March 15, 2023
HORAN Securities, Inc. (also referred to as “HSI”, “HWM”, or “we”, “our”, “us”) is dually registered with the U.S. Securities and Exchange Commission (“SEC”) as an Investment Adviser and Broker-Dealer (member FINRA/SIPC). HSI conducts its investment advisory business under the business name HORAN Wealth Management (“HWM”). Furthermore, HSI is under common control with Horan Capital Advisors, LLC
(“HCA”). HCA is an independently SEC registered Investment Adviser within the HORAN enterprise. The majority of our financial professionals (“Professionals”) are dually licensed and registered with both HSI and HWM, allowing them to offer you brokerage and investment advisory services. HSI additionally offers various types of life, long-term care, variable annuities, and disability insurance strategies for individual consumers. HSI additionally is in the market to present, sell, and manage retirement plans on a business-to-business relationship, such as 401k programs. Brokerage and investment advisory services and the fees associated, differ and it’s important that you understand the differences. Free and simple tools are available to you to research firms and financial professionals at https://www.investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.
Our Professionals are qualified to offer brokerage services and investment advisory services. Each Professional generally provides access to a range of investment products, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), life insurance, annuities, and secondary market certificates of deposit (“CDs”). The range of investment options available to you may be limited depending on your investment size, ability to meet account minimum requirements, your personal suitability and other such qualifications. We encourage you to ask your Professional whether any investment limitations or account requirements apply.
Furthermore, you should ask your Professional if the advice they are providing or the recommendations they offer are part of a brokerage service or advisory service. Some of the key differences between brokerage and investment advisory services are described below.
The investment advisory services we offer include asset management, pension consulting, publication of periodicals/newsletters, educational seminars and financial planning.
We manage accounts on a discretionary basis or non-discretionary basis, as agreed to by you and your Professional. Discretionary means we will actively manager your assets and implement transactions without seeking your prior consent. Non-Discretionary means we will seek your prior consent for every transaction. Those types of accounts are not actively managed.
We’ll monitor advisory accounts and specific investments within accounts, on an ongoing basis to align with your investment goals. However, in some cases, such as financial planning only engagements, we will not provide ongoing monitoring. Investment performance and market conditions are reviewed by committee weekly.
For more detailed information about our advisory services, you may request a free copy of our Form ADV and refer to Items 4 & 7 of ADV Part 2 found at the SEC’s Investment Adviser Disclosure website.
We are an introducing broker-dealer, meaning we have a contract with a clearing firm who handles the execution and settlement of trade orders it receives from us and our clients. The clearing firm also holds your securities for safekeeping (known as having “custody” of your securities).
In most cases, we provide recommendations to you on specific investments, but you make the final investment decisions for your account.
We do not monitor brokerage account investments for you unless we state otherwise in writing.
For investment advisory services, we charge an ongoing monthly, asset-based fee of a percentage of the value of your assets in the account we manage, which will be reflected in quarterly statements. The more assets you have in this type of account, the more you’ll pay in fees, which creates an incentive to encourage you to increase the size of your account. Advisors receive a standard, fixed percentage of the fee for compensation in order for us to mitigate conflicts of interests.
For investments in stocks or ETFs, the transaction-based fee is usually charged as a separate commission or sales charge. For investments in bonds, this fee is typically included as part of the price you pay for the investment (called “markup or markdown”).
Commissions: we charge a transaction-based fee every time you buy or sell an investment. The amount you pay as a transaction-based fee varies according to the particular investment and amount invested. We collect these fees each time a transaction takes place, which creates an incentive for us to encourage you to trade often.
If applicable to your account, we will charge you directly for other fees in addition to brokerage commissions and/or advisory fees, including: (1) account maintenance fees such as custody, trade confirmation processing, corporate actions and transfer fees; (2) cash management fees, such as cash sweep, checking and wire fees; and (3) investment-specific fees such as those for administration of alternatives investments or for foreign securities. You should understand that these fees are not charged by us if your investment is in an account that is held directly with the fund sponsor. Advisory fees do not include any brokerage commissions, transactional costs, redemption fees, wire transfer fees, overnight check fees, account closing fees, or any other charges imposed by the administrator, custodian, or other service provider.
You will pay fees and incur costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time.
For additional information, please request a copy of our Regulation Best Interest (“Reg BI”) Disclosure Brochure and review Item 5 of our ADV Part 2A. You may also refer to your account opening paperwork, consult with your financial professional, or contact our Chief Compliance Officer, Thomas Shoemake.
When we provide you with a recommendation as your broker-dealer or act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money may create some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations and investment advice we provide you. Here are some examples to help you understand what this means:
We receive compensation from third parties related to investments you make in certain products, including mutual funds, ETFs and annuities. This compensation includes ongoing distribution charges, such as 12b-1 fees or commission trails, which an investment product charges you and then pays to us.
HORAN Capital Advisors, LLC (referred to as “HCA”) is under indirect common control with HSI. Depending on the relationship you have with us and the products or services you receive, your financial professional will be paid commission and/or fees from the sale of mutual funds, insurance, and other investments and services offered. Certain officers and directors of HCA also serve as officers and directors of HSI which create an incentive for us to refer business between the two entities. For accounts shared between HWM and HCA, higher fees are applied compared those managed directly by HWM. Under the sub-advisory arrangement, a portion of the advisory fee is paid to both entities under the terms of a Sub-Advisory Agreement between the entities. This incentivizes both entities to utilize each other’s services because of the higher fee schedule, referral opportunities, and fee sharing arrangements.
HORAN Associates, Inc. (referred to as “HAI”) is an employee benefits / insurance brokerage firm offering, health, disability, dental, vision and miscellaneous other lines of benefit coverage. HAI owns a 35% stake in HSI, and is under common ownership and control as HSI. We encourage our Professionals to refer you to use companies within our network of organizations. If you elect to purchase an insurance product through HAI,
your Professional will receive a discretionary form of compensation from that purchase, therefore creating an incentive to encourage you to buy insurance products with us.
All HORAN affiliated employees, in good standing and after background review, have the opportunity to enter into a solicitors arrangement with HORAN Wealth Management, the investment advisory part of HSI. Employees that refer business to HWM will receive a solicitor’s fee of 10% of the first years revenue derived from the assets under management. Currently, we do not enter into solicitors’ arrangements with individuals outside of HORAN.
For additional information, please request a copy of our Regulation Best Interest (“Reg BI”) Disclosure Brochure and see Items 4, 5, 10 and 14 of our ADV Part 2A. You may also refer to your account opening paperwork or consult with your financial professional.
All of our Professionals are employees of HSI, or one of our affiliated companies. The employment agreement between each Professional and HSI sets out the payments we make to them. Those who provide investment advisory services receive a portion of the advisory fee you pay. Those who provide you brokerage services receive a portion of the commissions or markups/markdowns from your trades. Employees that market retirement plans to businesses receive a commission based on the sale of a plan. HORAN collects an ongoing management fee for administering the plan. Receiving a portion of the advisory or brokerage fees you pay to us creates an incentive for them to encourage you to increase your investment account size or trade more frequently. Our Professionals also receive different levels of compensation for selling different types of investments or services. This could include, for example, a share of the 12b-1 fees2, trail commission3, or sales loads4 paid to us by an investment product sponsor. Although your Professional is required to recommend investment products or manage your account in your best interest, these additional forms of compensation create a potential incentive for them to recommend specific financial products.
Firm - YES. Financial Professionals - No.
For additional information on advisory services, see our Form ADV brochure on the SEC's Investment Advisers Public Disclosure website ("IAPD"), which can be found on Investor.gov, or on our website and any brochure supplement your Professional provides.
To report a problem to the SEC, you can visit www.Investor.gov or call the SEC’s toll‐free investor assistance line at (800) 732‐0330. To report a problem to FINRA, you can visit www.finra.org or call their help line at (240) 386-4357.
If you have a problem with your investments, account or financial professional, please contact our Chief Compliance Officer, Thomas Shoemake, in writing at 8044 Montgomery Road, Ste 640, Cincinnati, Ohio 45236 or by email at TomS@horanwealth.com.
1 Sponsor means the underwriting insurance company, mutual fund, or other investment company.
2 A 12b-1 fee is an annual marketing or distribution fee on a mutual fund. The 12b-1 fee is considered to be an operational expense and, as such, is included in a fund's expense ratio.
3 A trailing commission is a fee that you pay a financial professional each year that you own an investment. The purpose of a trailing commission is to give an advisor an incentive to review a client's holdings and provide advice.
4 A load is a sales charge paid by mutual fund investors to the brokers or agents who sell the fund to them.