FIDUCIARY RESPONSIBILITY

The term "fiduciary" comes from the Latin word "fides" or "fiducia" meaning trust and generally to a business or person who may act for another with total trust, good faith, and honesty who has the complete confidence of that person. At Schmitz Capital Partners, this principle is a core value, guiding all of our actions.

In the finance world, A Fiduciary is more specifically defined as someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility and is required by law to always act in the best interests of their client, beneficiary, or retirement plan participant. A financial advisor held to a Fiduciary Standard occupies this position of special trust and confidence when working with a client. The anti-fraud provisions of the Investment Advisers Act of 1940 and most state laws impose a duty on investment advisers to act as fiduciaries in dealings with their clients. As A Fiduciary, the financial advisor is required to act with undivided loyalty to the client, meaning the adviser must hold the clientís interest above its own in all matters. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest. However, there are some conflicts that will inevitably occur, such as a person being registered as a securities agent as well as an adviser. In these instances, the adviser must take great pains to clearly and accurately describe those conflicts and how the adviser will maintain impartiality in its recommendations to clients

When choosing an advisor it is important to know that they are a True Fiduciary. A broker, on the other hand, is individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor and is held to a "suitability" standard (far less stringent than a Fiduciary Standard).

Schmitz Capital Partners is a Registered Investment Advisor, which means we are required by law (anti-fraud provisions of the Investment Advisers Act of 1940) to act in our clients best interests. However, our Fiduciary Policy goes beyond just legal obligations. Since a primary factor in determining SCPís success comes from our ability to offer fair and unbiased advice we embrace and practice the SECís Fiduciary Duties, but have supplemented that with our own internal SCP Fiduciary Promise.

SEC FIDUCIARY DUTIES

1) Make suitable investment recommendations independent of outside influences
2) Select broker-dealers based on their ability to provide the best execution of trades for accounts where the
adviser has authority to select the broker-dealer
3) Make recommendations based on a reasonable inquiry into a clientís investment objectives, financial
situation and other factors
4) Always place client interests ahead of its own

SCP FIDUCIARY PROMISE

1) Place interests of the client first
2) Act in utmost good faith and undivided loyalty
3) Provide full and fair disclosure
4) Act diligently and exercise competence
5) Never mislead clients
6)Expose all conflicts of interest in a full and fair manner

Additionally, the following language is actually included directly in our SCP Registered Investment Adviser Written Supervisory Policies and Procedures Manual.

An Advisory Representative is a fiduciary who must take into consideration his client's interests and act in the best interests of the client. An Advisory Representative is prohibited from engaging in any activity that is in conflict with the interests of the client. As a fiduciary, the Advisory Representative has the obligation to deal fairly with the client. Advisory Representatives have the following responsibilities when working with a client:

  1. To render disinterested and impartial advice;
  2. To make suitable recommendations to clients based on the client's needs, financial circumstances and investment objectives;
  3. To exercise a high degree of care and diligence to insure that information is presented in an accurate manner and not in a way to mislead;
  4. To have reasonable basis, information and understanding of the facts in order to provide appropriate recommendations and representations;
  5. Disclose any conflict of interest in writing;
  6. Treat clients fairly and equitably; and
  7. Obtain best execution when conducting client transactions.

Advisory Representatives must be aware that a breach of the Advisory Representative's fiduciary obligations is deemed a violation of the anti-fraud provisions of the Adviser's Act. Section 206 of the Investment Advisers Act prohibits the Adviser and its related persons from:

  1. Employing any device, scheme, or artifice to defraud a client;
  2. Making any untrue statement of a material fact to a client or omitting to state a material fact necessary to make the statement made, in light of the circumstances under which they were made, not misleading;
  3. Engaging in any act, practice or course of business which operates or would operate as a fraud or deceit upon a client; or
  4. Engaging in any manipulative act or practice with a client.

Investors should understand that working with an advisor that is a fiduciary does not guarantee that they will experience greater investment performance or reduced losses as compared to working with an advisor that is not acting as a fiduciary.