Investments That Outperform
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You (the 'Client') and Hedgewise Inc., a California corporation and registered investment adviser, agree to enter into a financial advisory relationship which will allow Hedgewise to manage your brokerage account(s) at such securities broker as Hedgewise may designate (the 'Broker'), which is not affiliated with Hedgewise. This Agreement is effective as of the first day such a brokerage account is opened and is ready to receive trading instructions from Hedgewise (the 'Effective Date') based upon the investment plan, as described in Item 4, selected by the Client (the 'Plan'). Client and Hedgewise agree as follows:
Client retains Hedgewise to assume discretionary authority over Client's securities account(s) (the 'Account'). Hedgewise shall manage the Account by issuing trading instructions to Broker to cause such Account to purchase and sell financial instruments, as described in Item 7, pursuant to the Plan selected by Client on www.hedgewise.com (the 'Site') or as communicated to and confirmed by a Hedgewise advisor. Client has the right to change the selected Plan up to one time per week via the Site or by contacting a Hedgewise advisor, after which Hedgewise will issue new trading instructions to Broker in a timely manner. Client grants to Hedgewise full discretion as to all investment decisions regarding the Account.
Hedgewise has a fiduciary duty to Client, which requires that any investment decisions made be in the Client's best interest and consistent with the Client's investment objectives and goals.
Client may not place any limitations or restrictions on Account.
Nothing in this Agreement grants Hedgewise the authority to take custody or possession of any of Client’s assets, except for the direct deduction of Hedgewise fees from Accounts as provided in Item 6.
In order to grant Hedgewise discretionary authority to manage securities in the Account and to directly deduct Hedgewise fees from Account, Client must execute an agreement with the Broker which grants limited power of attorney to Hedgewise.
Client acknowledges that all securities involve risk and may result in loss. There can be no assurance that any investment mix will perform in any predictable manner. Past performance is no guarantee of future returns. No data or exhibit provided by Hedgewise indicates otherwise.
Hedgewise offers a variety of investment products ('Products') which seek to fulfill different investment goals. Client acknowledges that sufficient information has been provided to understand each Product, its associated risks, and whether it is suitable to meet his or her personal investment goals. Client understands that any information furnished by Hedgwise provides no guarantee of returns or limit of downside potential. The Client may select from one or more of these Products to create a personalized investment Plan. Client is given full discretion to change this Plan up to one time per week via the Site or by contacting a Hedgewise advisor.
Hedgewise may provide retroactive model simulations ('Models') on the Site which are developed with the benefit of hindsight. The methodology used to derive any Model performance is identical to that currently being used to manage any client portfolio utilizing the associated Product. Models include all Hedgewise fees and an estimate for commissions, which is consistent with commissions charged to clients since Hedgewise's inception in 2014. Models may be based on index price levels, such as the S&P 500, which cannot be directly traded and do not include live market costs such as interest, spreads, ETF management fees, or tracking error. All estimated dividends are included and assumed to be reinvested monthly. The implementation of the Model may require the use of derivatives, such as options and futures contracts, which are not accounted for in the simulation. There is no guarantee that Model performance could have been replicated in a real portfolio at any point.
In the application of the Model, Hedgewise must take into account many factors, including market liquidity, spreads, management fees, implied interest, commissions, taxes, dividends, margin requirements, client portfolio size, and client account type. Client understands that Models present no guarantee of performance or downside potential.
Hedgewise charges a percentage of each client's Net Liquidation Value ('NLV') as an annualized percentage, applied on a daily basis (252 business days are applied in this calculation method). NLV is equal to: Total cash value + stock value + securities options value + bond value + fund value. Note that NLV explicitly includes the value of any accounts for which Hedgewise is providing services, even if such account is not being directly managed. The annualized percentage fee varies depending on Assets Under Management.
| Assets Under Management (AUM) | Annual Fee |
|---|---|
| $100,000 - $1,000,000 | 0.70% |
| $1,000,000 - $2,000,000 | 0.60% |
| $2,000,000 and over | 0.50% |
Example: Your previous day ending NLV is $100,000. Your fees for the given day will be: 0.7%*$100,000/252=$2.78.
Note that fee discounts apply to all funds under management. For Investment Advisers, total AUM includes all sub-advisory accounts managed with Hedgewise.
For smaller accounts, Hedgewise must charge a minimum monthly fee of $19.99 to cover basic administrative and trading costs. This minimum only applies if the annual fee calculation as described above falls below this amount.
Hedgewise does not charge any account sign-up or termination fee. All accounts opened directly with Hedgewise will not be charged a monthly minimum or IRA custodial fee. Hedgewise will also pay for or reimburse all trading commissions (excepting sub-advisory clients and/or clients using "Alpha" products, such as Long-Short Oil). Clients are responsible for all other expenses related to trading the assets in their account, including, but not limited to, ETF fees, bank service fees, and debit balances.
Sub-advisory accounts are not eligible for fee reimbursement, including trading commissions, monthly minimum fees, and IRA custodial fees.
Fees will be deducted directly from a client's account in the month following the month which just ended, or immediately upon termination of an account for the amount of fees outstanding. Upon request, clients may be invoiced separately.
Hedgwise reserves the right, in its sole discretion, to negotiate, reduce or waive the advisory fee for certain Client Accounts for any period of time determined by Hedgewise. In addition, Hedgewise may reduce or waive its fees for the Accounts of some Clients without notice to, or fee adjustment for, other Clients.
Client gives Hedgewise permission to directly deduct advisory fees monthly from Account in conjunction with Broker. Upon deduction of fee, Hedgewise will provide Client an itemized invoice which includes the formula used to calculate the fee, the amount of assets under management the fee is based on, and the time period covered by the fee.
Client shall be given thirty (30) days’ prior written notice of any change in fees.
Client acknowledges that lower fees for comparable services may be available from other sources.
Client grants Hedgewise the authority to trade stocks, bonds, exchange-traded funds, exchange-traded notes, futures contracts, and options contracts, including the writing of naked puts or calls, in the Account. Client acknowledges the risks associated with trading and in particular that of trading futures and options contracts, as described more fully in Form ADV Part 2A.
Not all Accounts are eligible to trade certain kinds of options and futures contracts (such as retirement accounts), and some accounts may be too small to justify the use of options and futures contracts given their minimum size. There may also be instances in which the options and futures contracts available do not generate sufficient leverage to achieve a desired effect or level of risk. In the case of any of these limitations, a client may not be able to use specific Products or some features of specific Products. Hedgewise will notify Client of such limitations in a timely manner and provide information regarding their nature and impact.
Broker has responsibility for all official Client reporting, including account and tax statements. Hedgewise may provide additional reports but assumes no liability for their accuracy. Clients are urged to compare Hedgewise reports to those provided by the Brokerage and to report any inconsistencies to Hedgewise. The assets in the Account will be valued by Broker as the Account custodian.
Except as required by law or requested by regulatory authorities, Hedgewise agrees to maintain in strict confidence all of Client’s non-public personal and financial information that Client furnishes to Hedgewise, except for information that Client explicitly agrees to share publicly. Client acknowledges receipt of Hedgewise’s Privacy Policy available here.
The Account shall be responsible for all expenses related to trading the assets of such Account with the exception of those discussed in Item 6, including, but not limited to, ETF fees, bank service fees, and debit balances.
Client recognizes that Hedgewise may simultaneously place similar trades across many client accounts. Such trading activity may cause the price of an asset purchased on Client's behalf to be higher than it would be absent this activity. Hedgewise may offer different advice to different clients based on their chosen Plan and financial profile.
Client must open and maintain account with Broker designated by Hedgewise for the execution of securities transactions and custodial services. Hedgewise may receive certain administrative benefits from the Custodian that enable Hedgewise to provide the Client with advisory services. Client may not necessarily obtain commission rates and execution as favorable as those that would be obtained if Hedgewise was able to place transactions with other broker-dealers.
In the interest of better trade execution, Hedgewise may, but is not required to, aggregate orders across client accounts. This may result in lower overall trading costs for clients. However, Hedgewise is extremely cautious with the oversight of trading execution and may prefer to execute trades individually for each client to ensure no errors are made, even if it results in additional transaction cost.
The execution and delivery of this Agreement by Client shall constitute the representations by Client that the terms hereof do not violate any obligation by which Client is bound, whether arising by contract, operation of law or otherwise. Client will indemnify Hedgewise from any liability or expense resulting from a breach of Client’s representations. Hedgewise is responsible only for the Account and not for the diversification or prudent investment of any outside assets of the Client.
Hedgewise does not have any authority to vote client securities and does not direct clients to vote in a particular solicitation. Clients will receive any voting proxies or other solicitations directly from their custodian.
Client shall indemnify Hedgewise from any and all claims arising from an action taken by a custodian, broker, agent or other third party selected by Hedgewise in a commercially reasonable manner or selected by Client, except such as arise from Hedgewise's breach of fiduciary duty to Client.
Client acknowledges electronic delivery of Hedgewise’s brochure that would be required to be delivered under the Advisers Act (including the information in Part 2 of Hedgewise’s Form ADV), which is available on the Site and provided here by link: Form ADV Part 2A, Form ADV Part 2B
Client has reviewed the Site on or after March 15, 2016, and is not relying on any previous version of the Site in its consideration of the Hedgewise service.
This Agreement supersedes all prior or contemporaneous written or oral negotiations, correspondence, agreements and understandings.
This Agreement shall continue in effect until terminated by either party at any time. No assignment of the Agreement by Hedgewise shall be effective without the prior written consent of Client. Client may terminate the Agreement within five (5) business days of signing, without penalty, and with full refund. Upon termination, Hedgewise will immediately cease management of Account and relinquish all authority upon the final collection of any outstanding Hedgewise fee.
This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of California.
Hedgewise certifies that it has disclosed any material conflicts of interests to Client in writing via this contract and Form ADV Part 2A.
By checking the box and typing your name in the space labeled 'SIGNATURE' below, which shall constitute your legal signature, you confirm that you have read and understood each and every term set forth above, that the above representations and the information you provide below are accurate, that you have the authority to sign this form, and that you agree to be bound by the above contract with Hedgewise, Inc.
I agree to sign this contract as stated
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