Our Relationship With Mutual Fund Companies, Insurance Companies and Other Product Sponsors
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As representatives of an independent broker/dealer, First Allied financial advisors have the ability to build investment portfolios based on the specific needs and goals of each individual client. First Allied offers a wide variety of approved products and programs including stocks, bonds, options, mutual funds, annuities, life insurance, alternative investments, college savings plans, and asset management programs. Because there are hundreds of investment choices within this universe of approved products, First Allied’s marketing resources are focused on a select group of companies (product sponsors listed below) that offer a broad spectrum of products and meet First Allied’s due diligence criteria. The product sponsors have greater access to our advisors to market, train and educate them on their products and industry related topics with the intent to better serve their mutual clients.
It is important to know that although the product sponsors pay compensation to First Allied and/or its affiliates, clients do not pay more to purchase these products through First Allied than they would normally pay to purchase them through another broker/dealer. The payment of this additional compensation to First Allied by these product sponsors may pose a financial incentive for us to promote certain products over other products, although we believe that these arrangements do not compromise the advice your advisor provides to you.
First Allied is providing the following information to help you better understand the potential conflicts of interests regarding compensation that First Allied receives from certain product sponsors whose investments we offer to you.
The additional amounts that these product sponsors pay First Allied vary from one sponsor to another and from one product to another. These payments can be calculated the following ways:
- As a fixed annual or one-time amount,
- As a percentage of sales ranging from .5 percent to 1.5 percent (which would be from $5 to $150 on a $10,000 investment)
- As a percentage of our customers’ asset invested in the products ranging to a maximum of .10 percent (which would be $10 on a $10,000 investment),
- As a combination of these. The product sponsors who make these payments and the formulas by which they compensate First Allied are subject to change going forward.
All of these above-referenced payments are in addition to the sales charges disclosed in the offering materials of the investments offered by the product sponsors, and those offering materials have additional information about these payments.
Companies that are not product sponsors may at times send First Allied payments in recognition of our sales and marketing efforts, and may have additional opportunities to provide marketing services to our advisors. In addition, both product sponsors and other companies may pay marketing allowances to First Allied in connection with the sale of certain products and for training and educational meetings for our advisors. Both product sponsors and other companies may also reimburse up to 100 percent of the cost of due diligence, training and education/joint marketing meetings for our advisors, as permitted by industry rules. Sales of any products by First Allied advisors may qualify them for additional cash and non-cash compensation that may include support for their business activities, attendance at seminars, conferences and entertainment. Additionally, some investments, whether they are issued by a product sponsor or not, may pay higher rates of compensation than others (for example, commissions on equities are usually greater than those on bonds, and private placement offerings generally carry higher commissions than investments in publicly traded securities).
First Allied product sponsors are listed below in alphabetical order:
Advanced Equities, Inc.
AEI Real Estate Fund, LLC
Alger Funds
Allianz Global Investors
Allianz Life Insurance
Atlas
Atel
AXA Equitable
Brandon Capital
Calamos Funds
CNL Real Estate
Cole Real Estate
Crump
Curian
DWS
Eaton Vance
Empire
Federated Investors
Genworth
Griffin Capital Securities
Guardian Life
Hartford
Hatteras
Hines Real Estate
ICON Capital Corporation
Inland Securities Corporation
ING North American Ins. Corp.
Ivy Funds
Jackson National
KBS
Lincoln Financial
Lord Abbett
Loring Ward
Manning Napier
Met Life Investors
Nationwide
Pacific Life Insurance Co.
Pro Funds
Prudential
Reassure of America
Riversource Annuities
RS Funds
Steadfast
Superfund
Texas Energy
USA Advanced Planners
Vanguard*
Waveland Securities
Wells Investment Securities, Inc. Dividend Capital
WP Carey
* Flat Fee Only
Co-Marketing Arrangement with Vanguard
First Allied has entered into a co-marketing arrangement with Vanguard Marketing Corporation (VMC). VMC is the principal underwriter for the Vanguard funds and in that capacity performs and finances marketing, promotional and distribution activities (marketing and distribution activities) that are primarily intended to result in the sale of the funds’ shares. VMC’s marketing and distribution activities are conducted on an “at cost” basis in accordance with the terms and conditions of a 1981 exceptive order from the Securities and Exchange Commission, which permits the Vanguard funds to internalize and jointly finance such activities.
VMC performs most marketing and distribution activities itself but may agree to share the costs and performance of certain marketing and distribution activities in concert with a financial service provider (a co-marketing arrangement). Financial service providers include, but are not limited to, investment advisers, broker-dealers, financial planners, financial consultants, banks, and insurance companies.
VMC’s marketing arrangements may include, but are not necessarily limited to, the following: providing advertising and promotional materials; providing products or services that assist investors or financial service providers in the investment decision-making process; or sponsoring, jointly sponsoring, financially supporting or participating in conferences, programs, seminars, presentations, meetings or other events, such as industry conferences, prospecting trips, due diligence visits, training or education meetings and sales presentations.
VMC, as a matter of policy, does not pay asset-based fees, sales-based fees or account-based fees to financial service providers in connection with its co-marketing arrangements. VMC policy also prohibits co-marketing arrangements that are intended, designed or likely to compromise suitability determinations by, or the fulfillment of any fiduciary duties or other obligations that apply to, financial service providers. Nonetheless, VMC’s marketing and distribution activities are primarily intended to result in the sale of the funds’ shares, and as such its activities, including marketing arrangements, may influence participating financial service providers (or their representatives) to recommend, promote, include or invest in a Vanguard fund (including ETF shares).
Additional information about VMC’s marketing and distribution activities, including co- marketing arrangements, is available in the Statement of Additional Information for each Vanguard fund (including those issuing ETF shares).
The material provided herein is for disclosure and informational purposes only and is neither a solicitation to invest nor an offer to buy or sell securities. Any such solicitation or offer will be made only after a review of an investor’s personal financial situation and only in those jurisdictions where permitted by law and upon delivery of required documentation.
Investors should carefully consider the risks, charges and expenses of a mutual fund or variable annuity prior to investing. This and other important information can be found in the fund’s prospectus or variable annuity sub-account prospectus. Contact your financial advisor for a copy and always read it carefully before investing.
VENTURE CAPITAL AND PRIVATE EQUITY INVESTMENTS ARE EXTREMELY SPECULATIVE, CARRY A HIGH DEGREE OF RISK AND ARE SUITABLE ONLY FOR SOPHISTICATED AND “ACCREDITED” INVESTORS WHO CAN TOLERATE THE LOSS OF THEIR ENTIRE INVESTMENT. PLEASE SPEAK WITH YOUR FINANCIAL CONSULTANT FOR MORE INFORMATION REGARDING THESE QUALIFICATIONS AND INVESTMENTS.
Traded and Non-traded Real Estate Investment Trusts (REITs) involve special risks, which include: limited liquidity and demand for real property, changes in law, tenant turnover and defaults, competition, casualty losses and possible use of leverage. Values fluctuate based on economic, environmental and other facts. An investment in real estate or REITs may not be suitable for all investors. There are no assurances that the investment objectives of any real estate program will be obtained.
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