Transcription
Wealth Management, Inc.Client BrochureThis brochure provides information about the qualifications and business practices of HK Wealth Management,Inc. If you have any questions about the contents of this brochure, please contact us at (310) 482-2352 or byemail at: info@hkwmanagement.com. The information in this brochure has not been approved or verified by theUnited States Securities and Exchange Commission or by any state securities authority.Additional information about HK Wealth Management, Inc. is also available on the SEC’s website atwww.adviserinfo.sec.gov. HK Wealth Management, Inc.’s CRD number is: 15150410880 Wilshire Boulevard, Suite #122Los Angeles, California, 90024(310) mRegistration does not imply a certain level of skill or training.Version Date: 3/10/2014
Item 2: Material ChangesHK Wealth Management, Inc. has no material changes to report since the previous Annual ADVAmendment filed on March 26, 2013.i
Item 3: Table of ContentsTable of ContentsItem 2: Material Changes. iItem 3: Table of Contents .iiItem 4: Advisory Business . 1A. Description of the Advisory Firm . 1B. Types of Advisory Services . 1Acts as a Solicitor. 1Services Limited to Specific Types of Investments . 1C. Client Tailored Services and Client Imposed Restrictions . 1D. Wrap Fee Programs . 1E. Amounts Under Management . 1Item 5: Fees and Compensation. 2A. Fee Schedule . 2Selection of Other Advisors Fees . 2B. Payment of Fees . 2Payment of Selection of Other Advisors. 2C. Clients Are Responsible For Third Party Fees . 2D. Prepayment of Fees . 2E. Outside Compensation For the Sale of Securities to Clients . 3Item 6: Performance-Based Fees and Side-By-Side Management . 3Item 7: Types of Clients . 3Minimum Account Size . 3Item 8: Methods of Analysis, Investment Strategies, and Risk of Investment Loss . 3A.Methods of Analysis and Investment Strategies. 3Methods of Analysis . 3Technical analysis . 3Investment Strategies . 3B.Material Risks Involved . 4Methods of Analysis . 4Technical analysis . 4Investment Strategies . 4C.Risks of Specific Securities Utilized . 4Item 9: Disciplinary Information . 4Item 10: Other Financial Industry Activities and Affiliations . 4A.Registration as a Broker/Dealer or Broker/Dealer Representative . 4B.Registration as a Futures Commission Merchant, Commodity Pool Operator, or a Commodity Trading Advisor . 5ii
C.Registration Relationships Material to this Advisory Business and Possible Conflicts of Interests . 5D.Selection of Other Advisors or Managers and How This Adviser is Compensated for Those Selections . 5Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading . 5A.Code of Ethics . 5B.Recommendations Involving Material Financial Interests . 6C.Investing Personal Money in the Same Securities as Clients. 6D.Trading Securities At/Around the Same Time as Clients’ Securities . 6Item 12: Brokerage Practices . 6A.B.Factors Used to Select Custodians and/or Broker/Dealers . 61.Research and Other Soft-Dollar Benefits . 62.Brokerage for Client Referrals . 63.Clients Directing Which Broker/Dealer/Custodian to Use . 6Aggregating (Block) Trading for Multiple Client Accounts . 7Item 13: Reviews of Accounts . 7A.Frequency and Nature of Periodic Reviews and Who Makes Those Reviews. 7B.Factors That Will Trigger a Non-Periodic Review of Client Accounts . 7C.Content and Frequency of Regular Reports Provided to Clients. 7Item 14: Client Referrals and Other Compensation . 7A.Economic Benefits Provided by Third Parties for Advice Rendered to Clients (Includes Sales Awards or Other Prizes). 7B.Compensation to Non –Advisory Personnel for Client Referrals. 8Item 15: Custody . 8Item 16: Investment Discretion . 8Item 17: Voting Client Securities (Proxy Voting). 8Item 18: Financial Information. 8A.Balance Sheet . 8B.Financial Conditions Reasonably Likely to Impair Ability to Meet Contractual Commitments to Clients . 8C.Bankruptcy Petitions in Previous Ten Years . 9Item 19: Requirements For State Registered Advisers . 9A.Principal Executive Officers and Management Persons; Their Formal Education and Business Background . 9B.Other Businesses in Which This Advisory Firm or its Personnel are Engaged and Time Spent on Those (If Any) . 9C.How Performance Based Fees are Calculated and Degree of Risk to Clients . 9D.Material Disciplinary Disclosures for Management Persons of this Firm . 9E.Material Relationships That Management Persons Have With Issuers of Securities (If Any) . 9iii
Item 4: Advisory BusinessA. Description of the Advisory FirmHK Wealth Management, Inc. has been registered in the state of California sinceNovember 19, 2009 and the principal owner is Alan Tyrone Knobloch.B. Types of Advisory ServicesHK Wealth Management, Inc. (hereinafter “HKWM”) offers the following services toadvisory clients:Acts as a SolicitorHKWM acts solely as a solicitor recommending clients to third party managers for asolicitor's fee. HKWM will be compensated via a fee share from the advisors to which itdirects those clients. This relationship will be disclosed in each contract between HKWMand each third party advisor. The fees shared will not exceed any limit imposed by anyregulatory agency. Before selecting other advisors for clients, HKWM will always ensurethose other advisors are properly licensed or registered as investment advisor. HKWMmay look to see if their client’s are properly insured and their mortgage (s) are in theirbest interest. HKWM may also recommend real estate as part of an overall wealthstrategy.Services Limited to Specific Types of InvestmentsHKWM acts solely as a solicitor recommending clients to third party managers for asolicitor's fee.C. Client Tailored Services and Client Imposed RestrictionsFBAS acts solely as a solicitor recommending clients to third party managers BroxtonCapital for a solicitor's fee.D. Wrap Fee ProgramsHKWM does not participate in any wrap fee programs.E. Amounts Under ManagementHKWM has the following assets under management:Discretionary Amounts:Non-discretionary Amounts:Date Calculated: 0.00 2,100,000.0012/31/2013Form ADV 2A Version: 3/10/20141
Item 5: Fees and CompensationA. Fee ScheduleSelection of Other Advisors FeesHKWM will direct clients to third party money managers; Hanlon InvestmentManagement, Foxhall Capital or Broxton Capital. HKWM will be compensated via a feeshare from the advisors to which it directs those clients. This relationship will bedisclosed in each contract between HKWM and each third party advisor. The feesshared will not exceed any limit imposed by any regulatory agency. The fee schedule isas follows:AUMFirst 500,000This RIA’s Split1.10%Third Party’s Split1.10% 500,000 - 1,000,0000.85%0.85%Over 1,000,0000.60%0.60%Fees are paid quarterly in arrears, and clients may terminate their contracts with tendays’ written notice. Because fees are charged in arrears, no refund is necessary.B. Payment of FeesPayment of Selection of Other AdvisorsAdvisory fees are withdrawn directly from the client’s accounts with client writtenauthorization. Fees are paid quarterly in arrears.C. Clients Are Responsible For Third Party FeesClients are responsible for the payment of all third party fees (i.e. custodian fees, mutualfund fees, transaction fees, etc.). Those fees are separate and distinct from the fees andexpenses charged by HKWM. Please see Item 12 of this brochure regardingbroker/custodian.D. Prepayment of FeesHKWM collects its fees in arrears. It does not collect fees in advance.Form ADV 2A Version: 3/10/20142
E. Outside Compensation For the Sale of Securities to ClientsNeither HKWM nor its supervised persons accept any compensation for the sale ofsecurities or other investment products, including asset-based sales charges or servicesfees from the sale of mutual funds.Item 6: Performance-Based Fees and Side-By-Side ManagementHKWM does not accept performance-based fees or other fees based on a share of capital gainson or capital appreciation of the assets of a client.Item 7: Types of ClientsHKWM generally provides investment advisory services to the following Types of Clients:IndividualsHigh-Net-Worth IndividualsPension and Profit Sharing PlansTrusts, Estates, or Charitable Organizations Corporations or Business Entities Minimum Account SizeThere is an account minimum, 5,000, which may be waived by the investment advisor, basedon the needs of the client and the complexity of the situation.Item 8: Methods of Analysis, Investment Strategies, and Risk ofInvestment LossA. Methods of Analysis and Investment StrategiesMethods of AnalysisHKWM’s primary method of analysis includes technical analysis.Technical analysis involves the analysis of past market data; primarily price andvolume.Investment StrategiesHKWM primarily recommends third party money managers to clients based on clientobjectives, risk tolerance and cash flow requirements. However, the third party moneymanagers may uses long term trading and short term trading strategies.Investing in securities involves a risk of loss that you, as a client, should be preparedto bear.Form ADV 2A Version: 3/10/20143
B. Material Risks InvolvedMethods of AnalysisTechnical analysis attempts to predict a future stock price or direction based on markettrends. The assumption is that the market follows discernible patterns and if thesepatterns can be identified then a prediction can be made. The risk is that markets do notalways follow patterns and relying solely on this method may not work long term.Investment StrategiesLong term trading is designed to capture market rates of both return and risk. Frequenttrading, when done, can affect investment performance, particularly through increasedbrokerage and other transaction costs and taxes.Short term trading generally hold greater risk and clients should be aware that there is achance of material risk of loss using any of those strategies.Investing in securities involves a risk of loss that you, as a client, should be preparedto bear.C. Risks of Specific Securities UtilizedHKWM generally seeks investment strategies that do not involve significant or unusualrisk beyond that of the general domestic and/or international equity markets.Past performance is not a guarantee of future returns. Investing in securities involvesa risk of loss that you, as a client, should be prepared to bear.Item 9: Disciplinary InformationThere are no legal or disciplinary events that are material to a client’s or prospective client’sevaluation of this advisory business or the integrity of our management.Item 10: Other Financial Industry Activities and AffiliationsA. Registration as a Broker/Dealer or Broker/DealerRepresentativeNeither HKWM nor its representatives are registered as a broker/dealer or asrepresentatives of a broker/dealer.Form ADV 2A Version: 3/10/20144
B. Registration as a Futures Commission Merchant, CommodityPool Operator, or a Commodity Trading AdvisorNeither HKWM nor its representatives are registered as a FCM, CPO, or CTA.C. Registration Relationships Material to this Advisory Businessand Possible Conflicts of InterestsAlan Tyrone Knobloch is a licensed insurance agent and real estate agent in the state ofCalifornia. From time to time, he will offer clients advice or products from thoseactivities. Clients should be aware that these services pay a commission and involve apossible conflict of interest, as commissionable products can conflict with the fiduciaryduties of a registered investment adviser. HKWM always acts in the best interest of theclient; including the sale of commissionable products to advisory clients. Clients are inno way required to implement the plan through any representative of HKWM in theircapacity as an insurance agent or a real estate agent.Alan Tyrone Knobloch is also a partner in an educational training company for lifeinsurance and securities called, Academy of California Examinations, Inc.All material conflicts of interest under Section 260.238 (k) of the California CorporationsCode are disclosed regarding the investment adviser, its representatives or any of itsemployees, which could be reasonably expected to impair the rendering of unbiased andobjective advice.D. Selection of Other Advisors or Managers and How ThisAdviser is Compensated for Those SelectionsHKWM will direct clients to third party money managers. HKWM will be compensatedvia a fee share from the advisors to which it directs those clients. This relationship willbe disclosed in each contract between HKWM and each third party advisor. The feesshared will not exceed any limit imposed by any regulatory agency. This creates aconflict of interest in that HKWM has an incentive to direct clients to the third partymoney managers that provide HKWM with a larger fee split. HKWM will always act inthe best interests of the client, including when determining which third party managerto recommend to clients.Item 11: Code of Ethics, Participation or Interest in ClientTransactions and Personal TradingA. Code of EthicsWe have a written Code of Ethics that covers the following areas: Prohibited Purchases andSales, Insider Trading, Personal Securities Transactions, Exempted Transactions, ProhibitedActivities, Conflicts of Interest, Gifts and Entertainment, Confidentiality, Service on a Boardof Directors, Compliance Procedures, Compliance with Laws and Regulations, Proceduresand Reporting, Certification of Compliance, Reporting Violations, Compliance OfficerForm ADV 2A Version: 3/10/20145
Duties, Training and Education, Recordkeeping, Annual Review, and Sanctions.may request a copy of our Code of Ethics from management.ClientsB. Recommendations Involving Material Financial InterestsHKWM does not recommend that clients buy or sell any security in which a relatedperson to HKWM has a material financial interest.C. Investing Personal Money in the Same Securities as ClientsHKWM acts solely as a solicitor recommending clients to third party managers. Fromtime to time, representatives of HKWM may buy or sell securities for themselves thatthey also recommend to clients. HKWM will always document any transactions thatcould be construed as conflicts of interest and will always transact client business beforetheir own when similar securities are being bought or sold.D. Trading Securities At/Around the Same Time as Clients’SecuritiesHKWM acts solely as a solicitor recommending clients to third party managers.HKWM does not have any assets under management and does not trade in client’saccounts.Item 12: Brokerage PracticesA. Factors Used to Select Custodians and/or Broker/DealersHKWM acts solely as a solicitor recommending clients to third party managers. Ifneeded, a custodian will be chosen based on their relatively low transaction fees andaccess to mutual funds and ETFs. HKWM will never charge a premium or commissionon transactions, beyond the actual cost imposed by Custodian.1. Research and Other Soft-Dollar BenefitsHKWM receives no research, product, or service other than execution from a brokerdealer or third-party in connection with client securities transactions (“soft dollarbenefits”).2. Brokerage for Client ReferralsHKWM receives no referrals from a broker-dealer or third party in exchange forusing that broker-dealer or third party.3. Clients Directing Which Broker/Dealer/Custodian to UseHKWM allows clients to direct brokerage. HKWM may be unable to achieve mostfavorable execution of client transactions if clients choose to direct brokerage. Thismay cost clients money because without the ability to direct brokerage HKWM mayForm ADV 2A Version: 3/10/20146
not be able to aggregate orders to reduce transactions costs resulting in higherbrokerage commissions and less favorable prices.B. Aggregating (Block) Trading for Multiple Client AccountsHKWM acts solely as a solicitor recommending clients to third party managers.HKWM does not have any assets under management and does not trade in client’saccounts.Item 13: Reviews of AccountsA. Frequency and Nature of Periodic Reviews and Who MakesThose ReviewsClient accounts are reviewed at least monthly by Alan Tyrone Knobloch, President. AlanTyrone Knobloch is the chief advisor and is instructed to review clients’ accounts withregards to their investment policies and risk tolerance levels. All accounts at HKWM areassigned to this reviewer.B. Factors That Will Trigger a Non-Periodic Review of ClientAccountsReviews may be triggered by material market, economic or political events, or bychanges in client's financial situations (such as retirement, termination of employment,physical move, or inheritance).C. Content and Frequency of Regular Reports Provided to ClientsEach client will receive at least monthly a written report detailing the client’s accountwhich will come from the custodian.Item 14: Client Referrals and Other CompensationA. Economic Benefits Provided by Third Parties for AdviceRendered to Clients (Includes Sales Awards or Other Prizes)HKWM acts solely as a solicitor recommending clients to third party managers for asolicitor's fee.Form ADV 2A Version: 3/10/20147
B. Compensation to Non –Advisory Personnel for Client ReferralsHKWM does not directly or indirectly compensate any person who is not advisorypersonnel for client referrals.Item 15: CustodyHKWM does not take custody of client accounts at any time. Custody of client’s accounts isheld primarily at the Custodian. Clients will receive account statements from the custodian andshould carefully review those statements.Item 16: Investment DiscretionFor those client accounts where HKWM provides ongoing supervision, the client has givenHKWM written discretionary authority over the client’s accounts with respect to securities tobe bought or sold and the amount of securities to be bought or sold. Details of this relationshipare fully disclosed to the client before any advisory relationship has commenced. The clientprovides HKWM discretionary authority via a limited power of attorney in the InvestmentAdvisory Contract and in the contract between the client and the custodian.Item 17: Voting Client Securities (Proxy Voting)HKWM will not ask for, nor accept voting authority for client securities. Clients will receiveproxies directly from the issuer of the security or the custodian. Clients should direct all proxyquestions to the issuer of the security.Item 18: Financial InformationA. Balance SheetHKWM does not require nor solicit prepayment of more than 500 in fees per client, sixmonths or more in advance and therefore does not need to include a balance sheet withthis brochure.B. Financial Conditions Reasonably Likely to Impair Ability toMeet Contractual Commitments to ClientsNeither HKWM nor its management have any financial conditions that are likely toreasonably impair our ability to meet contractual commitments to clients.Form ADV 2A Version: 3/10/20148
C. Bankruptcy Petitions in Previous Ten YearsHKWM has not been the subject of a bankruptcy petition in the last ten years.Item 19: Requirements For State Registered AdvisersA. Principal Executive Officers and Management Persons; TheirFormal Education and Business BackgroundHKWM currently has only one management person and only one executive officer; AlanTyrone Knobloch. Alan Tyrone Knobloch’s education and business background can befound on the Supplemental ADV Part 2B form.B. Other Businesses in Which This Advisory Firm or its Personnelare Engaged and Time Spent on Those (If Any)Alan Tyrone Knobloch’s other business activities can be found on the SupplementalADV Part 2B form.C. How Performance Based Fees are Calculated and Degree ofRisk to ClientsHKWM does not accept performance-based fees or other fees based on a share of capitalgains on or capital appreciation of the assets of a client.D. Material Disciplinary Disclosures for Management Persons ofthis FirmNo management person at HKWM has been in
securities or other investment products, including asset-based sales charges or services fees from the sale of mutual funds. Item 6: Performance-Based Fees and Side-By-Side Management HKWM does not accept performance-based fees or other fees based on a share of capital gains on or capital appreciation of the assets of a client.
