CFS/SPF Disclosures:
Non-deposit investment products and services are offered through CUSO Financial Services, LP (“CFS”) or Sorrento Pacific Financial, LLC ("SPF"), registered broker-dealers (Member FINRA (www.finra.org) / SIPC (www.sipc.org)) and SEC Registered Investment Advisors. Products offered through CFS and SPF: are not federally insured, are not guarantees or obligations of banks or credit unions, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS or SPF. Credit Unions and Banks have contracted with CFS and SPF to make non-deposit investment products and services available to credit union members and bank customers.
CFS/SPF policies and procedures do NOT permit any CFS/SPF registered individual to accept a check from a client that is made payable to the representative or to their business entity for any investment purposes. The only exception to this is for payment of financial planning fees to an approved Registered Investment Advisor.
Please see other important disclosures located at www.CFSdisclosure.com, www.SPFdisclosure.com, and Investment Product and Services Overview.
CFS Regulation Best Interest Disclosures
CFS Client Relationship Summary (CRS)
CFS Brokerage Services Disclosure Summary (BSDS)
SPF Regulation Best Interest Disclosures
SPF Client Relationship Summary (CRS)
SPF Brokerage Services Disclosure Summary (BSDS)
THIRD-PARTY COMPENSATION DISCLOSURE
CUSO Financial Services, LP (“CFS") and Sorrento Pacific Financial Services, LLC (“SPF”) collectively “CFS/SPF”), receive compensation and/or fees (also referred to as revenue sharing or marketing support) from certain mutual fund families, insurance (fixed and variable product) providers, exchange traded funds (ETF) and alternative investment sponsors including real estate investment trusts (REITs), and business development companies (BDC) and unaffiliated investment advisers that sponsor, manage and/or promote the sale of certain products that are available to our customers. These payments include commissions, trailing commissions, fees and for certain product providers, revenue sharing payments made in connection with programs that support our marketing and sales force education and training efforts ("Strategic Partners Program"). These relationships provide additional compensation to CFS/SPF that is used to offset a variety of expenses, including, but not limited to, marketing, training, educational presentations and other support. This additional compensation creates a conflict of interest as it influences the selection of investments and services CFS/SPF and/or their financial professionals offer or recommend to customers. The participating programs and payments received are subject to change over time. Accordingly, the information provided below will be updated periodically. This disclosure is intended to provide you with an overview of the various types of compensation and/or fees CFS/SPF receive. We encourage you to review this information in the entirety and contact us with any questions.
Strategic Partners Program
Strategic Partner Program participants (referred to as "Participating Sponsors" or “Strategic Partners”) are listed below. Participating Sponsors pay CFS/SPF different amounts of revenue sharing and receive different levels of benefits for such payments. Revenue sharing fees are not shared with our financial professionals. A financial professional’s compensation is the same regardless of whether a sale involves a Participating Sponsor’s product. In some cases, Participating Sponsors pay additional marketing payments to CFS/SPF to cover fees to attend conferences or reimburse expenses for workshops or seminars. The payments made under the Strategic Partners Program are calculated based either on gross sales or assets under management or a flat fee arrangement and vary by product provider. CFS/SPF receive sales-based revenue sharing only on commission-based business. Participating Sponsors may receive benefits such as financial professional access and contact lists, business metrics, preferred placement on CFS/SPF’ website, participation in product training initiatives and marketing and sales campaigns, and the ability to participate in our conferences.
We use the revenue from our Participating Sponsors to support certain marketing, training, and educational initiatives including our annual National Conference. The conference provides a venue to communicate new products and services to our financial professionals, to offer training to them and their support staff, and to keep them abreast of regulatory requirements. The revenue is also used to pay for annual awards (in the form of a trophy, medal, or plaque) for our financial professionals who generate the most revenue overall and to pay for our general marketing expenses. Revenue from Participating Sponsors helps to pay for top producer conference costs. Top producing CFS/SPF financial professionals receive an award based on total sales.
Mutual Fund and ETF Participating Sponsors
In addition to receiving sales commissions and other types of compensation, CFS/SPF receive a flat fee, asset-based and/or sales-based compensation from mutual fund and ETF Participating Sponsors. Such payments vary by sponsor. CFS/SPF receive payments from mutual fund sponsors under the Strategic Partners Program of up to 0.20% annually on sales and up to 0.0032% on assets.
The following is a list of mutual fund and ETF sponsors that participate in CFS/SPF’s Strategic
Alliance Bernstein
Allianz
American Funds
Blackrock
BTS Asset Management
Columbia Threadneedle
First Trust
Franklin Templeton
Invesco
iShares by Blackrock
Lord Abbett
Meeder
Nationwide
Pacific Funds
PGIM (Prudential Global Investment Management)
PIMCO
Putnam
Sammons Retirement Solutions
SEI
Hartford Funds
Transamerica
VOYA
We prepare and make available to our financial professionals a quarterly list of Participating Sponsors mutual funds and ETFs that have been screened for investment performance against other Participating Sponsors funds with similar objectives and asset classes (the “Select Fund List” or “List”). CFS/SPF and our financial professionals have a conflict of interest when a financial professional chooses or recommends an investment from the Select Fund List for your portfolio because CFS/SPF receive revenue sharing fees from the mutual fund or ETF sponsor. Our receipt of revenue sharing fees influences our selection of mutual funds and ETFs, as our financial professionals are likely to choose or recommend a fund or ETF whose sponsor pays us revenue sharing fees over a fund or ETF whose sponsor does not pay us.
You do not pay more to purchase funds from the List through CFS/SPF than you would pay to purchase these funds through another broker-dealer, and your financial professional does not receive additional compensation for selecting a fund from the List. Our financial professionals are not required to choose or recommend investments from the Select Fund List.
Insurance and Annuity Participating Sponsors
In addition to receiving commissions, CFS/SPF receive flat fee and/or sales-based compensation from certain insurance and/or variable, fixed and indexed annuity Participating Sponsors. CFS/SPF receive compensation on an annual basis of up to 0.25% on sales of variable annuity products and up to 1% on fixed and indexed annuity sales.
The following is a list of variable, fixed and indexed annuity sponsors that participate in CFS/SPF’s Strategic Partners Program:
AIG
Allianz
American Equity
American National
Athene
AXA Equitable
Brighthouse Financial
Delaware Life
Global Atlantic Financial Group
Jackson National
Lincoln National
Mass Mutual
Midland National Life/Sammons Financial
Nationwide
New York Life
OneAmerica
Pacific Life
Pinnacle
Protective
Prudential
Security Benefit
Securian
Symetra
Transamerica
United Life
VOYA Services
Western Southern
Alternative Investment Partners
In addition to receiving commissions, CFS/SPF receive a fixed fee and/or payments of up to 1.00% of customer assets invested in certain alternative investment products, including real estate investment trusts (REITs), business development companies (BDCs), and other closed-end funds. This compensation is not shared with our financial professionals.
The following alternative investment sponsors currently participate in the Partners Program: CIM I-NAV
Griffin Capital Hines Securities
PIMCO Flexible Credit Income Fund (PFLEX)
Unit Investment Trust (UIT) Partners
CFS/SPF receive additional volume compensation based on total assets purchased from UIT sponsors over a given period of time as disclosed in the Unit Investment Trust’s prospectus. Certain UIT sponsors compensate CFS/SPF for education seminars for CFS/SPF financial professionals, customers, and prospective customers. This includes due diligence meetings, recreational activities, or other non-cash items. Also, marketing representatives of UIT sponsors, often referred to as “wholesalers,” work with financial professionals to promote their UITs. The volume concession rate does not exceed 0.035% per year.
The following UIT sponsors or brokers currently participate in the Partners Program:
First Trust
Third-Party Investment Advisors
CFS/SPF receive compensation from certain unaffiliated or third-party investment advisors to assist in paying for ongoing marketing and sales support activities including, but not limited to, training, educational meetings, due diligence reviews, and day-to-day marketing and/or promotional activities. Not all third-party Advisors pay such compensation. Current participating third-party advisors are:
AssetMark
Beacon Capital Management
Beaumont Capital Management
BluePrint
Brinker Capital
BTS Management
Clark Capital
FTJ/Orion
Envestnet
Goldman Sachs
Horizon
Meeder
Morningstar Managed Portfolios
Russell Investments
SEI
Symmetry
W.E. Donoghue
The compensation arrangements vary, and may generally be structured as follows:
- A stated percentage of gross sales up to .05% of net sales with the Third- Party Advisor.
- A stated percentage of assets under management up to .03% of assets under management with the third-party Advisor.
- A minimum flat fee, fixed payment up to $60,000.
- A combination of the above.
A conflict of interest exists where CFS/SPF receive such compensation because there is an incentive to recommend these third-party advisors over other investment opportunities in order to generate additional revenue for the firm. However, our financial professionals are not required to recommend any third-party advisor providing additional compensation, nor do they directly share in any of this compensation.
Other Compensation
Our financial professionals receive additional compensation from product sponsors. However, such compensation is not tied to the sales of any products. Compensation includes such items as gifts valued at less than $100 annually, an occasional dinner or ticket to a sporting event, or reimbursement in connection with educational meetings or marketing or advertising initiatives, including services for identifying prospects. Product sponsors sometimes also pay for or reimburse CFS/SPF for the costs associated with education or training events that are attended by our financial professionals and for CFS/SPF-sponsored conferences and events. CFS/SPF also receive reimbursement from product sponsors for technology-related costs associated with investment proposal tools they make available to our financial professionals for use with customers.
Pershing And Quasar Clearing Relationships
Pershing and Quasar are the clearing firms for CFS/SPF brokerage business. Due to this business relationship, Pershing and Quasar share with CFS/SPF a portion of certain commissions and fees that customers pay to Pershing or Quasar. The following is a brief description of some of the revenue items received from Pershing.
Pershing pays or shares with CFS/SPF the following items:
- transition assistance in the form of reimbursement of IRA termination fees of up to $165 per account for a retirement account transferred to Pershing and up to $125 per retail account for retail accounts transferred to
- a growth assistance credit for seven years to support, service, and grow brokerage assets on the Pershing
- a portion of certain brokerage account services and custodial fees charged to customer accounts that exceeds the amount that CFS/SPF are required to pay Pershing for such services, including account transfer fees, IRA custodial and termination fees, paper confirm and statement fees, inactive (custodial) account fees, retirement account maintenance fees, and margin
- a portion of shareholder servicing fees from certain mutual fund sponsors as part of their FundVest® FOCUS NTF (No Transaction Fee)
Quasar receives service fees from mutual fund companies and shares some of these fees with CFS/SPF. Our financial professionals do not receive any part of the revenue generated by these fees.
Cash Sweep & Money Market Sweep
CFS/SPF offer the Dreyfus insured deposit program through Pershing LLC (“Pershing”). The Dreyfus Insured Deposit Program is a bank deposit “sweep” program that can provide daily interest income and FDIC insurance on balances up to $2.5 million. CFS/SPF receive compensation from Pershing through the DIDP equal to a percentage of the average daily deposit balance. For additional information on the DIDP, please see the DIDP disclosure booklet available from your financial professional or online at Dreyfus Insured Deposit Program. This compensation is retained by CFS/SPF and is not shared with our financial professionals. The DIDP program provides FDIC insurance and payment rates based on the interest rate environment as well as based on total account balance. For accounts not eligible for the DIDP, cash balances are invested in a money market fund. The money market mutual fund automatic cash sweep program sweeps uninvested cash daily into taxable or tax-exempt money market funds offered by The Dreyfus Corporation and other investment managers. CFS/SPF receive compensation of up to 0.60% of the assets invested in The Dreyfus Corporation money market funds.
Insurance Marketing Organizations
Insurance Marketing Organizations (“IMOs”) assist investment professionals with the sale of life insurance and fixed annuity products while providing access to multiple insurance companies. CFS/SPF receive compensation from IMO’s based on sales of insurance products from product providers represented by the IMOs. CFS/SPF receives compensation of up 50% of the override received by the product provider which varies per product. This compensation is used to offset a variety of CFS/SPF expenses, including but not limited to, marketing, training, educational presentations and other support. This compensation is not shared with our financial professionals.
Other Fee Disclosures
Other fee disclosures related to our investment advisory business can be found in the:
CFS Form ADV, available at www.adviserinfo.sec.gov.
SPF Form ADV, available at www.adviserinfo.sec.gov
If you have any questions, you may contact our Legal and Compliance Department at (858) 805-7900.
