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ShareBuilder Advisors, LLCInvestment Advisor BrochureUpdated November 12, 201383 S. King Street, Suite 700Seattle, WA ervice@sharebuilder401k.comThis brochure provides information about the qualifications and businesspractices of SHAREBUILDER ADVISORS, LLC (“SBA”). If you have anyquestions about the contents of this brochure, please contact us at the phonenumber or email listed above. The information in this brochure has not beenapproved or verified by the United States Securities and Exchange Commission,or by any state securities authority. ShareBuilder Advisors, LLC is an SECregistered investment advisor, which does not imply a certain level of skill ortraining.Additional information about ShareBuilder Advisors is available on theSEC’s website at www.adviserinfo.sec.govMaterial ChangesAnnual UpdateThe Material Changes section of this brochure will be updated annually whenmaterial changes occur since the prior release of SBA’s Firm Brochure.TOC 1ShareBuilder Advisors, LLC
Material Changes since the Last UpdateWe offer or deliver Form ADV Part II Brochure to clients on at least an annualbasis. We will provide each of our clients with a summary of any materialchanges in subsequent annual updates to the brochure by April 30th. We willalso provide our clients with additional information regarding material changesat other times, within a reasonable time after such changes occur.The following are the material changes to the ShareBuilder Advisors ADVPart II since the since the prior version dated 3-28-2013: Updated Fees and Compensation section to outline new fee structure Introduces Sara Andres as new Chief Compliance OfficerFull Brochure AvailableWhenever you would like to receive a complete, current copy of our FirmBrochure, please contact us by telephone at: 800-943-6108 or by email at:customerservice@sharebuilder401k.com.TOC 2ShareBuilder Advisors, LLC
Table of ContentsMaterial Changes. 1Annual Update . 1Material Changes since the Last Update . 2Full Brochure Available . 2Advisory Business . 1Firm Description . 1Principal Owners . 1Types of Advisory Services . 1Fees and Compensation . 2Description . 2Fee Billing and Payment . 3Fee Billing and Payment for Plans Purchased through Third-Party Advisors . 3Expense Ratios . 4Past Due Accounts and Termination. 4Performance-Based Fees . 4Performance-Based Fees . 4Types of Clients. 5Description . 5Methods of Analysis, Investment Strategies and Risk of Loss . 5Methods of Analysis . 5Investment Strategies . 5Risk of Loss . 8Disciplinary Information . 9Legal and Disciplinary . 9Other Financial Industry Activities and Affiliations . 9Financial Industry Activities . 9Affiliations . 9Code of Ethics, Participation or Interest in Client Transactions and PersonalTrading . 9Code of Ethics. 9Participation or Interest in Client Transactions . 9Personal Trading. 10TOC 3ShareBuilder Advisors, LLC
Brokerage Practices. 10Selecting Brokerage Firms . 10Best Execution . 11Soft Dollars . 11Review of Accounts . 11Periodic Reviews . 11Review Triggers . 11Regular Reports . 11Client Referrals and Other Compensation . 12Referrals . 12Other Compensation . 12Custody . 13SEC “Custody” Requirements . 13Account Statements . 14Investment Discretion . 14Discretionary Authority for Trading. 14Voting Client Securities . 14Proxy Votes . 14Financial Information . 14Financial Condition . 14Business Continuity Plan . 14General . 14Disasters . 14Alternate Offices . 15ShareBuilder Advisors, LLC Online and Security Practices . 15TOC 4ShareBuilder Advisors, LLC
Advisory BusinessFirm DescriptionShareBuilder Advisors LLC, (“SBA”) was founded in 2005. The firm’s primarymission is to provide affordable retirement investment products to businesses(“Plan Sponsor”) and their employees (“Participants” or “Plan Participants”) .SBA typically serves businesses ranging in size from 1 to 2,500 employees.Principal OwnersShareBuilder Advisors is a wholly owned subsidiary of ShareBuilderCorporation, which is an indirect wholly owned subsidiary of Capital OneFinancial Corporation.Types of Advisory ServicesShareBuilder Advisors provides consulting services and information to theemployer or Plan Sponsor regarding the establishment of a definedcontribution or defined benefit plan for its employees (Plan Participants). SBAwill recommend a particular plan and then provide an automated process toassist the employer in selecting the plan and then investments, as describedbelow. SBA will furnish both online information and recommendations for planselections based on a number of factors, including but not limited to, size ofemployee base, demographics, and existing benefits.SBA offers 20 Exchange Traded Funds, as well as a Money Market Fund, theShareBuilder Bedford Shares of The RBB Money Market Portfolio. SBA alsoprovides 5 model portfolios constructed of the 20 Exchange Traded Funds.Participants may choose to invest in a recommended Model Portfolio or tocreate a custom portfolio from among the 20 Exchange Traded Funds. ModelPortfolios are constructed along a risk continuum and include Stable,Conservative, Balanced, Moderate, and Aggressive Portfolios. In no eventdoes SBA offer personalized advice to Plan Participants concerninginvestment strategies. SBA does not offer financial planning or portfoliomanagement services.As SBA’s Investment Committee determines the investment roster and modelportfolios offered to SBA clients, SBA serves as ERISA 3(38) advisor for eachclient’s 401(k) plan, unless otherwise arranged. SBA does not provide otherinvestment advisory services beyond this. ShareBuilder’s 3(38) status doesreduce fiduciary risks and duties for employers in offering a plan by managingthe investments made available in the plan. The Plan Sponsor and otherpersonnel of the business involved with the plan do retain all other fiduciaryduties, including the selection of providers.- 1ShareBuilder Advisors, LLC
Fees and CompensationDescriptionShareBuilder Advisors bases its fees on a combination of a percentage ofassets under management and fixed fees. These fees are detailed on SBA’swebsite at: http://401kpricing.com/pricing.htm.In addition to one-time setup and monthly administration fees (based on planassets and participants), the following management fees are collected basedon a percentage of assets for businesses with 250 or fewer employees:AssetsFee 0 - 499,999.75% 500,000 - 1,999,999.65% 2,000,000 - 4,999,999.55% 5,000,000 - 7,999,999.45% 8,000,000 .06% - .55%Overall, asset management fees will range from 0.06% to 0.75% dependingon the asset and number of participants in the plan. Plans with a 250participants tend to pay more than plans with the same asset amount but withfewer participants to cover additional support and recordkeeping costs.ShareBuilder 401k’s online assessment tool recommends a general 401(k)plan type and design based upon the user’s answers to the questionsasked. The user (plan sponsor) has the ability to review pricing, planfeatures, switch plan types, and then can complete their purchase and setuptheir plan online. ShareBuilder 401K Advisors can be reached by toll freenumber to discuss plan features, and in some markets meet in person, toanswer questions and guide the user to the plan that fits their stated needs.SBA’s affiliate, Capital One ShareBuilder, Inc. (“COSB”), receives a portion ofthe management fee of The RBB Money Market Portfolio in the form of 12b-1fees. This is paid to COSB by the investment company. The fee is paidmonthly based on average assets in the fund. SBA’s selection of this MoneyMarket Fund represents a conflict of interest in that other Money MarketFunds are available that might not offer this compensation to COSB The RBBMoney Market Portfolio carries a higher than average internal expensestructure to support the payment of 12b-1 fees to COSB. All investmentoptions are self-selected by plan participants. Further, SBA does not includethe RBB Money Market in the model portfolios it makes available to planparticipants.In accordance with marketing agreements with certain companies andaffiliates that provide products and services to small and mid-size businesses,- 2ShareBuilder Advisors, LLC
SBA may pay marketing bonuses for referrals. These payments are inaddition to subsequent payments of up to 2,600 for the referral and thensubsequent sale and funding of plans. Additionally, reduced set-up andmonthly administration fees may be available for Sponsors which are thebusiness customers of those companies. Otherwise, all standard fees are thesame.ShareBuilder 401k Plans may be offered to businesses and their employeesthrough independent Registered Investment Advisors (“RIAs”), RegisteredBroker-Dealers (“B/Ds”), or Capital One Financial Corporation’s affiliates(“COF Affiliates”) as part of advisory or other services offered in accordancewith management agreements between independent RIAs, B/Ds, or COFAffiliates and Plan Sponsors. In such cases, pursuant to a partnershipagreement between SBA and independent RIAs, B/Ds, COF Affiliates, SBA’scapacity is limited to providing only the 401(k) Plans, including web access(the TPA’s role is unchanged.)Since the ShareBuilder 401k program is based on a web-based platform,Plan Sponsors and Participants are dependent on internet access and areresponsible for associated costs.Fee Billing and PaymentFees for services are assessed on both Plan Sponsors and Participants bythe plan’s third-party administrator (“TPA”). The TPA shares a portion ofthese fees with SBA as follows. Depending on the Plan selected and thenumber of Participants in the Plan, the employer will pay a one-time Plansetup fee ranging from 0 to 995 and a monthly administration fee rangingfrom 0 to 15 per Participant for solo 401(k) plans or 0 to 550 for group401(k) plans. Participants are also assessed, and SBA receives part of anasset-based Account Servicing Fee that ranges from 6 to 75 basis points(.0075) per year for each account. (Participants are actually assessed a totalof 6 to 75 basis points per year, with up to an additional 15 retained by theTPA.) One-fourth of this fee (.00015 to .001875) is charged in arrears basedon the average daily account value during the prior calendar quarter. TheTPA deducts the fee directly from the account without further notice to orconsent of the Plan Sponsor or Participant. In some instances, participantsmay be assessed a flat monthly charge of up to 4.50 to help coveradministrative and recordkeeping costs which will be disclosed prior topurchase (typically very low asset plans with a large number of employees).SBA itself does not have authority to deduct the fee. The TPA will obtainexecution services from SBA’s affiliate, COSB. COSB, in turn, obtains closingpricing data for all securities offered from independent third parties, includingits custodian, Pershing LLC. These pricing data are used by the TPA indetermining quarter-end market value for fee purposes.Fee Billing and Payment for Plans Purchased through Third-Party AdvisorsIn recognition of advisory services provided by independent RIAs, B/Ds, orCOF Affiliates participants will pay a greater Account Servicing Fee than- 3ShareBuilder Advisors, LLC
shown on SBA’s Standard Fee Schedule. SBA charges an asset-basedAccount Servicing Fee of 6 to 75 basis points (.0006 to .0075) per year foreach account (SBA retains 6 to 75 basis points, and the TPA receives up tothe remaining 15 basis points if applicable). In addition to SBA’s basis points,independent RIAs or B/Ds may charge an additional 50 basis points foradditional advisory services those independent RIAs provide to both plansponsors and participants. Should plan sponsors elect to enter into a newplan purchase directly with SBA without involvement of the independent RIAB/D, or COF Affiliate, the additional basis points would not be charged. Onefourth of the respective fee is charged quarterly in arrears based on accountvalues as described above.Expense RatiosSBA provides advice to Plan Sponsors in the selection and periodicmodification of investment options and Model Portfolios composed exclusivelyof Exchange Traded Funds (“ETFs”) and the RBB Money Market Portfolio (aninvestment company registered under the Investment Company Act of 1940).ETFs are not traditional mutual funds but are often compared with them forinvestment purposes. Exchange Traded Funds are, as their name suggests,traded on stock exchanges. Most ETFs represent shares in the companiesthat make up a recognized index. ETFs are priced throughout the day andmay be purchased or sold at the current market price, rather than an end-ofday calculation based on net asset value. Some ETFs may have lowerexpense ratios than comparable mutual funds. However, unlike mutual fundswith structured sales loads, investors must typically pay individual transactionfees or commissions to brokers when they purchase exchange-traded funds.SBA has arranged to have ETF transactions for clients executed through itsaffiliate Capital One ShareBuilder, Inc. (“COSB”) at aggregated rates. Alltransactions are consolidated for execution once per day, and the TPA willremit the commission due directly to COSB. No separate commission will becharged to Participants purchasing or exchanging ETFs within their account.Past Due Accounts and TerminationShareBuilder Advisors reserves the right to stop work on any account that isoverdue for payment of services.Performance-Based FeesPerformance-Based FeesShareBuilder Advisors does not charge performance-based fees.- 4ShareBuilder Advisors, LLC
Types of ClientsDescriptionShareBuilder Advisors generally provides advice regarding Plan structuresand investment options to plan sponsors. SBA does not offer personalizedinvestment advice.Methods of Analysis, Investment Strategies and Risk of LossMethods of AnalysisSecurity analysis methods may include charting, fundamental analysis, andtechnical analysis.The main sources of information include financial newspapers andmagazines, research materials prepared by others, corporate rating services,annual reports, prospectuses, and filings with the Securities and ExchangeCommission.Investment StrategiesSBA does not have discretionary authority over individual participant accountsand does not otherwise implement investment choices or offer personalizedadvice. The ShareBuilder Investment Committee oversees the investmentoptions available in our clients’ plans along with managing the make-up of thefive model portfolios (from conservative to aggressive). The committeeconsists of seven investment professionals including four CFAs (CharteredFinancial Analyst). To assist in our analysis, we use a model from ASIemploying a Markowitz mean-variance technique des
ShareBuilder Advisors, LLC Investment Advisor Brochure Updated November 12, 2013 83 S. King Street, Suite 700 Seattle, WA 98104 800-943-6108 www.sharebuilder401k.com customerservice@sharebuilder401k.com This brochure provides information about the qualifications and business practices of SHA
