Form ADV Part 2 | Sagewell

Form ADV Part 2A

The Brochure

August 30, 2022

955 Massachusetts Ave, #220

Cambridge, MA 02139

+1 617-397-3764

www.sagewellfinancial.com

This brochure provides information about the qualifications and business practices of Sagewell Investment Advisors LLC. (“SIA” or “the Company”). If you have any questions about the contents of this brochure, please contact Jeff Wright, SIA’s Chief Compliance Officer at the number above.

Additional information about SIA is also available on the SEC’s website at: www.adviserinfo.sec.gov.

SIA is registered as an investment adviser with the United States Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940 (the “Advisers Act”). Registration as an investment adviser with the SEC does not imply a certain level of skill or training. In addition, the information in this Brochure has not been approved or verified by the SEC or by any state securities authority.

Item 2. Material Changes

This is SIA’s initial Form ADV filing. The Company is filing under the 120-day provision allowable under Section 203 of the Investment Advisers Act of 1940. This brochure describes the goals and intentions of SIA to establish a registered investment advisory business. At present, the Company is in discussions and finishing the final planning stages for its investment advisory offering. Therefore, the information contained herein is provisional in nature and subject to change as the plans become final. The Company does not have any clients, is not currently conducting any marketing or sales activities surrounding the offering, and is not managing any client assets.

SIA expects to be eligible for SEC registration as a “robo-adviser” and will update this brochure in its entirety within 120-days of the effective date of its SEC registration, or two weeks prior to the commencement of its advisory activities, whichever date is soonest.

Item 3. Table of Contents

Item 2. Material Changes
Item 3. Table of Contents
Item 4. Advisory Business
Item 5. Fees and Compensation
Item 6. Performance Based Fees and Side-by-Side Management
Item 7. Types of Clients
Item 8. Methods of Analysis, Investment Strategies and Risk of Loss
Item 9. Disciplinary Information
Item 10. Advisory Affiliates
Item 11. Code of Ethics, Participation, or Interest in Client Transactions and Personal Trading
Item 12. Brokerage Practices
Item 13. Review of Accounts
Item 14. Client Referrals and Other Compensation
Item 15. Custody
Item 16. Investment Discretion
Item 17. Voting Client Securities
Item 18. Financial Information

Item 4. Advisory Business

Sagewell Investment Advisers LLC is a Delaware limited liability company formed in 2022. The Company is a wholly owned subsidiary of Sagewell Financial Inc. Sagewell Financial Inc. provides financial services, including banking services and educational guidance to individuals at or nearing retirement age. Sagewell Financial Inc. established the Company to provide software-based investment advisory services to its clients aimed at providing assistance in the management of retirement assets. The Company is developing investing technology which will provide clients with the ability to invest in a selection of model portfolios based on their investment goals.

The model portfolios, including the securities underlying the model, will be constructed and maintained by SIA. The models and the securities underlying the models will be recommended on the basis of the relevant risk tolerance, diversification, income, and life stage needs of the client. SIA’s model portfolios are not tailored to the individual needs of clients. SIA will use a client profile questionnaire to determine the model that aligns with clients’ financial situation including its disclosed risk tolerance and investment objectives. As part of obtaining a client’s financial situation and investment objectives, such client may request a reasonable level of restrictions on investing in certain securities. SIA will consider such restrictions in recommending model portfolios. SIA will not have discretionary authority to decide whether the client invests its funds in the recommended model.

SIA is not currently providing advisory services and does not have any clients or assets under management as at the date of this brochure.

Item 5. Fees and Compensation

Management Fees

SIA anticipates charging a flat fee to clients for access to the investment management services. The Company will generally charge a maximum fee of $360 per year to clients for access to the investing platform and the fee is inclusive of all brokerage and transaction fees associated with the investing and rebalancing of the account.

The management fee will be charged monthly in advance at a rate of 1/12 the total fee agreed with each client. SIA will directly debit the management fee from the client’s Sagewell Financial Inc. checking account (please see Item 15 below for more information regarding custody). The specific details surrounding the billing of the account will be memorialized in the client’s investment management agreement.

SIA reserves the right to negotiate fees with individual clients and may offer incentives or discounts to clients based on specific factors, such as the size of the investment, the length of the relationship, the client’s engagement with SIA’s affiliates, etc.

Termination Fees

The investment management agreement between SIA and the client may be terminated by either party via a 15-day written notice. Upon termination of a client account, SIA will provide a refund of the prorated amount of the management fee not earned within a reasonable period of time, not to exceed two quarters from the date of termination. SIA does not charge a termination fee to clients, however, clients may be charged additional expenses for liquidation and transfer of any assets in the account as outlined below.

Additional Expenses

SIA will charge a “custody fee” to all clients equal to the actual cost of an annual audit of the account by a PCAOB registered accountant. Please see Item 15 below for further discussion of the audit and the fees associated. Clients will also be responsible for all fees and expenses charged by DriveWealth, LLC (“DriveWealth”), a registered broker-dealer with the SEC and a member of FINRA, that are related to the establishment, maintenance, and termination of their accounts, including any returned check and wire fees, telephone assisted trading fees, fees for hard copy trade confirmations and account statements, tax document fees, all charges associated with electronic asset transfers into or out of the account, among others.

A full schedule of all fees and expenses charged by or passed through to the client by Sagewell Financial Inc., the Company, and DriveWealth will be made available to clients prior to the establishment of the account.

The Company anticipates that the model portfolios will be invested into a variety of exchange traded funds (ETFs), which charge their own fees and expenses to investors and which are in addition to the management fee noted above. The fees and expenses charged by any underlying investment will be outlined in the relevant prospectus and offering materials which will be available to clients for review prior to investing.

Item 6. Performance Based Fees and Side-by-SideManagement

Performance based or incentive fees are fees based on a share of capital gains on or capital appreciation of the assets of a client. An adviser charging performance fees to some accounts face a variety of conflicts because the adviser can potentially receive greater fees from its accounts having a performance-based compensation structure versus those accounts it charges a fee unrelated to performance (e.g., an asset-based fee). As a result, the adviser may have an incentive to direct the best investment ideas to, or to allocate or sequence trades in favor of, the account that pays a performance fee.

SIA does not anticipate charging clients a performance-based fee. However, investments recommended by SIA, within the model portfolios may charge performance-based fees to shareholders of the investment. Those performance-based fees will be paid to the unaffiliated adviser of the relevant investment and SIA will not receive any portion of such fees. Clients should read carefully the fees and expenses information in the relevant disclosure documents for investments recommended by the Company to gain a full understanding of the fees and expenses associated with the investment. SIA will make the prospectus or other disclosure documents available to clients on the platform prior to making any investment in a SIA model.

Item 7. Types of Clients

SIA anticipates providing investment services to natural person clients who are at, or nearing, retirement age.

Item 8. Methods of Analysis, Investment Strategies and Risk of Loss

All Investing involves a risk of loss, including the risk of principal. SIA expects to design a collection of model strategies that will be diversified across risk profiles, investment objectives, asset classes, geographies and sectors. SIA will select the individual investments, which in its opinion, aligns best with the objective of to the particular model portfolio. Underlying investments may vary across or within models based on the specific restrictions or needs of the client (i.e. no sin stocks, state of residence for tax purposes, etc.)

A given portfolio construction will be driven by an anticipated set of risk tolerance, age, and general needs of seniors and retirees. Upon SIA’s receipt of a client’s financial situation, including its risk tolerance and investment objectives, SIA will recommend a particular model portfolio or portfolios for such client to invest its funds. The recommendations are, in SIA’s view, appropriate and in the best interest of the client generally based on the information contained in the client profile. SIA will perform reasonable due diligence to ensure that the client understands the questions being asked, and that the responses provided in the questionnaire are accurate. However, SIA cannot guarantee that the responses are accurate, and SIA relies on the accuracy of the responses provided by the client in the client profile in connection with providing such investment advice.

As SIA completes the construction of the model portfolios and the underlying investments utilized in each portfolio, it will provide further information as to the material risks related to investment strategies and or methods of analysis. As SIA reasonably anticipates the use of ETFs in constructing the portfolios, below is a summary of investment strategies and material risks related to the use of ETFs:

Summary of Investment Strategies

ETFs. SIA periodically reviews the entire population of more than 1,000 ETFs to identify the most appropriate ETFs to represent each asset class in our recommended portfolios. We look for ETFs that minimize cost and tracking error and offer market liquidity. Many investors do not realize that ETFs do not exactly track the indexes they were created to mimic. Choosing an ETF with a low expense ratio that does not track the asset class recommended by our service runs the risk of sub-optimizing a model portfolio’s investment objectives, and as an extension, the client’s portfolio’s performance. SIA chooses ETFs that are expected to have sufficient liquidity to allow client withdrawals at any time. Finally, SIA selects ETFs that have conservative and shareholder-friendly securities lending policies.

Summary of Material Risks

ETF Risks, including Net Asset Valuations and Tracking Error. ETF performance may not exactly match the performance of the index or market benchmark that the ETF is designed to track because 1) the ETF will incur expenses and transaction costs not incurred by any applicable index or market benchmark; 2) certain securities comprising the index or market benchmark tracked by the ETF may, from time to time, temporarily be unavailable; and 3) supply and demand in the market for either the ETF and/or for the securities held by the ETF may cause the ETF shares to trade at a premium or discount to the actual net asset value of the securities owned by the ETF. Certain ETF strategies may from time to time include the purchase of fixed income, commodities, foreign securities, American Depositary Receipts, or other securities for which expenses and commission rates could be higher than normally charged for exchange traded equity securities, and for which market quotations or valuation may be limited or inaccurate. Clients should be aware that to the extent they invest in ETF securities they will pay two levels of advisory compensation – subscription fees charged by SIA plus any management fees charged by the issuer of the ETF. This scenario may cause a higher advisory cost (and potentially lower investment returns) than if a client purchased the ETF directly.

An ETF typically includes embedded expenses that may reduce the fund’s net asset value, and therefore directly affect the fund’s performance and indirectly affect the model portfolio performance or an index benchmark comparison. Expenses of the fund may include ETF management fees, custodian fees, brokerage commissions, and legal and accounting fees. ETF expenses may change from time to time at the sole discretion of the ETF issuer. SIA discloses each ETF’s current information, including expenses, on the Site. ETF tracking error and expenses may vary.

Item 9. Disciplinary Information

SIA has not been involved in any legal or disciplinary events that would be material to a client’s evaluation of the Company.

Item 10. Advisory Affiliates

As detailed in Item 4 above, SIA is a software-based investment adviser to retirees aimed at providing assistance with respect to managing their retirement needs, which includes providing a comprehensive suite of services to clients with the aim of assisting in the management of their retirement income. In such respect, SIA expects to contract with several unaffiliated third-party service providers to underlie the offering of its services. No such unaffiliated third-party service providers are deemed related persons under the Advisers Act.

Item 11. Code of Ethics, Participation, or Interest in Client Transactions and Personal Trading

Pursuant to Rule 204A-1 of the Advisers Act, SIA has adopted a written Code of Ethics (the “Code) predicated on the principal that the Company owes a fiduciary duty to its clients. The Code is designed to address and avoid potential conflicts of interest and is applicable to all officers, directors, members, partners or employees of SIA, as well as their immediate family members (collectively the “Covered Persons”). SIA requires its Covered Persons to act in the clients’ best interests, abide by all applicable regulations and avoid any action that is, or could even appear to be, legally or ethically improper.

The Code also requires Covered Persons to: 1) pre-clear certain personal securities transactions, 2) report personal securities transactions on a quarterly basis, and 3) provide SIA with a detailed summary of certain holdings (both initially upon commencement of employment and annually thereafter) over which such Covered Persons have a direct or indirect beneficial interest.

A copy of SIA’s Code shall be provided to all clients on the platform, as well as any potential client, upon request.

Item 12. Brokerage Practices

SIA’s investment advisory services will consist solely of providing, and recommending, a selection of model portfolios for investment to the client. The Company has engaged with DriveWealth to conduct all trading and rebalancing of the model portfolios. DriveWealth will not have any discretion regarding the trades to be executed and will affect transactions in line with SIA’s instructions.

DriveWealth will route orders to various exchanges or market centers for execution and will regularly review the quality of execution to ensure that it is seeking to obtain the best execution of SIA’s client transactions. DriveWealth will have sole discretion regarding order routing decisions and will be responsible for ensuring that all trades are conducted in line with the established instructions of SIA. SIA’s clients will not have any interaction directly with DriveWealth and will not be permitted to instruct DriveWealth directly. While DriveWealth will, as described above, seek to obtain best execution of SIA’s client transactions, clients should be aware that, by SIA exclusively engaging with DriveWealth for all of its trading and rebalancing activities with respect to the model portfolios, DriveWealth may not provide lowest possible transactions cost. However, as described below, SIA believes the selection of DriveWealth is in the best interest of SIA’s clients, given the expanded suite of services – and the efficiency of one entity that provides such suite of services – that DriveWealth will provide in connection with the client accounts.

DriveWealth will be responsible for managing all of the account activities, including receipt and delivery of securities; receipt and payment of funds owed by or to SIA’s clients, and providing custody for securities and funds held by SIA’s clients in the program, as discussed further in Item 15 below. SIA will be responsible for monitoring all transactions in its client accounts and for notifying DriveWealth if it believes that an error has been made in the trading. If SIA identifies a trading error, it will work with DriveWealth to resolve the error and will ensure that any client affected by a trade error is made whole for any losses in the account. If there is a gain to the client as a result of a trading error, the client will keep the gain.

SIA will be responsible for providing allocation instructions to DriveWealth with regard to the model portfolios. DriveWealth will seek to execute trades on an aggregated basis to the extent possible across SIA’s model portfolios, and such trades and will be allocated in accordance with such allocation instructions.

SIA does not engage in the use of “soft dollars” or commission sharing agreements.

Item 13. Review of Accounts

SIA anticipates the services to be offered via its technology platform and for clients to have immediate access to their investment information and accounts. SIA will incorporate the investment account into overall financial reporting provided to the client as part of its broader business relationship and accessible by the client in real time. Additionally, SIA will contact a client, no less than annually, to request that the client updates the questionnaire (and more frequently if there are any material changes to a client’s financial situation and / or investment objectives) to ensure that any recommendation SIA provides is up to date with respect to the client. To the extent there are material changes to a client’s response to any subsequent questionnaire. SIA will provide a recommendation that is commensurate with such questionnaire. Furthermore, DriveWealth, in its capacity as broker-dealer for the accounts will provide all trade confirmations and monthly account statements as required by FINRA and SEC regulations.

Item 14. Client Referrals and Other Compensation

SIA anticipates creating partnerships and referral programs with its service providers and partners at a future point, but has not done so as of the date of this brochure. SIA may receive revenue sharing payments or compensation for inclusion of certain products in its model portfolios.

Item 15. Custody

All client funds and securities will be held in custody by DriveWealth. Clients wishing to engage the Company to provide investment advisory services will be required to establish a SIA checking account with Sagewell Financial Inc.’s banking service provider via separate agreement (“Banking Agreement”). The Banking Agreement provides Sagewell Financial Inc. with the ability to deposit and withdraw funds as necessary to provide the services elected by the client, including advance deposits of expected income. As Sagewell Financial Inc. and the Company are under common control, SIA will be deemed to have custody over its clients’ accounts. As such, the Company will be subject to the provisions of Rule 206(4)-2 of the Investment Advisers Act (“the Custody Rule”).

To ensure compliance with the Custody Rule and to provide meaningful protection to its clients, SIA will engage an independent auditor that is registered with the Public Company Accounting Oversight Board (PCAOB) to conduct surprise annual audits of its clients’ accounts. As noted above in Item 5, fees associated with the surprise annual audit will be passed through to clients. All clients will be provided with a written custody fee disclosure and be required to acknowledge and consent to the charging of such fees prior to becoming a SIA client.

In addition to the surprise annual audit, all clients will have access to real time reporting on the transactions in their accounts via the online platform and will receive at least quarterly statements from SIA Financial Inc., the Company, and DriveWealth. All clients should carefully review and compare each such statement to ensure that the information contained in such statement is accurate and does not contain any discrepancies.

Item 16. Investment Discretion

SIA has sole discretion in the construction of the model portfolios and the selection of the specific investments held within the models. Clients will have the ability to place reasonable restrictions on their accounts, but will not have any ability to direct the purchase and sale of securities within the SIA models outside of the selection of the rebalancing frequency.

Item 17. Voting Client Securities

SIA does not anticipate accepting proxy voting authority over client accounts. DriveWealth will send notices regarding proxy votes and other corporate actions to the eligible clients directly. SIA will provide advice and assistance regarding proxy votes and corporate actions to its clients upon request, but will not bear responsibility for making voting decisions or ensuring that clients vote the proxies. SIA clients will be instructed as to how to cast their proxy votes or votes on other corporate actions where applicable, but it will be solely the responsibility of the client to act.

Item 18. Financial Information

SIA has never filed for bankruptcy and is not aware of any financial condition that is expected to affect its ability to manage client accounts.