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Quantum Capital Management Disclosure BrochureDisclosure BrochureMarch 23, 2016Quantum Capital Managementa Registered Investment Adviser311 California Street, Suite 510San Francisco, CA 94104(415) 738-0288www.quantumcap.comThis brochure provides information about the qualifications and business practices of QCM, LLC doing business asQuantum Capital Management (hereinafter “Quantum Capital Management” or the “Firm”). If you have any questionsabout the contents of this brochure, please contact the Firm at (415) 738-0288. The information in this brochure has notbeen approved or verified by the United States Securities and Exchange Commission or by any state securities authority.Additional information about Quantum Capital Management is available on the SEC’s website at www.adviserinfo.sec.gov.Quantum Capital Management is an SEC registered investment adviser. Registration does not imply any level of skill ortraining. MarketCounsel 2016
Quantum Capital Management Disclosure BrochureItem 2. Material ChangesThis Item discusses only the material changes that have occurred since Quantum Capital Management’slast annual update dated February 24, 2015. The Firm does not have any material changes to reportpursuant to this Item.Page ii MarketCounsel 2016
Quantum Capital Management Disclosure BrochureItem 3. Table of ContentsFirm Disclosure BrochureItem 1. Cover Page . iItem 2. Material Changes . iiItem 3. Table of Contents .iiiItem 4. Advisory Business . 4Item 5. Fees and Compensation . 7Item 6. Performance-Based Fees and Side-by-Side Management . 10Item 7. Types of Clients . 10Item 8. Methods of Analysis, Investment Strategies and Risk of Loss . 11Item 9. Disciplinary Information . 13Item 10. Other Financial Industry Activities and Affiliations . 13Item 11. Code of Ethics . 14Item 12. Brokerage Practices . 15Item 13. Review of Accounts. 18Item 14. Client Referrals and Other Compensation . 19Item 15. Custody . 20Item 16. Investment Discretion. 20Item 17. Voting Client Securities . 20Item 18. Financial Information . 21Page iii MarketCounsel 2016
Quantum Capital Management Disclosure BrochureItem 4. Advisory BusinessQuantum Capital Management provides investment advisory services through two channels: 1) direct toclients of the Firm; and 2) as a separate account manager for other financial services firms. For directclients, the Firm provides financial planning, consulting, and investment management services. As aseparate account manager, the Firm provides wealth management services which combine assetmanagement and financial planning services under the Firm’s fee-only advisor structure, keepingQuantum Capital Management’s success tied to the success of its clients.The Firm strives to provide consistently superior investment disciplines while maintaining a client-centricbusiness model. Quantum Capital Management manages portfolios on a team-oriented basis for privateclients, family offices, endowments, foundations and select financial intermediary platforms. The Firm’sfounders are actively involved in daily management and research along with a team of professionals thatfollow a disciplined approach to building superior long term investment results.Prior to engaging Quantum Capital Management to provide any of the foregoing services, the client isrequired to enter into one or more written agreements with Quantum Capital Management setting forththe terms and conditions under which Quantum Capital Management renders its services (collectively the“Agreement”).Quantum Capital Management has been in business since 1997. Quantum Fund, LLC is the principalowner. As of December 31, 2015, Quantum Capital Management has 798,261,510.00 of assets undermanagement, of which 798,190,443.00 are managed on a discretionary basis and 71,067.00 aremanaged on a non-discretionary basis.This Disclosure Brochure describes the business of Quantum Capital Management. Certain sections willalso describe the activities of Supervised Persons. Supervised Persons are any of Quantum CapitalManagement’s officers, partners, directors (or other persons occupying a similar status or performingsimilar functions), or employees, or any other person who provides investment advice on QuantumCapital Management’s behalf and is subject to Quantum Capital Management’s supervision or control.Investment Management and Wealth Management ServicesClients can engage Quantum Capital Management to manage all or a portion of their assets on adiscretionary or a non-discretionary basis. In addition, Quantum Capital Management may provide clientswith wealth management services which may include a broad range of comprehensive financial planningservices as well as discretionary or non-discretionary management of investment portfolios.Quantum Capital Management primarily allocates clients’ investment management assets amongindividual debt and equity securities and/or options, as well as occasionally among exchange-tradedfunds (“ETFs”) and mutual funds in accordance with the investment objectives of the client. QuantumPage 4 MarketCounsel 2016
Quantum Capital Management Disclosure BrochureCapital Management also provides advice about any type investment held in clients' portfolios at theoutset of their relationship with the Firm.Quantum Capital Management tailors its advisory services to the individual needs of clients. The Firmconsults with clients initially and on an ongoing basis to develop an investment policy statement whichdetermines risk tolerance, time horizon and other factors that may impact the clients’ investment needs.Quantum Capital Management ensures that clients’ investments are suitable for their investment needs,goals, objectives and risk tolerance. Clients are advised to promptly notify Quantum Capital Managementif there are changes in their financial situation or investment objectives or if they wish to impose anyreasonable restrictions upon Quantum Capital Management’s management services.Clients mayimpose reasonable restrictions or mandates on the management of their account (e.g., require that aportion of their assets be invested in socially responsible funds) if, in Quantum Capital Management’ssole discretion, the conditions will not materially impact the performance of a portfolio strategy or proveoverly burdensome to its management efforts.Separate Account Management ServicesIn addition to serving its own direct clients, the Firm provides investment advisory services to the clients ofother investment advisors or financial services firms as a separate account manager. In this role, theFirm is hired directly by the financial services firm. Quantum Capital Management’s services are madeavailable through the separate account manager platforms maintained by various organizations such as(but not limited to) FDx Advisors, Inc., Citi Private Bank Access, Fidelity Investment Institutional WealthServices, Envestnet Asset Management, Janney Wealth Management Advisers, Lockwood SponsoredPrograms, Pershing Managed Account Command, Pinnacle UMA Platform, SunTrust Primer SMAPlatform, Schwab Access, Schwab Market Place, and T.D. Ameritrade Separate Account Exchange.The Firm manages a broad range of accounts for institutional and individual clients on a discretionary ornon-discretionary basis. The investment advisory services provided are based upon the individual needsof the client and stated objectives and guidelines of the account based on information received from theclient’s advisor. These services include, but are not limited to, management of equity, fixed income,balanced and other proprietary investment portfolios.Generally, clients of Quantum Capital Management’s separate account manager services will be placedinto one of the Firm’s proprietary investment portfolios: Large Cap Growth, Dividend Growth, InternationalEquity, Mid Cap Growth, Smid Cap Growth, Small Cap Growth and Micro Cap Growth. The Firmmanages these accounts on a discretionary basis.Financial Planning and Consulting ServicesQuantum Capital Management may provide its clients with a broad range of comprehensive financialplanning and consulting services. These services include business planning, retirement planning, estatePage 5 MarketCounsel 2016
Quantum Capital Management Disclosure Brochureplanning, tax and investment planning, and employee benefit analysis. These services may be includedas part of Quantum Capital Management’s wealth management services, described above.In performing its services, Quantum Capital Management is not required to verify any informationreceived from the client or from the client’s other professionals (e.g., attorney, accountant, etc.) and isexpressly authorized to rely on such information. Quantum Capital Management may recommend theservices of itself, and/or other professionals to implement its recommendations. Clients are advised thata conflict of interest exists if Quantum Capital Management recommends its own services. The client isunder no obligation to act upon any of the recommendations made by Quantum Capital Managementunder a financial planning or consulting engagement or to engage the services of any such recommendedprofessional, including Quantum Capital Management itself. The client retains absolute discretion over allsuch implementation decisions and is free to accept or reject any of Quantum Capital Management’srecommendations. Clients are advised that it remains their responsibility to promptly notify QuantumCapital Management if there is ever any change in their financial situation or investment objectives for thepurpose of reviewing, evaluating, or revising Quantum Capital Management’s previous recommendationsand/orPage 6services. MarketCounsel 2016
Quantum Capital Management Disclosure BrochureItem 5. Fees and CompensationQuantum Capital Management offers its services on a fee basis, which may include hourly fees, as wellas fees based upon assets under management or the performance of the client’s portfolio.Investment Management and Wealth Management FeesQuantum Capital Management provides investment management services for an annual fee based upona percentage of the market value of the assets being managed by Quantum Capital Management.Generally, the Firm’s investment management services include basic financial planning.QuantumCapital Management’s annual fee is prorated and charged quarterly, in advance, based upon the marketvalue of the assets being managed by Quantum Capital Management on the last day of the previousquarter. The annual fee varies (between 0.55% and 1.20%) depending upon the market value of theassets under management, as follows:Equity and Balanced Accounts:PORTFOLIO VALUEBASE FEEup to 1,000,0001.20%Next 1,000,0001.00%Next 4,000,0000.80%Next 5,000,0000.75%Next 15,000,0000.65%On the balance0.55%Fixed Income Accounts:PORTFOLIO VALUEBASE FEEup to 5,000,0000.75%On the balance0.50%Concentrated Stock Position Management (per year):PORTFOLIO VALUEFor the serviceBASE FEE1.00%**Certain legacy clients may be charged a lesser fee.Page 7 MarketCounsel 2016
Quantum Capital Management Disclosure BrochurePerformance FeeQuantum Capital Management may render investment management services to qualified clients for aperformance-based fee in accordance with the requirements set forth in applicable laws, rules, andregulations.For those clients, Quantum Capital Management may charge a fee based upon apercentage of the market value of the assets being managed by Quantum Capital Management (“basefee”) in addition to a fee based on the performance of the account (“performance fee”).Quantum Capital Management charges a performance fee up to fifteen percent (15%) of the netperformance by which the account exceeds a high water mark. Quantum Capital Management may alsocharge a base fee of 0.75% on assets subject to the performance fee. Quantum Capital Management’sannual base fee is prorated and charged quarterly, in advance, based upon the market value of theassets on the last day of the previous quarter. Quantum Capital Management’s performance fee ischarged quarterly, in arrears, based on the net gains of the client’s portfolio at the end of the calendarperiod.Separate Account ManagementQuantum Capital Management fees for separate account management services to other advisors rangesfrom 0.25% to 1.00% of the assets managed under such a program, depending on the size of theprogram, services to be performed for the program sponsor, particular investment strategy, pre-existingrelationship with the program sponsor or other factors. Fees for fully bundled separate account managedaccount programs may be less than partially bundled or unbundled arrangements (including institutionalseparate accounts). In a partially bundled arrangement, the client pays a fee to the program sponsor fortrade execution, custody and consulting services, and a separate fee to the Firm for the investmentmanagement of its account. The minimum size of a separate account management program account istypically 100,000.Financial Planning and Consulting FeesQuantum Capital Management may provide financial planning services on an hourly rate basis. Theseservices include retirement planning, estate planning, business, tax and investment planning andemployee benefit analysis.These fees are 350 per hour.If the client engages Quantum CapitalManagement for additional investment advisory services, Quantum Capital Management may offset all ora portion of its fees for those services based upon the amount paid for the financial planning and/orconsulting services.Prior to engaging Quantum Capital Management to provide financial planning and/or consulting services,the client is required to enter into a written agreement with Quantum Capital Management setting forth theterms and conditions of the engagement. Generally, Quantum Capital Management requires one-half ofthe estimated financial planning payable upon entering the written agreement. The balance is generallydue upon delivery of the financial plan or completion of the agreed upon services.Page 8 MarketCounsel 2016
Quantum Capital Management Disclosure BrochureNegotiation of FeesQuantum Capital Management, in its sole discretion, may negotiate to charge lesser investmentmanagement and performance-based fees based upon certain criteria (i.e., anticipated future earningcapacity, anticipated future additional assets, dollar amount of assets to be managed, related accounts,account composition, pre-existing client, account retention, pro bono activities, etc.).Additional Fees and ExpensesIn addition to the advisory fees paid to Quantum Capital Management, clients may also incur certaincharges imposed by other third parties, such as broker-dealers, custodians, trust companies, banks andother financial institutions (collectively “Financial Institutions”). These additional charges may includesecurities brokerage commissions, transaction fees, custodial fees, charges imposed directly by a mutualfund or ETF in a client’s account, as disclosed in the fund’s prospectus (e.g., fund management fees andother fund expenses), deferred sales charges, odd-lot differentials, transfer taxes, wire transfer andelectronic fund fees and other fees and taxes on brokerage accounts and securities transactions. TheFirm’s brokerage practices are described at length in Item 12, below. Quantum Capital Managementdoes not, however, receive any portion of these commissions, fees, and costs.Fee DebitClients generally provide Quantum Capital Management with the authority to directly debit their accountsfor payment of the Firm’s investment advisory fees.The Financial Institutions that act as qualifiedcustodians for client accounts have agreed to send statements to clients not less than quarterly detailingall account transactions, including any amounts paid to Quantum Capital Management.Fees for Management During Partial Quarters of ServiceFor the initial period of investment management services, the fees are calculated on a pro rata basis,based upon the date that client assets are transferred to the Firm.The Agreement between Quantum Capital Management and the client will continue in effect untilterminated by either party pursuant to the terms of the Agreement. Quantum Capital Management’s feesare prorated through the date of termination and any remaining balance is charged or refunded to theclient, as appropriate.Clients may make additions to and withdrawals from their account at any time, subject to QuantumCapital Management’s right to terminate an account. Additions may be in cash or securities provided thatQuantum Capital Management reserves the right to liquidate any transferred securities or decline toaccept particular securities into a client’s account. Clients may withdraw account assets on notice toQuantum Capital Management, subject to the usual and customary securities settlement procedures.However, Quantum Capital Management designs its portfolios as long-term investments and thePage 9 MarketCounsel 2016
Quantum Capital Management Disclosure Brochurewithdrawal of assets may impair the achievement of a client’s investment objectives. Quantum CapitalManagement may consult with its clients about the options and ramifications of transferring securities.However, clients are advised that when transferred securities are liquidated, they are subject totransaction fees, fees assessed at the mutual fund level (i.e. contingent deferred sales charge) and/or taxramifications.If assets are deposited into or withdrawn from an account after the inception of a quarter, the fee payablewith respect to such assets will not be adjusted or prorated.Item 6. Performance-Based Fees and Side-by-Side ManagementAs discussed in response to Item 5, above, Quantum Capital Management may render investmentmanagement services to qualified clients for a performance-based fee. This fee arrangement raisesconflicts of interest. The performance fee may be an incentive for Quantum Capital Management to makeinvestments that are riskier or more speculative
other investment advisors or financial services firms as a separate account manager. In this role, the Firm is hired directly by the financial services firm. Quantum Capital Management’s services are made available through the separate account mana
