IMPORTANT INFORMATION AFFECTING YOUR RIGHTS, PLEASE READ CAREFULLY
The following is a legally binding agreement (the “Agreement”) between you and Girard Investment Services, LLC (“Girard” or “GIS”) with regard to your account, whether it is a brokerage or non-brokerage account. Please review these Terms and Conditions as they contain important information regarding the Agreement and your risks and responsibilities. The type of account you are opening is set forth on the new account form executed contemporaneously with the receipt of the Agreement. By signing Girard’s New Account Form, you acknowledge that you have received a copy of this agreement, read it and understand the contents. This agreement contains a pre-dispute arbitration clause as disclosed on page 13 of the agreement under the heading Arbitration Agreement and Disclosure.
PARTIES TO THE AGREEMENT
In this document, “us,” “we,” and “our” refers to Girard Investment Services, LLC, a Financial Industry Regulatory Authority (“FINRA”) member firm and Introducing Broker/Dealer and applies to all activities in any accounts opened with us. Girard operates as a separate company with its offices located both on the premises of Univest Financial Corporation and in stand-alone offices. In the course of opening an account with Girard, a registered representative has explained to you that securities and insurance transactions are being handled by Girard Investment Services, LLC and not a depository institution. References to the “Clearing Firm” apply to Pershing LLC (“Pershing”) which is a New York Stock Exchange member firm (collectively the “Parties”).
The Clearing Firm has been engaged to provide account custody and clearing services for brokerage accounts opened through Girard. The terms “account owner,” “you,” and “your” refer to the owner(s) indicated on the account application or such individuals added as account owners. For joint accounts, these terms refer to all owners, collectively and individually. For accounts owned by entities, such as trust or business accounts, these terms refer both to the entity and to all persons authorized to transact business on behalf of the entity. “Representative” refers to the person or persons duly licensed and registered with us as a Registered Representative who has been selected by you to service your account. Such services may include making insurance or investment related recommendations or accepting orders on your behalf; providing you with necessary documents and information; as well as updating or changing our records to reflect your current financial or personal situation.
Brokerage account activities are processed and cleared through the Clearing Firm and customer assets are held by the Clearing Firm. Non-Brokerage activities are processed through accounts opened and maintained directly with various product sponsors (such as Mutual Funds and separate accounts of Insurance Companies) (“Product Sponsor”) and customer assets are held at the Product Sponsor.
Not FDIC Iinsured
Non-deposit investments offered by Girard Investment Services, LLC are:
- Not insured by the Federal Deposit Insurance Corporation (FDIC)
- Not deposits or any other obligations of, guaranteed by or endorsed by a depository institution or affiliate
- Not insured by any federal government agency
- Subject to investment risk, including possible loss of principal invested
SIPC Account Protection
The securities in your account are protected in accordance with the Securities Investor Protection Corporation (SIPC) for up to $500,000 including up to $250,000 protection for claims for cash, subject to periodic adjustments for inflation in accordance with the terms of the SIPC statute and approval by SIPC’s Board of Directors. The Clearing Firm also has arranged for additional coverage above these limits. Neither coverage protects against a decline in the value of your securities, nor does either coverage extend to certain securities that are considered ineligible for coverage. For more details on SIPC, or to request a SIPC brochure, visit www.sipc.org or call 1-202-371-8300.
USA Patriot Act Notice
To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.
What this means for you: When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.
As set forth under the section regarding statements, you are responsible for monitoring the activities of your Representative and you should contact us at the attention of our Compliance Department whenever any activities are unauthorized or contrary to your express directions. You may contact us using the following address and telephone number:
Girard Investment Services, LLC.
41 West Broad Street
Souderton, PA 18964
The following paragraphs apply to all activities in a brokerage or non-brokerage account. When you see reference to the activities of a Clearing Firm, it applies to activities in brokerage accounts.
COMMITMENTS BETWEEN YOU AND THE PARTIES
Our Commitments to You
When we accept your account application, we are agreeing to serve as your broker and to maintain an account for you. We agree, subject to industry regulations and our internal procedures that upon acceptance of an authorized order, we will buy, sell, or otherwise dispose of securities for you according to your instructions. We accept no discretionary trading authority over your account. We and the Clearing Firm agree to provide various services and features, as described in this Agreement. When we act as a broker for you, our primary role is to act in your best interest and to place your interests above our own at the time of an investment-related recommendation. At the time of making a recommendation of any securities transaction, investment strategy involving securities, or account recommendation to you, we shall act in your best interest and will disclose to you all material facts relating to the scope and terms of our relationship with you, including the material fees and costs that apply to your transactions, holdings, and accounts; the type and scope of services provided to you, including any material limitations on the securities or investment strategies involving securities that may be recommended to you; and all material facts relating to conflicts of interest that are associated with the recommendations made to you. These disclosures are provided to you in various documents, including this agreement, our Firms’ Form CRS, the account applications, prospectuses and specific product disclosure documents.
Custody is provided by the Clearing Firm. We are not a custodian and therefore cannot hold your securities, stock powers, monies or any other personal or real property in which you may have an interest.
Girard and the Clearing Firm do not offer any tax, legal or accounting advice regarding a security or investment. You should consult your own tax advisor regarding tax consequences with respect to transactions in or for your account.
In What Capacity Will We Be Acting For You
When dealing with you on behalf of GIS, our firm and our Representatives will act solely in the capacities of a broker/dealer and Registered Representatives of a broker/dealer. Any recommendations we provide to you regarding securities or the type of account to open with our firm will be made in accordance with the SEC’s Regulation Best Interest and FINRA suitability standards and not in the capacity as an investment advisor under a full fiduciary standard. As such, unless otherwise agreed to in writing, GIS and its Representatives are not fiduciaries as that term is defined under the Employee Retirement Income Securities Act of 1974 (ERISA) or other statutory or regulatory requirements applicable to your account(s), including retirement plans or retirement accounts. Your Representative may also be an Investment Advisor Representative of an affiliated investment advisor company. The services provided by that firm are separate and distinct from GIS and your representative will advise you when they are acting in that capacity.
We do not provide account monitoring services. As such, you should have no expectation that GIS will be reviewing your account and any investments therein on a continuous and/or regular basis to determine whether your investments are performing as expected and to recommend any changes to your account. At our discretion, we may voluntarily review your account or do so in preparation for any periodic meetings we may have with you or as you may request. However, these voluntary reviews should not be implied to be account monitoring or an agreement to perform account monitoring. Because we will not be providing ongoing monitoring of your account(s), it is important for you to review your account(s) regularly and communicate with your representative whenever you have questions, or if your financial situation, needs or personal circumstances change.
As an account owner, you are responsible for monitoring your account. This includes making sure that all transactions are accurate and you are receiving confirmations, account statements, and any other expected communications. You should review these communications to ensure that the information about you and the activities in your account are accurate and contain nothing suspicious or unauthorized. You understand that the Clearing Firm does not monitor your brokerage account for you and has no duty to advise you or us of any issue regarding your account.
So long as we or the Clearing Firm or Product Sponsor send communications to you at the physical or electronic address of record given on the application, or to any other address given to us by an owner, the communications are legally presumed to have been delivered, whether you actually received them or not. In addition, confirmations are presumed to be accurate unless you specifically notify us in writing within five (5) days of when they were sent to you; account statements, within ten (10) days.
If you have not received a communication you expected, or if you have a question or believe you have found an error in any communication, telephone us immediately and follow up with written notice at the telephone number and address listed under Notices.
The Clearing Firm will send to the physical or electronic address of record given to us by you, a statement of your account:
- every calendar quarter, at a minimum; or
- for any month when you have trading or cash management activity in your account
Your brokerage account statements will show all activity in your account for the stated period, including securities transactions, cash and margin balances, credits and debits to your core account, and all fees paid directly from your account. The Clearing Firm will also send to you a confirmation for every securities transaction in your account. The only exceptions are automatic investments, automatic withdrawals, dividend reinvestments, transfers to other accounts, and transactions that involve only your core account; for these activities, your regular account statement serves in place of a confirmation.
Statements showing all activity and confirmations for every securities transaction will be sent to you by the Product Sponsor.
The Firm has established the following account minimums:
- There is an account minimum of $25,000 for ALL new accounts, excluding SIMPLE/SEP plans.
- There is an account minimum of $50,000 for ALL new QUALIFIED (e.g. IRA) Variable Annuity accounts
- There is an account minimum of $50,000 for ALL new NON-QUALIFIED (e.g. non-IRA) Variable Annuity accounts with a living benefit rider (i.e. Guaranteed Income Rider or Guaranteed Withdrawal Rider).
Your Commitments to the Parties
When you sign Girard’s New Account Form, you agree to the following Commitments to the Parties, many of which are spelled out more completely in this Agreement:
- To accept full responsibility for the content and accuracy of all authorized instructions placed on your account, and for all results and consequences of these instructions; this includes all investment decisions and trading orders, and all instructions placed by you or any other person you authorize including your Representative.
- To pay all fees, charges, and expenses incurred in your account. The Parties may change their fees and commissions at any time subject to applicable legal requirements. GIS reserves the right to vary commissions and other charges among clients in connection with special offers, combinations of services, or in other circumstances.
- To let us, our Representatives, or the Clearing Firm monitor and/or record any phone conversations with you.
- To let us, our Representatives, or the Clearing Firm verify the information you provide and obtain credit reports and other credit related information about you at any time, such as payment and employment information (whether for margin or any other purpose).
- To monitor the activities of any Representative serving your account and contact us with regard to any unauthorized activities or activities that are contrary to your expressed instructions. You understand that you need to contact us if you have any concerns regarding your account. Your failure to provide us with timely notice can be viewed by us as authorization or ratification of such activities for which you are responsible.
- To refuse to lend or borrow monies or securities to/from your Representative or any other person associated with the Parties.
- To refuse to allow your Representative or any other person(s) associated with the Parties to serve as trustee, guardian, fiduciary, or co-owner for your account unless you are an immediate family member of the Representative (i.e. spouse, parent, child or other person living in the Representative’s household).
- To refuse to purchase or sell a security, insurance, or other product based upon the promise that you will receive a commission rebate, share in compensation due your Representative, or for any other inducement such as a prize or gift.
- To understand that whenever you purchase or exchange any mutual fund or variable annuity/life product, you are responsible for obtaining and reading that fund’s prospectus.
- To refuse to obtain credit or otherwise borrow money from your Representative or other third party to purchase securities except through a properly approved margin account.
- To refuse to enter into any other personal business relationship with your Representative, including but not limited to providing funds for any type of business activity that involves your Representative or someone associated with your Representative.
- To make payment for purchases of securities or deposits for your account to the Clearing Firm or Product Sponsor. You should never make payment for the purchase of securities payable to Girard or your Representative.
- To notify us in writing any time there is a material change in your financial circumstances or investment objectives as set forth in your account application.
You understand and agree that Girard and the Parties may amend this Agreement from time to time without prior notice to you, except as may be required by applicable law. The most current version of the Agreement is available from your Representative, or by contacting GIS as listed under the “Notices” section. You agree to be bound by the current and future terms of this Agreement, from the time you first use your account or sign your application, whichever happens first.
For joint owners, whether joint tenants with rights of survivorship or joint tenants in common, any obligations or liabilities resulting from one account owner’s actions are the responsibility of each account owner, both individually and jointly. We or the Clearing Firm may enforce this Agreement against all account owners or against any one of them individually.
Each owner of a joint account may act as if he or she were the sole owner of the account, with no further notice or approval necessary from other joint owners. For example, a joint owner can — in his or her own name — write checks, buy and sell securities, withdraw or transfer assets, borrow against the account through margin, arrange for account statements to be sent only to them, or change the account’s features and services (although no account owner may remove another’s name from the account without their authorization).
In addition, with joint accounts, the principle of “notice to one is notice to all” applies. We or the Clearing Firm are legally considered to have fulfilled our obligation to you and the account if we fulfill it with respect to just one account owner (for example, sending statements or other required communications to just one account owner).
The Parties are not obligated to question the purpose or propriety of any instruction of a joint account owner that appears to be authentic, or to let other owners know about any changes an owner has made to the account, unless we have received written notice to the contrary, from another account owner. The Parties reserve the right at any time and at their discretion to require the written consent of all account owners before acting on an instruction from one account owner.
In the event of death of any one of you, the survivor or survivors will notify us immediately. We may take such actions as we deem necessary, such as request additional documents, retain such portion and/or restrict transactions in the account to protect us against any claim, penalty or loss. The estate of any deceased account owner or any other living account owner shall be liable, jointly and severally, to us for any debt or loss in this account resulting from the completion of transactions initiated prior to our receipt of a written notice of such death or incurred in the liquidation of the account or the adjustment of the interest of the respective parties.
Laws covering joint or community property vary by state. You are responsible for verifying that the joint registration you choose is valid in your state. You may want to consult your legal counsel before establishing your account. Generally, for joint tenants with rights of survivorship and tenants by the entirety, upon the death of an account owner the entire interest in the account transfers to the surviving account owner(s). However, such transfer of interest is subject to the same terms and conditions set forth in the Agreement and does not release the decedent’s estate from the liability for amounts owed to the Parties. For tenants in common, a deceased account owner’s interest (which equals that of the other account owner(s) unless specified otherwise) goes to that deceased account owner’s legal representative. The interests in the account shall be determined as of the close of business on the date of death of the decedent (or on the next business day if the date of death is not a business day). Tenants in common are responsible for maintaining records of the percentages of ownership.
For accounts opened under the Uniform Gifts/Transfers to Minors Acts, you, the account owner, are the custodian. By opening this type of account, you agree that all assets belong to the minor and that you will only use them for the minor’s benefit — even after the assets have been removed from the account.
INVESTMENT RISK DISCLOSURES
Securities Product Disclosure
You understand that investing in securities, including, but not limited to, stocks, bonds and mutual funds and variable sub-accounts within a variable annuity involves risks and variables that may have a substantial negative effect on the value of your securities positions and you can lose money. These risks and variables include, but are not limited to, market fluctuations, changing economic conditions and policy, interest rate changes, political events and world events. You acknowledge that U.S. Government Debt Obligations (Government Bonds) are guaranteed ONLY as to the timely payment of interest and principal. The value of government bonds, and all bonds in general, will fluctuate depending upon prevailing interest rates and market conditions. Furthermore, you represent that you are willing to assume these risks and that you are in fact financially able to bear these risks.
Insurance Product Disclosure
Fixed, indexed and variable annuities are obligations of the issuing insurance company. Withdrawals from an annuity may be subject to surrender charges, taxation as ordinary income, and/or additional taxes. Complete information on all possible surrender and withdrawal charges is available in your policy contract and prospectus for products sold by prospectus. The issuing insurance company has the right to sell or transfer its annuity contracts to another obligator and may or may not give prior notice. If you purchased a variable annuity, you acknowledge receipt of a current prospectus and understanding of the risks associated with your investment as identified in that document. Annuities are not deposits of, obligations of, or guaranteed by any bank/credit union, nor are they insured by the FDIC or any government agency.
Money Market Fund Investments
An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other U.S. government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
INVESTMENT OBJECTIVES AND DEFINITIONS
Girard Investment Services, LLC has identified five common investment objectives that it makes available for account holders to select to determine their objective for an account registration opened with the firm and the investments contained therein. Each investment objective and corresponding definition is listed below. The investment objective is used in conjunction with other factors such as risk tolerance and time horizon to help determine an appropriate mix of investments in an account portfolio designed to meet the account holder’s financial needs. You also acknowledge and agree that you have an affirmative obligation to notify us in writing should there be material change in your investment objectives.
It is your responsibility as the account owner to select the account’s investment objective that most closely matches your desired financial needs for the account. Your Girard representative will rely on your selection when making recommendations to you. However, Girard cannot assure you that any given investment or strategy recommended will achieve your investment objective.
Income: This objective seeks investments primarily focused on generating current income. The investor may have some exposure to growth oriented investments but is willing to forgo capital appreciation in order to seek a higher level of current income.
Income & Growth: This objective seeks current income with the opportunity to also experience some capital appreciation by investing primarily in income producing investments in addition to growth oriented investments which may produce little or no current income.
Growth & Income: This objective seeks capital appreciation with the opportunity to also experience some current income by investing primarily in growth oriented investments which may produce little or no current income in addition to income producing investments.
Growth: This objective seeks capital appreciation by focusing on growth oriented investments with little emphasis on the generation of current income.
Aggressive Growth: This objective seeks to maximize capital appreciation by focusing on investments with high growth potential and is not concerned with the generation of current income. Aggressive Growth investments will assume high market risks, volatility and potential for loss in exchange for high return potential.
RISK TOLERANCE AND DEFINITIONS
In general terms, risk tolerance is the amount of uncertainty, losses or volatility, or any combination thereof, an investor can withstand in the value of the investments in their account. Typically, there is a correlation between the amount of risk an investor is willing to assume and the potential for positive returns in an account over time. As such, when assessing risk and returns, you, as the account owner, should take the time to properly assess your tolerance for risk and expectations for your account. To this end, you should understand that investments with a low degree of risk will generally have lower positive return potential in exchange for a lower degree of negative returns. Conversely, investments with a higher degree of risk will generally have a higher positive return potential in exchange for higher volatility and a higher degree of potential negative returns.
Girard has identified five common risk tolerances for account owners to utilize when determining the risk profile for the investments in their account. As was the case with the choice of an investment objective, it is your responsibility as account owner to select the level of risk you are willing to assume in your account.
Conservative: A conservative investor generally wants to preserve principal and minimize risk and account volatility, even if that means their account does not generate significant income or appreciation in value and may not keep pace with inflation.
Moderately Conservative: A moderately conservative investor is willing to accept low risk to their principal, including low account volatility, in order to seek a modest level of income or capital appreciation. This investor understands that they could lose a small portion of the principal amount invested.
Moderate: A moderate investor is willing to accept average risk to their principal and tolerate average account volatility in order to seek a higher level of income or capital appreciation. This investor is willing to sustain short term losses and/or lose a portion of the principal amount invested in exchange for higher return potential.
Moderately Aggressive: A moderately aggressive investor is willing to accept above average risk to their principal and tolerate a high level of account volatility in order to seek an above average level of income or capital appreciation. This investor understands that they could lose a significant portion of the principal amount invested.
Aggressive: An aggressive investor is willing to accept maximum risk to their principal and maximum account volatility to aggressively seek maximum income or capital appreciation and understands they could lose most, or all, of the principal amount invested.
FEES and EXPENSES
Mutual Fund Fees and Expenses
You acknowledge that when investing in a mutual fund, you will incur fees and expenses associated with the fund. These fees and expenses include, but are not limited to, management fees, operating expenses, sales charges (commissions), 12b-1 fees (service fees), surrender charges and other expenses which will vary by fund type (stock, bond, money market, etc.), share class and by the issuing fund family. Please refer to each fund’s prospectus for information specific to that fund and its related fees and expenses. Please also refer to the Mutual Fund Disclosure you will receive from your representative upon purchasing a new mutual fund for information related to your purchase.
Mutual Fund Share Classes, Sales Charges, Limits and Discounts
Class A Shares: Purchases are subject to a front-end sales charge which is deducted from the amount invested at the time of purchase. Class A shares typically have lower annual fees and expenses because the sales charge, which is used to pay commissions to financial institutions, such as Girard Investment Services, LLC, is deducted up front and not paid from fund assets. The upfront sales charge varies among different fund families but typically falls within a starting range of 3.75% to 5.75%. Stock funds typically start at the higher end of the range with bond funds toward the lower end. Discounts to the upfront sales charge also vary by fund family and are discussed further below. Class A shares also pay ongoing 12b-1 fees (service fees) to firms such as Girard and are deducted from fund assets, but the fee is lower than Class C shares and is typically around 0.25%. Class A shares with lower fees and expenses provide more value to its shareholders over longer periods of time. The firm imposes no purchase limits on Class A shares.
Class C Shares: Purchases are subject to a back-end sales charge which typically lasts up to 12 months. This means that investors will pay a surrender charge (typically 1%) if they sell their shares within one year of purchase. Class C shares also have higher annual fees and expenses because the ongoing 12b-1 fees (service fees) paid to financial institutions, such as Girard Investment Services, LLC, are higher than other share classes, typically around 1.00%, and are deducted from fund assets. Therefore, Class C shares may not provide as good a return as Class A shares over the long term. Clients will not receive a discount on their purchase, regardless of how much they invest. The Firm limits total purchases in Class C shares to $249,999 per fund family and an aggregate amount of $999,999 per household regardless of the number of fund families, or the limit specified in the prospectus, whichever is lower.
Class A and Class C shares are the most common share classes, but there may be other shares classes available. Please refer to each fund’s prospectus for more information including all fees and expenses.
Mutual Fund Discounts
Most mutual funds offer investors a variety of ways to qualify for breakpoint discounts on the sales charge associated with the purchase of Class A shares. In general, most mutual funds provide breakpoint discounts to investors who make large purchases at one time. The specific terms and conditions under which breakpoint discounts may become available are explained further below but are determined by each mutual fund family and can vary. You agree to review the individual fund prospectus and Statement of Additional Information for detailed information on ways to reduce or eliminate the sales charge. You understand that you are responsible for informing your Representative of all relevant facts about the investments you hold, so that your Representative may assist you in identifying and obtaining any reductions or waivers to which you may be entitled.
Class A shares purchases within the same mutual fund family provide a reduced sales charge for purchases above a certain dollar amount (“breakpoint”). Discounts to the upfront sales charge vary by fund family and type of fund (stock or bond) but typically start for investment amounts of $50,000 or more. Breakpoints are not available for investments in Class C shares. Also, investors that choose to allocate or “spread” their investments across more than one fund family will not receive a reduction in sales charges if they do no invest the minimum amount necessary with each fund family.
Rights of Accumulation
Many mutual funds allow investors to aggregate the value of previous purchases within the same fund family, with the value of a new purchase, to qualify for breakpoint discounts on Class A shares. Moreover, fund families may allow investors to count existing holdings in multiple accounts, such as IRAs or accounts at other broker-dealers, and holdings in accounts of certain related parties, such as spouses or children, to qualify for breakpoint discounts.
Letter of Intent
Most mutual funds allow investors to qualify for breakpoint discounts by signing a Letter of Intent, which commits the investor to purchasing a specified amount of Class A shares within a defined period of time, usually 13 months. For example, if you plan to purchase $50,000 worth of Class A shares over a period of 13 months, but each individual purchase would not qualify for a breakpoint discount, you could sign a Letter of Intent at the time of the first purchase and receive the breakpoint discount associated with $50,000 investments on the first and all subsequent purchases. Additionally, some funds offer retroactive Letters of Intent that allow investors to rely upon purchases in the recent past to qualify for a breakpoint discount. However, if you fail to invest the amount required by the Letter of Intent, the fund is entitled to retroactively deduct the correct sales charges based upon the amount you actually invested.
Variable Annuity Fees and Expenses
You acknowledge that when investing in a variable annuity (“VA”), you will incur fees and expenses associated with the VA. These fees and expenses include, but are not limited to, mortality and expense fees, administrative expenses, sub-account management fees, contract riders (Living Benefit or Death Benefit Riders if applicable), surrender charges and other expenses which will vary by product sponsor and individual product selected.
You further acknowledge that the fees associated with a variable annuity are typically higher than other types of investments and will erode the value of your account more rapidly than other types of investments and you have considered the impact these fees will have on the long-term performance and returns of the VA.
You understand that Girard and your Representative will receive up front and ongoing compensation, including commissions and 12b-1 fees (Service Fees). Variable annuities also typically pay a higher commission rate than other types of investments and do not offer breakpoints or volume discounts based on the amount invested as is the case with mutual funds. Because of this, please be aware that these factors create a conflict of interest when a variable annuity is recommended to you by your Representative as the recommendation of a VA could be based more on the compensation to be received rather than your actual needs.
Please refer to the product’s prospectus for information specific to that VA and its related fees and expenses. In addition, please refer to the Variable Annuity Disclosure you will receive from your representative upon purchasing a VA that will also contain information related to your purchase including fees, expenses and surrender charges. Investing in a variable annuity involves risk and you can lose money.
Switching Between Investments
It may not be advisable for you to switch or move assets from one variable product or mutual fund to another if it involves payment of additional up-front or contingent deferred sales charges (aka surrender charge), especially if this is done on a frequent basis. However, there may be circumstances in which it is reasonable to do so. Exchanges within the same mutual fund family may be available with no commission or sales charges and at reduced processing costs. Ask your Representative questions about the reasons why switching investments would be in your best interest and be sure to review the activity in your account including transaction confirmations and account statements. You are encouraged to contact Girard if you have any questions.
Brokerage Account Charges
Transaction charges (“ticket charges”) will apply to securities purchases, sales and exchanges conducted in a brokerage account. Additional account fees such as inactive account fees, account termination fees, statement or confirm mailing fees and other expenses will also apply to a brokerage account depending on the type of product in question. The amounts charged vary for mutual fund, stock and bond transactions. Factors that determine transaction charges include size of purchase, type of transaction, mutual fund family, representative and processing method (on-line/phone/systematic).
You further acknowledge and understand that mutual fund shares may be purchased directly from the mutual fund company without any sales charges on no-load funds, or any charges in excess of the amounts disclosed in the prospectus for mutual fund shares sold with a sales charge.
For more information on the charges associated with a brokerage account, please review your clearing firm fee schedule and account statements and confirmations. We also encourage you to ask your Representative or contact GIS directly.
Compensation and Conflicts of Interest
Girard and its Representatives receive revenue from the products and services provided to you through our firm. This revenue includes upfront sales charges (aka “sales load”) and ongoing 12b-1 fees (“Service Fees” or “Trail Commissions”) from mutual funds and variable annuities, commissions on stock and ETF transactions and “mark‐ups” or “mark downs” on bond transactions which are fees included in the price of the bond depending on whether you are buying or selling.
The amount of compensation we receive will vary depending upon various factors including, but not limited to, the type of investment selected, amount of the transaction and the product sponsor as outlined in the preceding sections of this agreement. You will also receive additional disclosures such as a prospectus (for mutual funds, ETFs, variable annuities), product specific disclosure (mutual funds and variable annuities), brokerage account fee schedule and account statements and confirmations. These disclosures will expand upon the fees and charges you will pay and/or complement the information provided in this agreement.
IMPORTANT NOTE ABOUT COMPENSATION
Girard and our representatives are compensated each time a new investment is purchased in your account (with limited exclusions such as internal exchanges within a single mutual fund family). Furthermore, variable annuities typically pay a higher commission rate than other types of investments and do not offer breakpoints or volume discounts based on the amount invested as is the case with mutual funds. We are also paid ongoing 12b-1 fees received from mutual funds and variable annuities that pay such fees. This gives us an incentive to place you in products that pay us higher 12b-1 fees and will typically have higher fund expenses which you will pay. These incentives present a conflict of interest as the recommendation, and frequency of recommendations, of an investment product could be based on the compensation to be received rather than your actual needs. We encourage you discuss this with your representative.
Your Representative may also be an Investment Advisor Representative of an affiliated investment advisor company and this affiliated relationship presents a conflict of interest. Through this affiliation, your representative may be in a position where he or she can receive fees and compensation payouts that may be higher at one entity over the other. As such, you should discuss this with your representative to help assure you are selecting the right entity to meet your financial needs.
Reimbursement of Expenses
As described below, we may receive additional payments for marketing purposes from certain Product Sponsors. GIS does not share these additional payments with its Representatives. Representatives of Product Sponsors, often referred to as “wholesalers,” work with GIS and Representatives to promote their products. Consistent with rules set out by FINRA, these wholesalers and/or their firms may pay or make contributions to GIS for training or education of Representatives. Product Sponsors may also make payments to GIS to promote the marketing of their products to clients which includes seminars for clients and potential clients. These firms may also invite Representatives to due diligence or continuing education meetings regarding their products where they pay the cost of our representative to attend.
It is GIS policy not to promote any fund family or insurance carrier’s products over another based solely on any additional payments or other considerations that might be received from the sale of their products. Sponsors of these products are granted equal access to our Representatives to promote their products, and Representatives are encouraged to make recommendations to clients based on the clients’ needs and objectives. However, receipt of such payments could create a greater incentive for our firm and your Representative to recommend products that provide such payments to our firm.
In an effort to mitigate any conflict of interest this may create, Girard does not promote or engage in any sales contests for our Representatives. Also, attendance at product sponsor educational meetings, where the cost is paid by the product sponsor, requires firm approval by the Compliance Department before a Representative may attend. You are encouraged to talk with your Representative about any fees or compensation they receive from the sale of investment products as the receipt of compensation does present a conflict of interest.
Revenue Sharing with Our Clearing Firm
Girard receives revenue from our clearing firm in the form of a fixed dollar amount of the IRA maintenance fee and account transfer fee for non-retirement accounts.
POLICIES ON TRANSACTIONS IN BROKERAGE ACCOUNTS
Margin Account (Requires Separate Application)
A margin account lets you borrow money from the Clearing Firm using eligible securities in your account as collateral. A margin account is designed primarily to finance additional purchases of securities, although it can also provide overdraft protection for your cash management activities. GIS does not make any recommendations to purchase securities on margin and any margin accounts opened at the firm are primarily for overdraft protection purposes if the account has check writing privileges. Consult your Representative if you require information regarding margin accounts and the associated benefits and risks.
Credits to Your Account
Any new deposits (including checks) and any proceeds from transactions are credited promptly to your core account. If you have a money market fund for your core account investment vehicle, all core account credits will be swept automatically into that fund daily for amounts of $1.00 or more, weekly for lesser amounts. All money market investments must meet the fund’s investment minimums. If you have a money market as your core account investment vehicle, amounts held earn dividends, as described in the applicable fund’s prospectus. If in the future you have a different money market fund for your core account investment vehicle, these provisions will still apply. Note that while incoming checks and electronic funds transfers (EFT’s) will begin to earn dividends or interest upon deposit, you may have to wait up to eight (8) business days before being able to draw on the proceeds (regardless of your core account investment vehicle).
Debits to Your Account
All debits are accumulated daily to your account and are paid to the extent that sufficient funds are available. As an account owner, you are responsible for satisfying all debits on your account, including any debt still owed after all assets have been removed from an account, any interest (at prevailing margin rates) that has accrued on that debt, any late charges arising from your failure to pay for securities transactions in full by the settlement date, and any costs (such as legal fees) that we or the Clearing Firm incur in collecting the debt.
When multiple debit items become payable at the same time, these items will be paid in the following order:
- Securities transactions (including any margin calls) and any account fees.
- Your Debit card transactions.
- Checks written against account.
When settling debits against your account, it is the Clearing Firm’s policy to turn to the following sources (collectively called your “available balance”), in this order:
- Any cash available in your account without incurring margin interest charges (including core account balances).
- If you have a margin account, any margin credit available.
If necessary, we may turn to the following additional sources to settle a debit involving a securities transaction:
- Any shares in another money market fund, including any in another non-retirement account with the same registration (which you authorize us to sell for this purpose when you sign the application).
- Any securities in this or any other account furnished by us in which you have an interest.
Resolving Unpaid Debts or Other Obligations
You will maintain enough assets in your account to satisfy all obligations as they become due, and you authorize us or the Clearing Firm to take whatever steps we or the Clearing Firm may consider necessary to resolve unpaid debts or other obligations. If your available balance is not sufficient to satisfy any debt or obligation, we and the Clearing Firm reserve the right to take action as we see fit, including any of the following:
- Decline to honor the debit, which may result in fees (such as a returned check fee) or other consequences for you.
- If you have a margin account and the unsatisfied debit is for a securities purchase, you authorize us to draw on any available assets in any account you maintain with us as otherwise authorized by law.
- If you have a margin account, we or the Clearing Firm may transfer to that account any unresolved debit from other accounts you maintain with us.
In the event funds or securities are deposited to your account due to an error by us or the Clearing Firm, we reserve the right to debit your account for any such assets. If such funds or securities are subsequently removed by you from your account, we reserve the right to take any action necessary, including legal action, to retrieve assets to which you were not entitled.
Transaction Settlement Deadlines
Unless notified to the contrary, you need to pay for all transactions by 2:00 p.m. Eastern Time on the settlement date and deliver all securities in time for us to receive them one business day before the settlement date. We and the Clearing Firm reserve the right to cancel or liquidate, at your risk, any transaction not settled in a timely way.
Interest Charges in Cash Accounts
As an introducing broker/dealer we do not extend credit to customers in connection with the purchase of securities. Any extension of credit for such purposes must be done pursuant to a margin agreement with the Clearing Firm. In the event you create a debit balance in a cash account from failure to make payment in full for securities purchased by settlement date, from failure to timely deliver securities sold, from proceeds of sales paid prior to settlement date or for other charges which may be incurred in your account, we reserve the right to charge you interest on such debits until satisfied by you.
Cash accounts with debit balances may be subject to interest charges of up to 3.00 percentage points above the Pershing Base Lending Rate (PBLR). The rate of interest charged to your account will be changed without notice in accordance with changes in the PBLR and in your average debit balance. Your monthly or quarterly statement will show this dollar amount of interest and the interest rate charged to your account.
You agree to comply with all applicable laws and regulations concerning trading in restricted securities and securities of issuers of whom you are an affiliate.
Bank Wires and Electronic Fund Transfers (“EFT”) Transactions
Bank wire transactions are normally executed the business day after you request them. EFT transactions are normally executed within three (3) to seven (7) business days of your request. The two accounts involved in an EFT transaction must have at least one owner’s name in common (and that name must match exactly). To send and receive EFT transactions, your bank must be a member of the Automated Clearing House (“ACH”) system.
For EFT transactions, you hereby grant us limited power of attorney for purposes of redeeming any shares in your accounts (with the right to make any necessary substitutions), and direct us to accept any orders to make payments to an authorized bank account and to fulfill these orders through the redemption of shares in your account. You agree that the above appointments and authorizations will continue until either the account is terminated, we receive written notice of any change, or we have sent 30 day’s written notice to your account’s address of record indicating that we will cease to act as agents to the above appointments.
In the event that any securities in your account become non-transferable, the Clearing Firm may remove them from your account without further notice. Non-transferable securities are those where transfer agent services have not been available for six or more years. A lack of transfer agent services may be due to a number of reasons, including that the issuer of such securities may no longer be in business and may even be insolvent.
Please note the following:
- There are no known markets for these securities.
- We are unable to deliver certificates to you representing these positions.
- These transactions will not appear on Form 1099 or any other tax reporting form.
- The removal of the position will not be reported as a taxable distribution and any reinstatement of the position will not be reported as a contribution.
- If transfer agent services become available sometime in the future, the Clearing Firm will use its best efforts to have the position reinstated in your account.
- Positions removed from your account will appear on your next available account statement following such removal as an “Expired” transaction.
NOTICES AND DISCLOSURES
Brokerage Account Administration
Financial Industry Regulatory Authority (FINRA) Rule 4311 requires that we identify the various account administrative functions that we and the Clearing Firm each agree to perform. Below is a summary of this information; for a more complete description, contact us. As your broker/dealer, we will:
- Open, approve, and monitor your brokerage account.
- Transmit accurate, timely instructions to the Clearing Firm regarding your brokerage account. We reserve the right to refuse any orders and you will not hold us liable for any loss you incur due to our refusal to permit any transactions.
- Determine the suitability of any investment recommendations and advice made by a duly authorized representative.
- Operate your brokerage account in compliance with applicable laws and regulations.
- If you have a margin account, advise you of margin requirements and ensure that your account remains in compliance with all applicable federal, industry, and the Clearing Firm margin requirements.
- Maintain proper books and records of all services we perform for you.
At our direction, The Clearing Firm will:
- Execute, clear, and settle transactions that we process through them.
- Send you transaction confirmations and periodic brokerage account statements, if we do not do this ourselves.
- Act as custodian for all funds and securities they receive on your behalf.
- Carry out our instructions regarding the transactions, and the receipt and delivery of securities, on your brokerage account
- Extend margin credit, if you have applied, and been approved, for margin borrowing.
- Maintain proper books and records of all services they perform in connection with your account.
Choice of Marketplace and Routing of Brokerage Account Orders
When securities may be traded in more than one marketplace, the Clearing Firm may use its discretion in selecting the market in which to place your order. Brokerage orders (including those generated by reinvested dividends) are routed through the Clearing Firm, who in turn sends orders to various exchanges or market centers for execution. The Clearing Firm’s order-routing policies are designed to result in transaction processing that is favorable for you.
Note that we and the Clearing Firm may receive monetary payments or other consideration (such as financial credits or reciprocal business) for directing equity trades to particular broker/dealers or market centers for execution.
Business Continuity Plan Disclosure
Girard Investment Services, LLC has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.
Contacting Us – If after a significant business disruption you cannot contact us as you usually do at 215-721-2112, you should call our alternative number 215-721-2400, or email us at email@example.com
. If you cannot access us through either of those means, you should contact our clearing firm, Pershing, LLC, at 201-413-3333, or online at www.pershing.com
for instructions on how it may process cash disbursement, security transfers, and trade-related transactions. Customers who maintain an account directly with a mutual fund or annuity company can access their funds directly by using the contact information provided on their account statement(s).
Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.
Our business continuity plan addresses: data backup and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.
Our clearing firm, Pershing, LLC backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments within four (4) hours. Your orders and requests for funds and securities could be delayed during this period.
Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we will transfer our operations to a local site when needed and expect to recover and resume business within four (4) hours. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area and recover and resume business within 48 hours. In either situation, we plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our web site, www.meetgirard.com
or our customer emergency number, 215-721-2400 regarding how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customer’s prompt access to their funds and securities.
Limits of Responsibility
Although all entities that provide services to your account strive to ensure the quality and reliability of those services, neither we nor the Clearing Firm can be responsible for the availability, accuracy, timeliness, completeness, or security of any service related to your account. These services are provided “as is” and “as available.” You therefore agree that we and the Clearing Firm are not responsible to you for any losses (meaning claims, damages, actions, demands, investment losses, direct or indirect, incidental, special, punitive, consequential, or other losses, as well as any costs, charges, attorneys’ fees, or other fees and expenses) that you incur as a result of conditions beyond our control or any agreement between the Parties. This includes, for example:
- Any action that is done in accordance with the procedures described in this Agreement or an applicable mutual fund or securities prospectus or other investment description.
- The acceptance and processing of any order or transaction placed in your account, whether received electronically or through other means, as long as the order appears to be authentic.
- Investment decisions or instructions placed in your account or other such actions attributable to you or any authorized person including your Representative.
- Occurrences related to governments or markets, such as rules and regulations, restrictions, suspensions of trading, bank closures or bank regulatory, legal or other limitations or restrictions or high market volatility or trading volumes.
- Uncontrollable circumstances in the world at large, such as wars, terrorist activities, earthquakes, power outages, or unusual weather conditions.
- Occurrences related to computers and communications, such as a network or systems failure, a message interception, or an instance of unauthorized access or breach of security over which we have no control or reasonable ability to know it has occurred (such as theft of your personal information by a third party, spyware or malware on your computer) or other actions or inactions by you resulting in unauthorized activities in your account.
You agree to indemnify us from, and hold us harmless for, any losses (as defined in Limits of Responsibility) resulting from your actions or failures to act, whether intentional or not, including losses resulting from actions taken by third parties on your behalf. Beyond taking reasonable steps to verify the authenticity of instructions, we have no obligation to contact you with regard to the purpose, wisdom, or propriety of any instruction we receive from you or your authorized agents.
TERMS CONCERNING THIS AGREEMENT
This Agreement is the only agreement between you and us, concerning its subject matter and covers all brokerage and non- brokerage accounts that you, at whatever time, open, reopen, or have opened with us. In addition, if you have already entered into any agreements concerning services or features that relate to this account, or if you do so in the future, this Agreement incorporates by reference the terms, conditions, and policies of those agreements. In the case of any conflict between this Agreement and an agreement for a particular service or feature, the service or feature agreement will prevail.
Notwithstanding contrary statements from third parties (such as Product Sponsor companies), we or the Clearing Firm can terminate your account, this Agreement or any account feature, at any time or for any reason - including reasonable belief that a version of this Agreement containing unauthorized changes has been used - upon written notice to you.
You can close your account, or terminate any optional feature at any time, by notifying us in writing or calling us and providing us with your instructions. When an account is closed, all debit cards, check writing, and other features associated with it are terminated. The bank associated with your debit card and check writing services cannot close your brokerage account but can terminate its debit card or check writing services. Regardless of how or when your account is closed, you will remain responsible for all unpaid obligations of your account. This includes charges, debit items, or other transactions you initiated or authorized, whether arising before or after termination, as well as any fees incurred but not yet charged to your account. Payment for these obligations will be deducted from your final account balance. If we are unable to contact you for a certain period of time (the period of time is specified by applicable state laws and may vary from state to state) your account balance and any un-cashed checks or outstanding credits may be transferred to a state unclaimed property administrator.
Governing Laws and Policies
With respect to matters between you and us, this agreement and its enforcement shall be governed by the laws of the State of Pennsylvania, but not its conflicts of law provisions. With respect to matters involving Pershing, this Agreement and its enforcement shall be governed by the laws of the State of New York. In the event Pershing is made a party to a claim initiated by you, either as a respondent or cross respondent, Pershing shall have the right to require that all issues be adjudicated under the laws of the State of New York.
We may amend this Agreement at any time. This may include changing, dropping, or adding fees and policies, changing features and services or the entities that provide them, and limiting the usage or availability of any feature or service, within the limits of applicable laws and regulations. The most current version of this Agreement can be obtained by contacting your representative or GIS directly as indicated under the section entitled “Notices.”
No provision of this Agreement can be amended or waived except in writing by an authorized representative of Girard. Your Representative is not authorized to act on behalf of GIS to change any terms of this Agreement. We or the Clearing Firm may transfer our interests in your account or this Agreement to any of our successors and assigns, whether by merger, consolidation, or otherwise. You may not transfer your interests in your account or Agreement except with our prior written approval, or through inheritance, corporate dissolution, or similar circumstance, as allowed by law, in which case any rights and obligations in existence at the time will accrue to, and be binding on, your heirs, executors, administrators, successors, or assigns.
We or the Clearing Firm may enforce this Agreement against any and all account owners. Although we or the Clearing Firm may not always enforce certain provisions of this Agreement, both parties retain the full right to do so at any time. If any provision of this Agreement is found to be in conflict with applicable laws, rules, or regulations, either present or future, that provision will be enforced to the maximum extent allowable, or made to conform, as the case may be. However, the remainder of this Agreement will remain fully in effect. No waiver of any provision of this Agreement will be considered a waiver of any other provision.
If for any reason (such as the termination of a contract between us and the Clearing Firm) your account is held directly by the Clearing Firm, it may be restricted, and there may be new or different fees and commissions. Examples of restrictions include the ability to place sell orders only and the loss of electronic trading. Although there is no minimum balance requirement beyond those set by industry regulation, we may review your account for activity and may charge an inactivity fee, close your account, or transfer your account to another provider. We will notify you in writing before we close or transfer your account. If your account is transferred, it may have different fees, features and terms.
ARBITRATION AGREEMENT AND DISCLOSURE
THIS AGREEMENT CONTAINS A PREDISPUTE ARBITRATION CLAUSE. BY SIGNING AN ARBITRATION AGREEMENT, THE PARTIES AGREE AS FOLLOWS:
- 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 PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED.
- ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING; A PARTY’S ABILITY TO HAVE A COURT REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY LIMITED.
- 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 HEARING DATE.
- THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
- 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.
- THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT.
ANY CONTROVERSY BETWEEN YOU AND US SHALL BE SUBMITTED TO ARBITRATION BEFORE AND ONLY BEFORE THE FINANCIAL INDUSTRY REGULATORY AUTHORITY. NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PREDISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE CLASS ACTION; OR WHO IS A MEMBER OF A PUTATIVE CLASS 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. THE LAWS OF THE STATE OF PENNSYLVANIA GOVERN.