Orbit Group Advisory Services Advisor s Account Agreement

Transcription

1 Orbit Group Advisory Services Advisor s Account Agreement This Orbit Group Advisory Services (Orbit) Advisor s Account Agreement ( Agreement ) is entered into by and between Orbit in its capacity as a Registered Investment Adviser and the client(s) ( Client ) for the purpose of opening an Orbit Advisor s Account. 1. Services By executing this Agreement, the Client understands that the following procedures will generally be followed in managing investment portfolios: A. The Client and Orbit will agree upon a calculated risk tolerance (via the new account form) and tailored to the Client s responses unique their personal situation, liquidity and income needs, time horizon, attitude toward risk, and special investment concerns. B. It is understood that Orbit does not assume responsibility for the accuracy of information furnished by the Client. C. Orbit will recommend investments that are believed to be prudent for the Client, in accordance with the information provided by the Client. D. The Client will receive confirmations and quarterly reports from the account custodian. E. On a periodic basis, Orbit will generally review the Client account to ensure that it is consistent with the Client s written risk tolerance and asset allocation strategy. F. Orbit will be available to the Client on an ongoing basis to receive deposit and withdrawal instructions. G. Orbit will be available to the Client to make changes in the Client s financial data or investment objectives. H. Orbit is not authorized to withdraw or transfer any money, securities, or property either in the name of the Client or otherwise, without the consent of the Client. 2. Client Responsibilities By executing this Agreement, the Client understands the following: A. The Client shall provide current and accurate data regarding their current financial situation and other relevant personal information as requested by Orbit. B. The Client agrees to inform Orbit promptly of any changes to their investment objectives, financial situation, liquidity, income needs, time horizon, attitude toward risk, and/or special investment concerns. C. The Client acknowledges that Orbit cannot adequately provide the services requested by the Client unless the Client provides such information completely and candidly, and that the value of Orbit s analyses and recommendations depends entirely upon the information provided by the Client. D. It is the responsibility of the Client to review all data supplied by Orbit and the account custodian, and to notify Orbit immediately in the event of any questions or discrepancies. E. The Client acknowledges that they must forward any stock certificates directly to the custodian, and not through Orbit. 3. Execution, Clearance and Administrative Services Orbit will employ an independent custodian to act as general custodian of the account, which includes charging and collecting advisory fees, and deposits to and withdrawals from the account. The Custodian will also execute all purchase and sale orders directed to it by Orbit and will perform clearance of those orders. The custodian shall maintain custody of all account assets and will perform such functions as: crediting interest and dividends on the account assets, crediting of principal on called or matured securities in the account, in addition to other custodial functions performed with respect to securities brokerage accounts. 4. Discretionary Authorization By executing this agreement the Client hereby authorizes the Orbit to purchase, sell, and/or exchange securities within the account without obtaining their authorization ( discretion ) in a manner consistent with the Client s stated risk tolerance. The Client authorizes Orbit, at its discretion, to aggregate purchases and sales of securities for the account with purchases and sales of securities of the same issuer for other clients of Orbit occurring on the same day. When transactions are aggregated, the actual prices applicable to the transaction will be averaged, and this account along with the accounts of other participating clients of Orbit will be deemed to have purchased or sold their proportionate shares of the securities involved at the average price. This trading authorization shall remain in effect as long as this Agreement remains in effect. 1 Orbit Group Advisory Services, LLC

2 5. Fees and Charges The Client will pay an annualized fee in accordance with the schedule appearing in the table below. The Client agrees and understands that fees will be automatically deducted from their account in advance on a quarterly basis. The first payment will be charged upon execution of this Agreement, and subsequent payments will be charged on the first day of each calendar quarter. The amount of the fee to be charged is based upon the value of the billable assets in the account as of the close of business on the last business day of the preceding quarter. The amount of the initial fee will be prorated if the account is opened any day other than the first day of the calendar quarter. A fee will still be assessed for deposits and subsequent withdrawals of those funds that occur within the same quarter. The fee will be calculated based on the number of days the billable assets are held within the account. The Client understands that the fees paid may be shared with other parties in connection with their respective services. Account Program Fee Schedule ETF Portfolios less cash.7% Income Preferred Portfolio less cash.5% 6. Automatic Debiting The Client authorizes the custodian to deduct all applicable fees from the Client s Account, and forward the fees to Orbit. A portion of the fee will be paid to Orbit for its administrative services. The Client understands that Orbit, in connection with the performance its services, shall be entitled to the fee payable by the terms of this Agreement. 7. Additions to and Withdrawals From the Account The Client may request periodic withdrawals from the account, or may make additions to the account at any time. In the event that the account asset value falls below any required account minimum as disclosed in the Orbit Form ADV Part 2A, the Client understands that the Agreement may be subject to Termination, as noted in Section 13. The Client understands that the account is designed as a long-term investment vehicle and that withdrawals of assets may impair the achievement of the Client s investment objectives. 8. Notices All written notices to the client under this Agreement shall be sent by hand, first class mail, facsimile transmission, or by certified mail, return receipt requested, at the address set forth in the account application. All written notices to Orbit Group Advisory Services under this Agreement shall be sent by hand, first class mail, facsimile transmission, or by certified mail, return receipt requested, at the address set forth below. Orbit Group Advisory Services LLC Attn: Compliance Dept. 100 International Drive Buffalo, NY Fax (716) mfuentes@nyaaa.com i

3 9. Other Investment, Account and Compensation Information Orbit represents that it is registered as an Investment Adviser under the Investment Advisers Act of 1940 ( Advisers Act ) and that it is authorized and empowered to enter into this Agreement. Client represents that the Client is authorized and empowered to enter into this Agreement and that it has created a legal, valid and binding obligation on the Client. The Client acknowledges that all or a portion of the assets held in the account may be redeemed, either initially or during the course of management in the account, and that the Client is responsible for all tax liabilities arising from such transactions (including any redemptions arising from the addition of assets to or the withdrawal of assets from the Client s account to pay for management fees). The Client is encouraged to seek the advice of a qualified tax professional. The Client understands that Orbit and its affiliates may perform advisory and/or brokerage services for many types of clients. The advice given to or action taken for any other client or account, including other client s accounts under management, may or may not differ from the advice given or the timing or nature of any actions taken under this Agreement. The Client acknowledges that investment performance and/or the success of any investment can never be predicted or guaranteed, and that the values of assets held in the account will fluctuate due to market conditions and other factors. The Client further understands that the investment decisions made, and the actions taken within the account will be subject to various market, liquidity, currency, economic and political risks, and will not necessarily be profitable. Orbit is not be required to take any action or give any advice with respect to voting of proxies solicited by, or with respect to, the issuers of securities in which Client s assets may be invested. The Client understands and agrees that the Client retains the right to vote all proxies, which are solicited for securities held in the investment advisory account. Orbit will not take any action on behalf of the Client with regard to class action lawsuits. Orbit and its agents and employees shall not be liable to the Client for any loss arising from: (i) the Client s actions, decisions or incomplete or inaccurate information provided by the Client; (ii) any act or failure to act by any third party; or (iii) any act or failure to act by Orbit, its affiliates, agents or employees that does not constitute gross negligence, gross misconduct or reckless violation of law. Despite the items noted above, nothing stated in this paragraph shall in any way constitute a waiver or limitation of any rights accorded to the Client under state or federal securities laws for the services provided under this Agreement. 10. Trustee or Fiduciary Representations If this Agreement is executed for the Client by a trustee or other fiduciary, including but not limited to a fiduciary as defined by the Employee Retirement Income Security Act of 1974 ( ERISA ) such trustee or other fiduciary represents and warrants the following: That the execution of this Agreement is within the scope of the trustee or fiduciary s authority as authorized by the governing instrument(s) and/or laws; That the trustee or fiduciary is duly authorized to execute this Agreement; That the trustee or fiduciary will promptly notify Orbit, in writing, of any event that might affect the authority or enforceability of this Agreement; The governing instruments provide that an investment manager as defined under ERISA may be appointed and that the person executing this Agreement is a named fiduciary as defined by ERISA, who has the power under the plan to appoint an IAR; and If the Client is a corporation, the party executing this Agreement on behalf of the Client represents and warrants the execution of this Agreement has been duly authorized by appropriate corporate action. 11. Arbitration This Agreement contains a pre-dispute arbitration clause. By signing and receiving this arbitration agreement, the parties agree as follows: a. Any controversy arising out of or relating to my accounts; transactions with Orbit and/or Orbit s officers, directors, agents, employees, and/or clearing agent; and/or this Agreement, or the breach thereof, whether such transaction or Agreement was entered in prior, on, or subsequent to the date hereof, shall be settled by arbitration in accordance with FINRA s rules. b. All parties to this Agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as ii

4 provided by the rules of the arbitration forum in which a claim is filed and where such a waiver would be void under the Federal securities laws. c. Arbitration awards are generally final and binding; a party s ability to have a court reverse or modify an arbitration award is very limited. d. The ability of the parties to obtain documents, witness statements, and other discovery is generally more limited in arbitration than in court proceedings. The arbitrators do not have to explain the reason(s) for their award unless, in an eligible case, a joint request for an explained decision has been submitted by all parties to the panel at least 20 days prior to the first scheduled hearing date. e. The panel of arbitrators may include a minority of arbitrators who were or are affiliated with the securities industry. f. The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court. g. The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this Agreement. h. No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration Agreement against any person who has initiated in court a putative class action or who is a member of a putative class action who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; (ii) the class is decertified; or (iii) the Customer is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Agreement except to the extent stated herein. 12. Assignment/Termination No assignment (as that term is defined in the Investment Advisers Act of 1940) of this Agreement may be made by any party without the written consent of the Client. This Agreement will continue in effect until the Client, or Orbit cancels it by giving written notice to the other parties, with termination effective upon the receipt of such notice. If the account is to be liquidated as a result of a termination notice, it is understood that Orbit will promptly effect such liquidation following the date the liquidation request was received. Proceeds will be payable to the Client promptly thereafter. Termination of the Agreement will not affect any liabilities or obligations of the parties for transactions initiated prior to termination. 13. Receipt of Written Information and Effectiveness of Agreement By executing this Agreement, the Client acknowledges receipt of the following: A copy of Orbit s Form ADV Part 2A and the Brochure Supplement if applicable; A copy of the account application (if applicable); A copy of the Account Agreement. This Agreement is not effective and Orbit is not bound by this Agreement until accepted by an authorized Registered Principal of Orbit. 14. Entire Agreement/Amendments This Agreement represents the entire agreement between the parties. This Agreement may not be changed orally, but only in writing. If any terms of this Agreement are found to be invalid or unenforceable, it will not affect the validity or enforceability of the remainder of the Agreement. As permitted by law, the terms of this Agreement may be modified subject to Client s receipt of prior written notice, and the Client continued acceptance of services after receipt of the modified Agreement will be deemed consent to the modifications. Failure to insist on strict compliance with this Agreement or any of its terms or any continued conduct will not be considered a waiver by either the Client or Orbit of the rights under the Agreement. The Client acknowledges that this Agreement contains a predispute arbitration clause, located in Section 12. The Client further acknowledges receiving a copy of this Agreement. 15. Acknowledgement By checking below, I agree that a photocopy, electronically scanned image, or facsimile of this Agreement and electronic consent shall be deemed an original for purposes of introducing this Agreement into evidence as part of any proceeding. iii

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6 Orbit Group Advisory Services LLC Firm Brochure - Form ADV Part 2A This brochure provides information about the qualifications and business practices of Orbit Group Advisory Services LLC. If you have any questions about the contents of this brochure, please contact us at (716) or by at: mfuentes@nyaaa.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about Orbit Group Advisory Services LLC is also available on the SEC s website at Orbit Group Advisory Services LLC s CRD number is: International Drive Buffalo, NY, (716) mfuentes@nyaaa.com Registration does not imply a certain level of skill or training. Version Date: 10/21/2014 v

7 Item 2: Material Changes Orbit Group Advisory Services LLC has not yet filed an annual updating amendment using the Form ADV Part 2A. Therefore there are no material changes to report. i

8 Item 3: Table of Contents Item 1: Cover Page Item 2: Material Changes...i Item 3: Table of Contents... ii Item 4: Advisory Business... 4 A. Description of the Advisory Firm... 4 B. Types of Advisory Services... 4 C. Client Tailored Services and Client Imposed Restrictions... 5 D. Wrap Fee Programs... 5 E. Assets Under Management... 5 Item 5: Fees and Compensation... 6 A. Fee Schedule... 6 B. Payment of Fees... 6 C. Client Responsibility For Third Party Fees... 6 D. Prepayment of Fees... 6 E. Outside Compensation For the Sale of Securities to Clients... 7 Item 6: Performance-Based Fees and Side-By-Side Management... 7 Item 7: Types of Clients... 8 Item 8: Methods of Analysis, Investment Strategies, and Risk of Investment Loss... 8 A. Methods of Analysis and Investment Strategies... 8 B. Material Risks Involved... 9 C. Risks of Specific Securities Utilized... 9 Item 9: Disciplinary Information A. Criminal or Civil Actions B. Administrative Proceedings C. Self-regulatory Organization (SRO) Proceedings Item 10: Other Financial Industry Activities and Affiliations A. Registration as a Broker/Dealer or Broker/Dealer Representative B. Registration as a Futures Commission Merchant, Commodity Pool Operator, or a Commodity Trading Advisor C. Registration Relationships Material to this Advisory Business and Possible Conflicts of Interests D. Selection of Other Advisers or Managers and How This Adviser is Compensated for Those Selections Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading A. Code of Ethics B. Recommendations Involving Material Financial Interests C. Investing Personal Money in the Same Securities as Clients D. Trading Securities At/Around the Same Time as Clients Securities ii

9 Item 12: Brokerage Practices A. Factors Used to Select Custodians and/or Broker/Dealers Research and Other Soft-Dollar Benefits Brokerage for Client Referrals Clients Directing Which Broker/Dealer/Custodian to Use B. Aggregating (Block) Trading for Multiple Client Accounts Item 13: Reviews of Accounts A. Frequency and Nature of Periodic Reviews and Who Makes Those Reviews B. Factors That Will Trigger a Non-Periodic Review of Client Accounts C. Content and Frequency of Regular Reports Provided to Clients Item 14: Client Referrals and Other Compensation A. Economic Benefits Provided by Third Parties for Advice Rendered to Clients (Includes Sales Awards or Other Prizes) B. Compensation to Non Advisory Personnel for Client Referrals Item 15: Custody Item 16: Investment Discretion Item 17: Voting Client Securities (Proxy Voting) Item 18: Financial Information A. Balance Sheet B. Financial Conditions Reasonably Likely to Impair Ability to Meet Contractual Commitments to Clients C. Bankruptcy Petitions in Previous Ten Years Item 19: Requirements For State Registered Advisers A. Principal Executive Officers and Management Persons; Their Formal Education and Business Background B. Other Businesses in Which This Advisory Firm or its Personnel are Engaged and Time Spent on Those (If Any) C. Calculation of Performance-Based Fees and Degree of Risk to Clients D. Material Disciplinary Disclosures for Management Persons of this Firm E. Material Relationships That Management Persons Have With Issuers of Securities (If Any) iii

10 Item 4: Advisory Business Business Description We provide services to individuals and high-net-worth individuals concerning mutual funds, fixed income securities, real estate funds (including REITs), insurance products including annuities, equities, ETFs (including ETFs in the gold and precious metal sectors), treasury inflation protected/inflation linked bonds and non-u.s. securities. As a registered investment adviser, we are held to the highest standard of client care a fiduciary standard. As a fiduciary, we always put our client s interests first and must fully disclose any potential conflict of interest. We do not hold customer funds or securities. A. Description of the Advisory Firm Orbit Group Advisory Services LLC (hereinafter OGAS ) is a Limited Liability Company organized in the State of New York. The firm was formed in September 2014, and the principal owner is AAA Western and Central New York. B. Types of Advisory Services Portfolio Management Services OGAS offers ongoing portfolio management services based on the individual goals, and risk tolerance of each client. OGAS creates a Risk Score for each client, which outlines the client s current situation (income, tax levels, and risk tolerance levels) and then selects an investment plan that has a similar risk level for each client's specific situation. Portfolio management services include, but are not limited to, the following: Investment strategy Personal investment policy Asset allocation Asset selection Risk tolerance Regular portfolio monitoring OGAS evaluates the current investments of each client with respect to their risk tolerance levels and time horizon. OGAS will request discretionary authority from clients in order to select securities and execute transactions without permission from the client prior to each transaction. Risk tolerance levels are documented in the Investment Policy Statement, which is given to each client. OGAS seeks to provide that investment decisions are made in accordance with the fiduciary duties owed to its accounts and without consideration of OGAS s economic, investment or other financial interests. To meet its fiduciary obligations, OGAS attempts to avoid, among other things, investment or trading practices that systematically advantage or disadvantage certain client portfolios, and accordingly, OGAS s policy is to 4

11 seek fair and equitable allocation of investment opportunities/transactions among its clients to avoid favoring one client over another over time. It is OGAS s policy to allocate investment opportunities and transactions it identifies as being appropriate and prudent among its clients on a fair and equitable basis over time. Services Limited to Specific Types of Investments OGAS generally limits its investment advice to ETFs (including ETFs in the gold and precious metal sectors), no-load mutual funds, treasury inflation protected/inflation linked bonds, and 529 plans. OGAS primarily recommends ETFs and no-load mutual funds to a majority of its clients. OGAS may use other securities as well to help diversify a portfolio when applicable. C. Client Tailored Services and Client Imposed Restrictions OGAS will match and monitor a program for each individual client. This will include an electronic interview session to get to know the client s specific risk tolerance and requirements as well as a plan that will be executed by OGAS on behalf of the client. OGAS may use model portfolios together with a specific set of recommendations for each client based on their personal restrictions, needs, and targets. Clients may not impose restrictions in investing in certain securities or types of securities in accordance with their values or beliefs. D. Wrap Fee Programs A wrap fee program is an investment program where the investor pays one stated fee that includes management fees, transaction costs, fund expenses, and other administrative fees. E. Assets Under Management OGAS has the following assets under management: Discretionary Amounts: Non-discretionary Amounts: Date Calculated: $0 $0 September

12 Item 5: Fees and Compensation A. Fee Schedule Asset-Based Fees for Portfolio Management Total Assets Under Management ETF Portfolio Preferred Income Portfolio Annual Fee 0.70% on assets, 0% on cash 0.50% on assets, 0% on cash The final fee schedule is attached as Exhibit II of the Investment Advisory Contract. Clients may terminate the agreement without penalty for a full refund of OGAS's fees within five business days of signing the Investment Advisory Contract. Thereafter, clients may terminate the Investment Advisory Contract generally with 5 days' written notice. OGAS bills based on the balance on the first day of the billing period. B. Payment of Fees Payment of Asset-Based Portfolio Management Fees Asset-based portfolio management fees are withdrawn directly from the client's accounts with client's written authorization on a quarterly basis. Fees are paid in advance. C. Client Responsibility For Third Party Fees Clients are responsible for the payment of all third party fees (i.e. custodian fees, brokerage fees, mutual fund fees, transaction fees, etc.). Those fees are separate and distinct from the fees and expenses charged by OGAS. Please see Item 12 of this brochure regarding broker-dealer/custodian. D. Prepayment of Fees OGAS collects fees in advance. Refunds for fees paid in advance will be returned within fourteen days to the client via check, or return deposit back into the client s account. For all asset-based fees paid in advance, the fee refunded will be equal to the balance of the fees collected in advance minus the daily rate* times the number of days elapsed in the billing period up to and including the day of termination. (*The daily rate is calculated by dividing the annual asset-based fee rate by 365.) 6

13 E. Outside Compensation For the Sale of Securities to Clients OGAS or its supervised persons may accept compensation for the sale of securities or other investment products, including asset-based sales charges or services frees from the sale of mutual funds. Marco A. Fuentes is a registered representative of a broker-dealer and an insurance agent and in these roles, may accept compensation for the sale of securities and other products to OGAS clients. 1. This is a Conflict of Interest Supervised persons may accept compensation for the sale of securities or other investment products, including asset based sales charges or service fees from the sale of mutual funds to OGAS's clients. This presents a conflict of interest and gives the supervised person an incentive to recommend products based on the compensation received rather than on the client s needs. When recommending the sale of securities or investment products for which the supervised persons receives compensation, OGAS will document the conflict of interest in the client file and inform the client of the conflict of interest. 2. Clients Have the Option to Purchase Recommended Products from Other Brokers Clients always have the option to purchase OGAS recommended products through other brokers or agents that are not affiliated with OGAS. 3. Commissions are not the Primary Source of Income for OGAS Commissions are not OGAS s source of compensation. 4. Advisory Fees in Addition to Commissions or Markups Advisory fees that are charged to clients are not reduced to offset the commissions or markups on securities or investment products recommended to clients. As a matter of business practice; OGAS will tend to avoid purchasing products that require the payment of a commission or sales charge. Item 6: Performance-Based Fees and Side-By-Side Management OGAS does not accept performance-based fees or other fees based on a share of capital gains on or capital appreciation of the assets of a client. 7

14 Item 7: Types of Clients OGAS generally provides advisory services to the following types of clients: Individuals High-Net-Worth Individuals Minimum Account Size for Portfolio Management There is an account minimum of $500.00, which may be waived by OGAS in its discretion. Item 8: Methods of Analysis, Investment Strategies, and Risk of Investment Loss A. Methods of Analysis and Investment Strategies Methods of Analysis OGAS s methods of analysis may include fundamental analysis, technical analysis and modern portfolio theory. Fundamental analysis involves the analysis of financial statements, the general financial health of companies, and/or the analysis of management or competitive advantages. Technical analysis involves the analysis of past market data; primarily price and volume. Modern portfolio theory is a theory of investment that attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, each by carefully choosing the proportions of various asset. Investment Strategies OGAS uses long term investing. Investing in securities involves a risk of loss that you, as a client, should be prepared to bear. 8

15 B. Material Risks Involved Methods of Analysis Fundamental analysis concentrates on factors that determine a company s value and expected future earnings. This strategy would normally encourage equity purchases in stocks that are undervalued or priced below their perceived value. The risk assumed is that the market will fail to reach expectations of perceived value. Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets do not always follow patterns and relying solely on this method may not take into account new patterns that emerge over time. Modern Portfolio Theory assumes that investors are risk adverse, meaning that given two portfolios that offer the same expected return, investors will prefer the less risky one. Thus, an investor will take on increased risk only if compensated by higher expected returns. Conversely, an investor who wants higher expected returns must accept more risk. The exact trade-off will be the same for all investors, but different investors will evaluate the trade-off differently based on individual risk aversion characteristics. The implication is that a rational investor will not invest in a portfolio if a second portfolio exists with a more favorable risk-expected return profile i.e., if for that level of risk an alternative portfolio exists which has better expected returns. Investment Strategies Long term investing is designed to capture market rates of both return and risk. Due to its nature, the long-term investment strategy can expose clients to various types of risk that will typically surface at various intervals during the time the client owns the investments. These risks include but are not limited to inflation (purchasing power) risk, interest rate risk, economic risk, market risk, and political/regulatory risk. Investing in securities involves a risk of loss that you, as a client, should be prepared to bear. C. Risks of Specific Securities Utilized Clients should be aware that there is a material risk of loss using any investment strategy. The investment types listed below (leaving aside Treasury Inflation Protected/Inflation Linked Bonds) are not guaranteed or insured by the FDIC or any other government agency. Mutual Funds: Investing in mutual funds carries the risk of capital loss and thus you may lose money investing in mutual funds. All mutual funds have costs that lower 9

16 investment returns. The funds can be of bond fixed income nature (lower risk) or stock equity nature. Equity investment generally refers to buying shares of stocks in return for receiving a future payment of dividends and/or capital gains if the value of the stock increases. The value of equity securities may fluctuate in response to specific situations for each company, industry conditions and the general economic environments. Fixed income investments generally pay a return on a fixed schedule, though the amount of the payments can vary. This type of investment can include corporate and government debt securities, leveraged loans, high yield, and investment grade debt and structured products, such as mortgage and other asset-backed securities, although individual bonds may be the best known type of fixed income security. In general, the fixed income market is volatile and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. The risk of default on treasury inflation protected/inflation linked bonds is dependent upon the U.S. Treasury defaulting (extremely unlikely); however, they carry a potential risk of losing share price value, albeit rather minimal. Risks of investing in foreign fixed income securities also include the general risk of non-u.s. investing described below. Exchange Traded Funds (ETFs): An ETF is an investment fund traded on stock exchanges, similar to stocks. Investing in ETFs carries the risk of capital loss (sometimes up to a 100% loss in the case of a stock holding bankruptcy). Areas of concern include the lack of transparency in products and increasing complexity, conflicts of interest and the possibility of inadequate regulatory compliance. Precious Metal ETFs (e.g., Gold, Silver, or Palladium Bullion backed electronic shares not physical metal) specifically may be negatively impacted by several unique factors, among them (1) large sales by the official sector which own a significant portion of aggregate world holdings in gold and other precious metals, (2) a significant increase in hedging activities by producers of gold or other precious metals, (3) a significant change in the attitude of speculators and investors. Real Estate funds (including REITs) face several kinds of risk that are inherent in the real estate sector, which historically has experienced significant fluctuations and cycles in performance. Revenues and cash flows may be adversely affected by: changes in local real estate market conditions due to changes in national or local economic conditions or changes in local property market characteristics; competition from other properties offering the same or similar services; changes in interest rates and in the state of the debt and equity credit markets; the ongoing need for capital improvements; changes in real estate tax rates and other operating expenses; adverse changes in governmental rules and fiscal policies; adverse changes in zoning laws; the impact of present or future environmental legislation and compliance with environmental laws. Annuities are a retirement product for those who may have the ability to pay a premium now and want to guarantee they receive certain monthly payments or a return 10

17 on investment later in the future. Annuities are contracts issued by a life insurance company designed to meet requirement or other long-term goals. An annuity is not a life insurance policy. Variable annuities are designed to be long-term investments, to meet retirement and other long-range goals. Variable annuities are not suitable for meeting short-term goals because substantial taxes and insurance company charges may apply if you withdraw your money early. Variable annuities also involve investment risks, just as mutual funds do. Non-U.S. securities present certain risks such as currency fluctuation, political and economic change, social unrest, changes in government regulation, differences in accounting and the lesser degree of accurate public information available. An American depositary receipt (ADR) is a negotiable security that represents securities of a non-us company that trades in the US financial markets, which has certain of the same risks as investing directly in non-u.s. securities. Past performance is not indicative of future results. Investing in securities involves a risk of loss that you, as a client, should be prepared to bear. Item 9: Disciplinary Information A. Criminal or Civil Actions There are no criminal or civil actions to report. B. Administrative Proceedings There are no administrative proceedings to report. C. Self-regulatory Organization (SRO) Proceedings There are no self-regulatory organization proceedings to report. Item 10: Other Financial Industry Activities and Affiliations A. Registration as a Broker/Dealer or Broker/Dealer Representative As a registered representative of Orbit Group LLC (license pending), Marco A. Fuentes accepts compensation for the sale of securities. 11

18 B. Registration as a Futures Commission Merchant, Commodity Pool Operator, or a Commodity Trading Advisor Neither OGAS nor its representatives are registered as or have pending applications to become either a Futures Commission Merchant, Commodity Pool Operator, or Commodity Trading Advisor or an associated person of the foregoing entities. C. Registration Relationships Material to this Advisory Business and Possible Conflicts of Interests Marco A. Fuentes is a registered representative of Orbit Group LLC (license pending) and from time to time, will offer clients advice or products from those activities. Clients should be aware that these services pay a commission or other compensation and involve a conflict of interest, as commissionable products conflict with the fiduciary duties of a registered investment adviser. OGAS always acts in the best interest of the client, including with respect to the sale of commissionable products to advisory clients. Clients are in no way required to implement the plan through any representative of OGAS in such individual s capacity as a registered representative. Marco A. Fuentes is an independent licensed insurance agent, and from time to time, may offer clients advice or products from those activities. Clients should be aware that these services pay a commission or other compensation and involve a conflict of interest, as commissionable products conflict with the fiduciary duties of a registered investment adviser. OGAS always acts in the best interest of the client; including the sale of commissionable products to advisory clients. Clients are in no way required to implement the plan through any representative of OGAS in such individual s capacity as an insurance agent. D. Selection of Other Advisers or Managers and How This Adviser is Compensated for Those Selections OGAS does not utilize nor select third-party investment advisers. All assets are managed by OGAS management. Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading A. Code of Ethics OGAS has a written Code of Ethics that covers the following areas: Prohibited Purchases and Sales, Insider Trading, Personal Securities Transactions, Exempted Transactions, Prohibited Activities, Conflicts of Interest, Gifts and Entertainment, Confidentiality, Service on a Board of Directors, Compliance Procedures, Compliance with Laws and 12

19 Regulations, Procedures and Reporting, Certification of Compliance, Reporting Violations, Compliance Officer Duties, Training and Education, Recordkeeping, Annual Review, and Sanctions. OGAS's Code of Ethics is available free upon request to any client or prospective client. B. Recommendations Involving Material Financial Interests OGAS does not recommend that clients buy or sell any security in which a related person to OGAS or OGAS has a material financial interest. C. Investing Personal Money in the Same Securities as Clients From time to time, representatives of OGAS may buy or sell securities for themselves that they also recommend to clients. This may provide an opportunity for representatives of OGAS to buy or sell the same securities before or after recommending the same securities to clients resulting in representatives profiting off the recommendations they provide to clients. Such transactions may create a conflict of interest. OGAS will always document any transactions that could be construed as conflicts of interest and will never engage in trading that operates to the client s disadvantage when similar securities are being bought or sold. D. Trading Securities At/Around the Same Time as Clients Securities From time to time, representatives of OGAS may buy or sell securities for themselves at or around the same time as clients. This may provide an opportunity for representatives of OGAS to buy or sell securities before or after recommending securities to clients resulting in representatives profiting off the recommendations they provide to clients. Such transactions may create a conflict of interest; however, OGAS will never engage in trading that operates to the client s disadvantage if representatives of OGAS buy or sell securities at or around the same time as clients. Item 12: Brokerage Practices A. Factors Used to Select Custodians and/or Broker/Dealers Custodians/broker-dealers will be recommended based on OGAS s duty to seek best execution, which is the obligation to seek execution of securities transactions for a client on the most favorable terms for the client under the circumstances. Clients will not necessarily pay the lowest commission or commission equivalent, and OGAS may also consider the market expertise and research access provided by the brokerdealer/custodian, including but not limited to access to written research, oral communication with analysts, admittance to research conferences and other resources provided by the brokers that may aid in OGAS's research efforts. OGAS will never 13

20 charge a premium or commission on transactions, beyond the actual cost imposed by the broker-dealer/custodian. OGAS will require clients to use TD Ameritrade Institutional, Inc. 1. Research and Other Soft-Dollar Benefits While OGAS has no formal soft dollars program in which soft dollars are used to pay for third party services, OGAS may receive research, products, or other services from custodians and broker-dealers in connection with client securities transactions ( soft dollar benefits ). OGAS may enter into soft-dollar arrangements consistent with (and not outside of) the safe harbor contained in Section 28(e) of the Securities Exchange Act of 1934, as amended. There can be no assurance that any particular client will benefit from soft dollar research, whether or not the client s transactions paid for it, and OGAS does not seek to allocate benefits to client accounts proportionate to any soft dollar credits generated by the accounts. OGAS benefits by not having to produce or pay for the research, products or services, and OGAS will have an incentive to recommend a broker-dealer based on receiving research or services. Clients should be aware that OGAS s acceptance of soft dollar benefits may result in higher commissions charged to the client. 2. Brokerage for Client Referrals OGAS receives no referrals from a broker-dealer or third party in exchange for using that broker-dealer or third party. 3. Clients Directing Which Broker/Dealer/Custodian to Use OGAS will require clients to use a specific broker-dealer to execute transactions. Not all advisers require clients to use a particular broker-dealer. B. Aggregating (Block) Trading for Multiple Client Accounts OGAS may aggregate or bunch the securities to be purchased or sold for multiple clients. This may result in less favorable prices, particularly for illiquid securities or during volatile market conditions. Item 13: Reviews of Accounts A. Frequency and Nature of Periodic Reviews and Who Makes Those Reviews All client accounts for OGAS's advisory services provided on an ongoing basis are reviewed at least quarterly by Marco A Fuentes, President with regard to clients 14

21 respective investment policies and risk tolerance levels. All accounts at OGAS are assigned to this reviewer. B. Factors That Will Trigger a Non-Periodic Review of Client Accounts Reviews may be triggered by material market, economic or political events, or by changes in client's financial situations (such as retirement, termination of employment, physical move, or inheritance). C. Content and Frequency of Regular Reports Provided to Clients Each client of OGAS's advisory services provided on an ongoing basis will receive a quarterly report detailing the client s account, including assets held, asset value, and calculation of fees. This written report will come from the custodian. Item 14: Client Referrals and Other Compensation A. Economic Benefits Provided by Third Parties for Advice Rendered to Clients (Includes Sales Awards or Other Prizes) OGAS does not receive any economic benefit, directly or indirectly from any third party for advice rendered to OGAS's clients. B. Compensation to Non Advisory Personnel for Client Referrals OGAS does not directly or indirectly compensate any person who is not advisory personnel for client referrals. Item 15: Custody When advisory fees are deducted directly from client accounts at client's custodian, OGAS will be deemed to have limited custody of client's assets and must have written authorization from the client to do so. Clients will receive all account statements and billing invoices that are required in each jurisdiction, and they should carefully review those statements for accuracy. Item 16: Investment Discretion OGAS provides discretionary investment advisory services to clients. The Investment Advisory Contract established with each client sets forth the discretionary authority for trading. Where investment discretion has been granted, OGAS generally manages the client s account and 15

22 makes investment decisions without consultation with the client as to when the securities are to be bought or sold for the account, the total amount of the securities to be bought/sold, what securities to buy or sell, or the price per share. In some instances, OGAS s discretionary authority in making these determinations may be limited by conditions imposed by a client (in investment guidelines or objectives, or client instructions otherwise provided to OGAS. Item 17: Voting Client Securities (Proxy Voting) OGAS will not ask for, nor accept voting authority for client securities. Clients will receive proxies directly from the issuer of the security or the custodian. Clients should direct all proxy questions to the issuer of the security. Item 18: Financial Information A. Balance Sheet OGAS neither requires nor solicits prepayment of more than $500 in fees per client, six months or more in advance, and therefore is not required to include a balance sheet with this brochure. B. Financial Conditions Reasonably Likely to Impair Ability to Meet Contractual Commitments to Clients Neither OGAS nor its management has any financial condition that is likely to reasonably impair OGAS s ability to meet contractual commitments to clients. C. Bankruptcy Petitions in Previous Ten Years OGAS has not been the subject of a bankruptcy petition in the last ten years. Item 19: Requirements For State Registered Advisers A. Principal Executive Officers and Management Persons; Their Formal Education and Business Background OGAS currently has only one management person: Marco A. Fuentes. Education and business background can be found on the individual's Form ADV Part 2B brochure supplement. 16

23 B. Other Businesses in Which This Advisory Firm or its Personnel are Engaged and Time Spent on Those (If Any) Other business activities for each relevant individual can be found on the Form ADV Part 2B brochure supplement for each such individual. C. Calculation of Performance-Based Fees and Degree of Risk to Clients OGAS does not accept performance-based fees or other fees based on a share of capital gains on or capital appreciation of the assets of a client. D. Material Disciplinary Disclosures for Management Persons of this Firm No management person at OGAS or OGAS has been found liable in an arbitration claim or been found liable in a civil, self-regulatory organization, or administrative proceeding that is material to the client s evaluation of the firm or its management. E. Material Relationships That Management Persons Have With Issuers of Securities (If Any) See Item 10.C and 11.B. 17