beacon firm brochure mar 14 2017v3€¦ · b. types of advisory services 1. portfolio management...

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FirmBrochure(Part2AofFormADV)

751CoolSpringsBlvd.,Suite106

Franklin,Tennessee37067

7003ChadwickDrive,Suite321

Brentwood,Tennessee37027

Telephone:615‐224‐9794

Email:[email protected]

Thisbrochureprovidesyouwith informationabout thequalifications,businesspracticesandnatureofadvisoryservicesofBeaconCapitalManagement,LLC,allofwhichshouldbeconsidered before becoming an advisory client of our firm. Please contact Frankie V.Merritt,ChiefComplianceOfficer,ifyouhaveanyquestionsaboutthisnarrativebrochure.

The information in thisbrochurehasnotbeenapprovedorverifiedby theUnitedStatesSecuritiesandExchangeCommission(“SEC”),orbyanystatesecuritiesauthority.

Weare registeredasan InvestmentAdviserwith theSEC.Nonetheless, registrationwiththeSECdoesnotimplyanylevelofskillortraining.Additionalinformationaboutourfirmisavailableon theSEC’swebsiteatwww.adviserinfo.sec.gov. Youcansearch thissitebyusingaunique identifyingnumber, knownas aCRDnumber. Our firm’sCRDnumber is156228.

March14,2017

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ITEM2 MATERIALCHANGES

SummaryofMaterialChanges

Beacon CapitalManagement, LLC (“Beacon CapitalManagement”) last filed an annual updatingamendmentonMarch16,2016.Sincethatdate,theFirmhasmadethefollowingmaterialchangestoitsfirmbrochure:

Oneinvestmentadviserrepresentative,WesleyMcNeil,resignedfromourfirm.

OurChiefComplianceOfficerhaschangedfromC.PeteBensontoFrankieV.Merritt.

Wehaveaddedabranchofficeat7003ChadwickDrive,Ste321,Brentwood,TN37027.

All itemsaddressed inthisbrochurehavebeenupdatedtoreflectBeaconCapitalManagement’scurrentadvisorybusiness. BeaconCapitalManagementhasmadenoothermaterial changes tostructure,personnel,oroperations.

IfyouwouldliketoreceiveacompletecopyofourFirmBrochure,pleasecontactusbytelephoneat615‐224‐[email protected].

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ITEM3 TABLEOFCONTENTS

Item2 MATERIALCHANGES........................................................................................................................................2

Item3 TABLEOFCONTENTS.......................................................................................................................................3

Item4 ADVISORYSERVICES........................................................................................................................................4

Item5 FEESANDCOMPENSATION...........................................................................................................................6

Item6 PERFORMANCEBASEDFEESANDSIDE‐BY‐SIDEMANAGEMENT...........................................8

Item7 TYPESOFCLIENTS.............................................................................................................................................9

Item8 METHODSOFANALYSIS,INVESTMENTSTRATEGIES:RISKOFLOSS...................................9

Item9 DISCIPLINARYINFORMATION..................................................................................................................12

Item10 OTHERFINANCIALINDUSTRYACTIVITIESANDAFFILIATIONS...........................................12

Item11 CODEOFETHICS,PARTICIPATION,ORINTERESTINCLIENTTRANSACTIONSANDPERSONALTRADING........................................................................................................................................................14

Item12 BROKERAGEPRACTICES..............................................................................................................................14

Item13 REVIEWOFACCOUNTS.................................................................................................................................16

Item14 CLIENTREFERRALSANDOTHERCOMPENSATION......................................................................17

Item15 CUSTODY...............................................................................................................................................................17

Item16 INVESTMENTDISCRETION.........................................................................................................................18

Item17 VOTINGCLIENTSECURITIES....................................................................................................................19

Item18 FINANCIALINFORMATION........................................................................................................................19

PRIVACYPOLICY.................................................................................................................................................................21

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ITEM4 ADVISORYSERVICES

A. FIRMDESCRIPTION

BeaconCapitalManagement,LLC,(“BeaconCapitalManagement”or“Firm”)isorganizedasa Tennessee limited liability company that was founded in 2005. Beacon CapitalManagementisawealthmanagementfirmthatprovidesselectionofadvisoryprogramsorservicesdirectedbythirdpartyinvestmentadvisoryfirms.

PrincipalOwners:TheprincipalownersofourfirmareJonathanS.MaxsonandCameron“Pete” Benson. Jonathan S. Maxson and Cameron “Pete” Benson are also InvestmentAdviserRepresentativesfortheFirm.

B. TYPESOFADVISORYSERVICES

1.PortfolioManagementServices

BeaconCapitalManagementoffersdiscretionarymanagementservicestoclientsbasedonthe specific needs and objectives of such persons. As a discretionary adviser, BeaconCapitalManagementwill be granted full discretion and authority tomanage the client’saccountsubjecttoanywrittenguidelineswhichtheclientmayprovide.

Accordingly,BeaconCapitalManagementisauthorizedtoperformvariousfunctions,attheClient’s expense, without further approval from the Client. Such functions include thedeterminationofsecuritiestobepurchasedorsold.OnceaClient’sportfolioisconstrued,Beacon CapitalManagementwill provide continuous supervision and rebalancing of theportfolio as changes inmarket conditions and as Client circumstancesmay require. Asnoted,BeaconCapitalManagementwillhavediscretionaryauthority tomanageadvisoryaccounts, andwill not obtain approval prior toplacing trades or thepurchase or sale ofassets.

Beacon Capital Management will offer financial planning as part of the portfoliomanagement services. Beacon Capital Management will review a Client’s investmenthorizon,objectives,taxsituation,incomeandliquidityneedsandwillrecommendanassetallocationmixbasedonsuchcriteria.

2.ThirdPartyMoneyManagementServices

Beacon Capital Management provides access to investment service programs in whichclientaccountsaremanagedbyindependentthirdpartyinvestmentadvisors.OurFirmhasentered into agreements with various third parties investment advisors to offer for thepurpose of having their products and services available to our clients. These programsprovide investmentopportunitiesamongmutual funds, variableannuities, stocks, bonds,andadditionalsecurities.

Our InvestmentAdviserRepresentatives (“IAR”)meetwith clients to analyze the client’sneed(s) of third party advisory programs or services by collecting the client’s financialinformation including the client’s suitability. Based on the information provided by theclient, a Beacon Capital Management IAR will assist the client in determining anappropriate asset allocation amount available independent third partymoneymanagersbased on the investment style and asset classes employed by those money managers.Clients will receive separate Form ADV Parts 2A of each selected third‐party money

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manager and will enter into a separate investment management agreement with eachthird‐party money manager selected by Beacon Capital Management. Clients areencouraged to obtain and carefully review the contracts and disclosure documents,includingFormADVPart2A,ofthethirdpartymoneymanagerswhoseservicestheyareconsidering so they understand fully the services being provided and the fees beingcharged. The services, reports and contract termination provisions provided by theseprogramsvaryasdothecosts.Weencourageourclientstocompareprograms.

The third‐party managers will be granted discretionary trading authority to provideinvestment supervisoryservices for thatportionof theclient’sportfolioallocated to thatparticular third‐party money manager. Under this arrangement, Beacon CapitalManagement does notmake any custody arrangements for client’s funds and securities.Themoneymanagerswilltradeindependentlyofoneanother.Therecanbenoassurancethatthetradingstrategiesemployedbyathirdpartymoneymanagerwillbesuccessful.

BeaconCapitalManagementatalltimesretainstheauthoritytoterminatetherelationshipwiththethird‐partymoneymanagersortoaddanewthird‐partymoneymanagerwithoutspecific client consent. BeaconCapitalManagement’s rolewill be tomonitor theoverallfinancialsituationoftheclient,tomonitortheinvestmentapproachandperformanceofthethird party manager, and to assist the client in understanding the investments of theportfolio.

Beacon Capital Management generally utilizes third‐party money manager platformsprovided by TD Ameritrade, Inc., Pershing, LLC, Fidelity Investments, National FinancialServices,LLC,MilleniumTrustCompany,andConstellationTrustCompany.

3.ConsultingServices

Beacon CapitalManagement provides consulting services on investment relatedmatters(includingestateplanning,portfolioreviewetc.)onastandaloneseparate feebasis. OurFirmwill be compensated on anhourly basis for its consulting services. The consultingfeesarenegotiablebutgenerallyarebasedonanhourlyrateat$250perhour.Clientsaregenerally required to enter into a consulting agreement setting forth the terms andconditionsoftheengagement,includingtermination,descriptionofservicesandportionofthefeethatisduefromtheclientpriortothefirmcommencingservices.

C. TAILOREDSERVICES


BeaconCapitalManagementmanagesitClientsaccountsbasedontheindividualneedsofourClientsandthesuitabilityofproductsandservices.WemakeathoroughassessmentofourClient’sgoals,objectives,investmenthorizon,andrisktolerance.

BeaconCapitalManagement requires that awritten InvestmentManagementAgreement(“Agreement”)besignedbytheClientpriortotheengagementofservices.TheAgreementoutlinestheservicesrenderedbyBeaconCapitalManagementandthefeesthattheClientwillbecharged. TheAgreementgrantsBeaconCapitalManagementwrittenauthority todeductfeesfromcustodialaccounts.

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ClientsareadvisedtopromptlynotifyBeaconCapitalManagementifthereareanymaterialchanges in their financial situations, investment objectives, or in the event theywish toalteranyguidelinesuponinvestmentmanagementservices.

Agreementsmaynotbeassignedwithoutpriorconsent.


Theselectionofthirdpartymoneymanagerisbasedonindividualneedsofourclientsandthesuitabilityofproductsandservices.Ouradviceisbasedonthoroughassessmentofourclient’s goals, objectives, investment horizon, and risk tolerance and the investmentphilosophyofthethirdpartymoneymanager.

D. WRAPFEEPROGRAMS

WrapFeeProgramsarearrangementsbetweenbroker‐dealers,investmentadvisers,banksandotherfinancialinstitutionsandaffiliatedandunaffiliatedinvestmentadvisersthroughwhich the Clients of such firms receive discretionary investment advisory, execution,clearing and custodial services in a “bundled” form. In exchange for these “bundled”services,theClientspayanall‐inclusive(or“wrap”)feedeterminedasapercentageoftheassetsheldinthewrapaccount.

BeaconCapitalManagementisnotasponsorofanddoesnotparticipateinanyWrapFeeProgram(s).

E. ASSETSUNDERMANAGEMENT

When calculating regulatory assets under management, an Investment Adviser mustinclude the value of any private fund over which it exercises continuous and regularsupervisory or management services. Beacon Capital Management has approximately$153,297,620onadiscretionarybasis.ThisAssetsunderManagement figure isbasedoncalculationsasofDecember31,2016.

ITEM5 FEESANDCOMPENSATION

A. ADVISORYFEES

1.PortfolioMoneyManagementServices

Beacon Capital Management will assess a Management Fee (the “Management Fee”) toprovidediscretionaryportfoliomanagementservices. TheManagementFee isanannualfeebasedonapercentageoftheClient’sassetsundermanagement.Clientsareassessedanannual assetmanagement fee of up to 2.0%of the value of a Client’s assets held in thatClient’s account. As noted in Item 4, Beacon Capital Management will offer financialplanningaspartoftheportfoliomanagementservicesaspartoftheManagementFee.


Underthisarrangement,theclientspaythethirdpartymoneymanagerstheprogramfeesincludingtheadvisoryfees,asdisclosedintheadvisoryagreementsandFormADVPart2Afor services performed in connectionwith the third partymoneymanager’s products orservices. The fees for discretionary asset management services are negotiable, but

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generallyrangefrom0.25%to2.00%.Thefinalfeeisdeterminedinconjunctionwiththeprogramselected,thesizeoftheaccount,andtheservicescovered.Thefinalfeeandothercharges exclusive of fees such as, brokerage, clearance, custody, and administrativeservices will be fully disclosed in the third party money manager’s advisory contract.Beacon Capital Management will receive referral fees from the third party moneymanagers. Clients must acknowledge such compensation arrangement by signing thesolicitor’sacknowledgement.

3.ConsultingServices

Beacon CapitalManagement provides consulting services on investment relatedmatters(includingestateplanning,portfolioreviewetc.)onastandaloneseparate feebasis. Theconsultingfeesarenegotiablebutgenerallyarebasedonanhourlyrateat$250perhour.Thehourlyfeeisnegotiable,butgenerallyisassessedonanhourlyratebasis.Consultingfeesarerequiredtobepaiduponcompletionofservice.

B. BILLINGPROCEDURES


TheManagementFeewillbeassessedquarterlycandwillbeequalto0.50%(2.0%onanannual basis) of the weighted daily average net assets (securities, cash, and cashequivalents)undermanagement(“NetAssets”)ofsuchClient’sAccount,averagedovertherelevantquarter.TheManagementFeeispayableinarrearsasofthefirstbusinessdayofeachquarterandcalculatedbeforeanyaccrualfororpaymentoftheManagementFee.TheManagement Fee will be appropriately prorated to reflect any withdrawals and/orcontributionswhichoccurduringaquarter,andshallbepaidtotheAdviserregardlessoftheAccount’sprofitability.BeaconCapitalManagementreservestherighttodiscountfeesbased on the needs and circumstances of Clients. All of the above‐referenced fees arenegotiable.Lowerfeesforcomparableservicesmaybeavailablefromothersources.


Advisoryfeesarebilledinaccordancewiththethirdpartymoneymanager’sfeestructure.Asoutlined in the InvestmentAdvisoryContractofeach thirdpartymoneymanager, thefees typically will be deducted directly from the client’s account on a monthly basis inarrears.

C. OTHERFEES&EXPENSES

Theremaybeadditionalcosts. Clientsmayincurno‐load12b‐1distributionfees;certaindeferred sales charges on previously purchased mutual funds. IRAs can incur certainchargesimposedbyotherthirdpartiesinconnectionwithinvestmentsmadethroughtheaccount,includingbutnotlimitedtoanannualmaintenancefees.

D. FEEPAYMENT&REFUNDPOLICY


AnyfeesduetoBeaconCapitalManagementshallbeinvoicedtoClientwhendueandshallbepaid,eitherbycheck/wiretransferorbymeansofadirectdebitfromClient’sAccount

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(where such debit is authorized in writing by Client) by not later than the twenty‐fifth(25th)businessdayaftertheClient’sreceiptofacorrectinvoiceforsuchfees.

TheClienthastherighttoterminatetheIAAgreementwithoutpenaltywithinthirty(30)businessdaysofenteringintotheIAAgreement. Inaddition,eitherpartymayterminatetheIAAgreementatanytimeuponthirty(30)days’writtennotice. Uponterminationofthe IA Agreement, management fees will be prorated to date of termination and anyunearnedportionofprepaidfeeswillberefunded.


BeaconCapitalManagementdoesnot receive its compensation from its clients; asnotedabove in Item5.A, the clientspay the thirdpartymoneymanagers. Clients areurged toreadtheFeePaymentandRefundPolicyoftherespectivethirdpartymoneymanager(s).

E. OTHERCOMPENSATION

1. CONFLICTSRELATEDTOCOMPENSATION

BeaconCapitalManagement’smanagementandsupervisedpersons(“personnel”)arealsoregisteredrepresentativesofKalosCapital,Inc.(“Kalos”),abroker‐dealer.SeveralBeaconCapitalManagementpersonnelareregisteredrepresentativesandplatformparticipantsofKalosCapital,Inc.wherebybrokerageandcustodyservicesareprovidedtoourinvestmentadviserrepresentatives.Inthatcapacity,theyarepaidcommissions,brokeragefees,12b‐1fees or other fees or payments for brokerage transactions on behalf clients, whichmayinclude clients who are also clients of Kalos Capital, Inc. Kalos is the only outlet forcommissionbasedsecuritiesbrokerage forourpersonnel. BeaconCapitalManagement’smanagementandsupervisedpersonsarenotpermittedtoactinthecapacityofregisteredrepresentativeswith any other firm. These arrangements pose conflicts of interest forpersonnel to the extent they have financial incentives to recommend sales or othertransactionstotheclientstoinducefees.

2. PRODUCTSANDSERVICESNOTEXCLUSIVE

ClientsorprospectiveclientsofBeaconCapitalManagementareundernoobligationtoactupon the recommendations of the Firm. Furthermore, if clients decide to accept ourrecommendations,theyarecertainlyundernoobligationtoeffectabrokeragetransactionorpurchaseinsuranceproductsthroughBeaconCapitalManagementorKalos.

3. INCOMEGENERATEDBYCOMMISSIONS

AconsiderableportionofBeaconCapitalManagement’spersonnel’scompensation(60%)is comprised of commissions and compensation from the sale of investment productsrecommended to clients, including asset‐based distribution fees,mutual fund sales fees,andinsurancecommissions.Thiscompensationisexclusiveofadvisorycompensation.

ITEM6 PERFORMANCEBASEDFEESANDSIDE‐BY‐SIDEMANAGEMENT

PerformanceFeesarebasedonashareof thecapitalgainsorcapitalappreciationof theassets of a Client. Fees based on performancemeans that Beacon Capital Managementwouldparticipatedirectlyintheaccount’sresults.“Side‐by‐SideManagement”referstoa

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situation in which the same Adviser manages accounts that are billed based on apercentage of assets under management (“Management Fee”) and at the same time itmanagesotheraccountsforwhichfeesareassessedonaperformancefeesbasis. BeaconCapitalManagementdoesnotchargeperformancebased feesanddoesnotconductside‐by‐sideinvestmentproductmanagement.

ITEM7 TYPESOFCLIENTS

BeaconCapitalManagementmanageswealthportfoliosformanydifferenttypesofclients.WegenerallyprovideadvicetoIndividualsandHighNet‐WorthIndividuals.


Theminimumaccountsizeforseparatelymanagedaccountsisgenerally$100,000.BeaconCapital Management reserves the right, in its sole discretion, to request reduction, orwaiverof,theminimuminitialinvestment.


Theminimumaccountsizeforthirdpartymoneymanagerswilldependonthetermsandconditionsofeachthird‐partymoneymanagertowhomBeaconCapitalManagementwillrefer clients. The minimum account size will be outlined in the Investment AdvisoryContractofeachthird‐partymoneymanager.

ITEM8 METHODSOFANALYSIS,INVESTMENTSTRATEGIES:RISKOFLOSS

A. METHODSOFANALYSIS

Beacon Capital Management generally employs fundamental analysis and technicalanalysiswhen analyzing securities to achieve the investment objectives and goals of theclient.

Fundamental analysis involves analyzing its financial statements and health, itsmanagementandcompetitiveadvantages,anditscompetitorsandmarkets.Fundamentalanalysisisperformedonhistoricalandpresentdatabutwiththegoalofmakingfinancialforecasts.Thereareseveralpossibleobjectives:toconductacompanystockvaluationandpredictitsprobablepriceevolution;tomakeaprojectiononitsbusinessperformance;toevaluateitsmanagementandmakeinternalbusinessdecisions;andtocalculateitscreditrisk. Fundamental analysis does not attempt to anticipate market movements. Thispresents a potential risk as the price of a security canmove up or down alongwith theoverallmarket regardless of the economic and financial factors considered in evaluatingstock.

Technicalanalysis isamethodofevaluatingsecuritiesbyrelyingon theassumption thatmarket data, such as charts of price, volume and open interest can help predict future(usually short‐term)market trends. Technical analysis assumes thatmarket psychologyinfluences trading in a way that enables predicting when a stock will rise or fall. Thetechnical indicators that the fund may consider include, but are not limited to, price,

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volume, momentum, relative strength, sector/group strength and moving averages.Technicalanalysisdoesnotconsidertheunderlyingfinancialconditionofacompany.Thispresentsariskthatapoorly‐managedorfinanciallyunsoundcompanymayunderperformregardlessofmarketmovement.

Analysisconsistsofidentifyinganinvestmentareaormacroopportunitywhereamarketdislocation has occurred and/or where an extraordinary risk/reward potential exists,identifyingbestofbreedemergingmanagers in the identified investmentarea,analyzingquantitative measurements to determine potential fit for Beacon Capital Management’sneedsandexpectations.

Third PartyMoneyManagement Services: Although Beacon Capital Management willseektoselectonlymoneymanagerswhowillinvesttheclientassetswiththehighestlevelof integrity, Beacon Capital Management will have no control over the day‐to‐dayoperations of any of its selected money managers. Beacon Capital Management doesperform due diligence on all managers chosen. Sources of information include, but notlimitedto,pastperformancenumbers,riskmetrics,backgroundchecksonmanagers,auditchecks and reference interviews. Nonetheless, Beacon Capital Management would notnecessarilybeawareofcertainactivitiesattheunderlyingmoneymanagerlevel,includingwithoutlimitationthemoneymanager’sengagementinunreportedrisks,investment“styledrift” or even fraud. As a result, there can be no assurance that money managers willconform their conduct in amanner that is consistentwithBeaconCapitalManagement’sexpectations.

Pleasenote that the third‐partymoneymanagersdeveloptheirown investmentanalysesand strategies. Each third‐partymoneymanagerwill provide to the client a copy of itsForm ADV Part 2A which includes information regarding methods of analysis andinvestmentstrategies.

B. INVESTMENTSTRATEGIES


Beacon Capital Management strives at all times to meet the individual investmentobjectivesofeachoftheirClients.DuringaninterviewwithanewClient,aBeaconCapitalManagementadvisorwillseektounderstandtheClient’sgoalsandtimehorizonwhilealsoevaluating the Client’s risk tolerance through discussion and feedback. The specificmethodsusedtomeetClientinvestmentobjectiveswillvarybut,ingeneral,BeaconCapitalManagement will construct well‐diversified investment portfolios that are comprised oflowexpenseratio,institutionalshareclassmutualfunds,exchangetradedfunds(“ETFs”),individualstocks,andetc.


The third party investment managers available through Beacon Capital Managementemployvariousinvestmentstrategiestohelpclientsmeettheirinvestmentobjectivesandgoals.Recommendationsconsistofdiversifyingassetsoverseveraldifferentassetclasses.This diversification process includes equities, mutual funds, bonds, annuities, andalternative investmentsofdifferentcompanies indiverse industrysectors.Our firmdoesnotmakeapracticeofrecommendingthirdpartymoneymanagersthatrecommendshort

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sales or margin transactions, but will employ these strategies upon the request of ourclients.Short‐termtrading,shortsales,margintransactions,andoptionswritinggenerallyholdgreaterriskandclientsshouldbeawarethatwhenutilizingthesestrategies,thereisanincreasedriskoflossofinvestmentprincipal.

C. RISKOFLOSS

Every effort is made by Beacon Capital Management to ensure positive outcomes ourClients.BeaconCapitalManagementwantsyoutobeawarethattherearemanydifferentevents that can affect the value of your assets or portfolio including, but not limited to,changes in financial statusof companies,market fluctuations, changes in exchange rates,trading suspensions and delays, economic reports, and natural disasters. All investmentprograms have certain risks that are borne by the investor. Investors may face thefollowinginvestmentrisks:

● Interest‐rate Risk: Fluctuations in interest rates may cause investment prices tofluctuate. Forexample,wheninterestratesrise,yieldsonexistingbondsbecomelessattractive,causingtheirmarketvaluestodecline.

● Market Risk: The price of a security, bond, ormutual fundmay drop in reaction totangibleand intangibleeventsandconditions. This typeofrisk iscausedbyexternalfactors independentofasecurity’sparticularunderlyingcircumstances. Forexample,political,economic,andsocialconditionsmaytriggermarketevents.

● InflationRisk:Whenanytypeofinflationispresent,adollarwillbeworthmoretodaythanadollarnextyear,becausepurchasingpoweriserodingattherateofinflation.

● Currency Risk: Overseas investments are subject to fluctuations in the value of thedollaragainstthecurrencyoftheinvestment’soriginatingcountry.Thisisalsoreferredtoasexchangeraterisk.

● ReinvestmentRisk:Thisistheriskthatfutureproceedsfrominvestmentsmayhavetobe reinvested at a potentially lower rate of return (i.e. interest rate). This primarilyrelatestofixedincomesecurities.

● Business Risk: These risks are associated with a particular industry or a particularcompanywithinanindustry.Forexample,oil‐drillingcompaniesdependonfindingoilandthenrefiningit,alengthyprocess,beforetheycangenerateaprofit.Theycarryahigherriskofprofitabilitythananelectriccompany,whichgeneratesitsincomefromasteady stream of customers who buy electricity no matter what the economicenvironmentislike.

● Liquidity Risk: Liquidity is the ability to readily convert an investment into cash.Generally, assets are more liquid if many traders are interested in a standardizedproduct.Forexample,TreasuryBillsarehighlyliquid,whilerealestatepropertiesarenot.

● FinancialRisk:Excessiveborrowingtofinanceabusiness’operationsincreasestheriskof profitability, because the companymustmeet the terms of its obligations in goodtimesandbad.Duringperiodsoffinancialstress,theinabilitytomeetloanobligationsmayresultinbankruptcyand/oradecliningmarketvalue.

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Whilethisinformationprovidesasynopsisoftheeventsthatmayaffectyourinvestments,this listing is not exhaustive. Wewant you to understand that there are inherent risksassociatedwith investinganddependingontheriskoccurrence;youmaysufferLOSSOFALLORPARTOFYOURPRINCIPALINVESTMENT.

Third PartyMoneyManagement: Clients should read the Form ADV Part 2A of therespective third party money manager to understand the investment strategies andmethodsofanalysisemployedbythethirdpartymoneymanager,andtherisksassociatedwith those. Prospective investors should carefully consider all risks, as there can be noassurancethat theassetmanagementprogramsbythethirdpartymanagerswillachievetheirrespective investmentobjectivesoravoidsubstantial losses.An investorshouldnotmake an investment with the expectation of sheltering income or receiving cashdistributions.

D. RECOMMENDATIONSOFSPECIFICTYPESOFSECURITIES

BeaconCapitalManagementdoesnotrecommendspecifictypesofsecuritiestoitsclients.Beacon Capital Management provides access to investment service programs in whichclientaccountsaremanagedbyindependentthirdpartyinvestmentadvisors.

ITEM9 DISCIPLINARYINFORMATION

The Firm is required to disclosewhether there are legal or disciplinary events that arematerial to a client’s or prospective client’s evaluation of our advisory business or theintegrity of our management. Beacon Capital Management and its employees have notbeeninvolvedinlegalordisciplinaryeventsrelatedtopastorpresentinvestmentclients.

ITEM10 OTHERFINANCIALINDUSTRYACTIVITIESANDAFFILIATIONS

A. FINANCIALINDUSTRYACTIVITIES

Beacon Capital Management is not a registered broker‐dealer, or a futures commissionmerchant, commodity pool operator or commodity trading advisor. However, ourManaging Principals and supervised persons are registered representatives of broker‐dealerKalosCapital,Inc.

B. FINANCIALINDUSTRYAFFILIATIONS

NoneofBeaconCapitalManagementsmanagementorsupervisedpersonsisregisteredas,orhasanapplicationpending to register, asa futures commissionmerchant, commoditypooloperator,acommoditytradingadvisor.

C. OTHERAFFILIATIONS

Our Managing Principals and supervised persons are investment adviser representativeand registered representatives of Kalos Capital, Inc. This dual registration affords theabilitytoeffectsecuritiestransactionsthroughbroker‐dealersonbehalfofclients. Inourcapacity as registered representatives, we are, by and through our broker‐dealer, KalosCapital, Inc., also affiliatedwith FINRA (Financial Industry Regulatory Authority). In our

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registeredcapacities,wereceivedseparate,yetcustomarycompensationforeffectinganytransactions.

Our Managing Principals and supervised persons are also insurance agents who mayconduct business through various insurance agencies. In our capacities as insuranceagents,wewillreceiveseparate,yetcustomarycompensationforinsuranceproductsales.As a prospective client or client, you are not obligated to effect securities transactionsthroughourfirmorpurchaseinsuranceproductofferings.

Actingindualcapacitiescreatespotentialconflictsofinterestorcangivetheperceptionofconflicts of interest due to the receipt of compensation for effecting transactions andcommissions for the sale of insurance products. Any conflicts of interest or perceivedconflictsofinterestwillbedisclosedtotheclientinwritingandinadvanceofeffectingsuchtransactions.

D. COMPENSATIONALACTIVITIESANDAFFILIATIONS

BeaconCapitalManagement,itsmanagingprincipalsandsupervisedpersonshavematerialbusiness relationships with Kalos Capital, Inc. Beacon Capital Management’s managingprincipals and supervised persons are Kalos Capital Inc. registered representatives andprovide investments offered through Kalos Capital, Inc. By and through theserelationships, Beacon Capital Management’s investment adviser representatives receivedirect and indirect compensation for accounts that are serviced by, introduced to, orsubject to association with Kalos Capital, Inc. product and service offerings. Due to thenatureoftheseassociations,andthecompensationderived,securitiesproductsandotherincomegeneratingsalescanresultinasubstantialconcentrationofproductsandservicesthat benefit Kalos Capital, Inc. and Beacon Capital Management’s investment adviserrepresentatives. To mitigate or remedy any potential conflicts of interest, the nature ofthese associations will be fully disclosed to the client before effecting transactions.Additionally, Beacon Capital Management’s Chief Compliance Officer will reviewtransactions periodically to assess over‐concentration with respect to any product andservice offering, evaluate client suitability to ensure compatibility with direct assetmanagementprogramsandassessfeestructuresforcompensationthatappearstoextendbeyondacustomarythreshold.

AspreviouslydisclosedinItem5,wecanreceiveareferralfeeforreferringclientstothirdpartymoneymanagers.Thissituationcreatesaconflictofinterest.Whenwereferaclientto a third party money manager, our main determining factor will be the client’s bestinterest.EachclientwillbeprovidedacopyoftheFormADVPart2orsimilardisclosuredocument of each third partymoneymanager towhom the client is referred. The FormADVPart2orsimilardisclosuredocumentofeachthirdpartymoneymanagerwillcontainatleasttheinformationcontainedintheADVPart2andwilldisclosespecificdetailsofthereferralarrangementandthefeesthatwillbepaid.

PleaserefertoItem5forfulldetailsregardingtheprograms,fees,andconflictsofinterestwhenselectingotherinvestmentadvisers.

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ITEM11 CODEOFETHICS,PARTICIPATION,ORINTERESTINCLIENTTRANSACTIONSANDPERSONALTRADING

A. CODEOFETHICS

All employees of Beacon Capital Management must act in an ethical and professionalmanner.Inviewoftheforegoingandapplicableprovisionsofrelevantlaw,BeaconCapitalManagement has adopted a Code of Ethics to specify and prohibit certain types oftransactions deemed to create conflicts of interest (or at least the potential for or theappearance of such a conflict), and establishes reporting requirements and enforcementproceduresrelatingtopersonaltradingbyBeaconCapitalManagementpersonnel.BeaconCapitalManagement’sCodeofEthics,whichspecificallydealswithprofessionalstandards,insidertrading,personaltrading,giftsandentertainment,andfiduciaryduties,establishesideals for ethical conduct based upon fundamental principles of openness, integrity,honesty,andtrust.WewillprovideacopyofourCodeofEthicstoanyclientorprospectiveclientuponrequest.

B. PARTICIPATIONORINTERESTINCLIENTTRANSACTIONS

BeaconCapitalManagementdoesnotmakerecommendationsoforeffect transactions insecuritieswhichanyrelatedpersonmayhavematerialfinancialinterest.

C. PROPRIETARYTRADING

Attimes,BeaconCapitalManagementorrelatedpersonsmay,fromtimetotime,buyorsellforitselfsecuritiesthatBeaconCapitalManagementalsorecommendstoClients.However,anypurchaseorsaleofasecuritybyBeaconCapitalManagementorarelatedpersonwillbe subject to Beacon CapitalManagement’s fiduciary duty to its Clients. Beacon CapitalManagementwillalwaysdocumentanytransactionsthatcouldbeconstruedasaconflictofinterest. Tomitigateorremedyanyconflictsofinterestorperceivedconflictsofinterest,Beacon Capital Management will monitor trading reports for adherence to our Code ofEthics.

D. SIMULTANEOUSTRADING

From time to time, representatives of Beacon Capital Management may buy or sellsecurities for themselves at or around the same time as clients. In any instance wheresimilar securities are being bought or sold,wewill uphold our fiduciary duty by alwaystransactingonbehalfofourclientbeforetransactingforourownbenefit.

ITEM12 BROKERAGEPRACTICES

A. SELECTIONANDRECOMMENDATION


BeaconCapitalManagementrecommendsbroker‐dealersorcustodianswithwhomithasestablishedarrangementsoragreements.BeaconCapitalManagementintendstomaintainbrokerage and custodial arrangementswithTDAMERITRADE Institutional, aDivision ofTDAMERITRADE,Inc.(“TDAI”)aswellasFidelityInvestments.BothareFINRA/SIPC/NFA

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members.Thesearrangementsaredesignedtomaximizeefficiency,enhancetheabilitytomonitorpositions,andtobecosteffectiveforourclients.Byrecommendingclientsusethespecifiedcustodian(s)whichBeaconCapitalManagementhasapproved,weseektoachievemostfavorableexecutionofclienttransactions.

Beacon Capital Management does not have discretion with respect to broker‐dealerselection. In making brokerage recommendations, Beacon Capital Management willconsideranumberof judgmental factors, including,without limitation: 1)clearanceandsettlementcapabilities;2)qualityofconfirmationsandaccountstatements;3)theabilityofthebrokertosettlethetradepromptlyandaccurately;4)thefinancialstanding,reputationand integrity of the broker‐dealer; 5) the broker‐dealer’s access to markets, researchcapabilities,market knowledge, and any “value added” characteristics; 6)BeaconCapitalManagement’s past experience with the broker‐dealer; 7) Beacon Capital Management’spast experience with similar trades; and 8) any other factors. Recognizing the value ofthese factors, Clientsmay pay a brokerage commission in excess of that which anotherbrokermighthavechargedforeffectingthesametransaction.BeaconCapitalManagementrecognizesthat“Bestexecution,”whichisacombinationofprice,qualityofexecutionandotherfactors,isnotsynonymouswithlowestbrokeragecommission.

Becausetheamountofourcompensationortheproductsorserviceswereceivemayvarydependingonthebroker‐dealerwerecommendtobeusedbyourclients,wemayhaveaconflict of interest in making that recommendation. Our recommendation of a specificbroker‐dealermaybebasedinpartontheproductsandserviceswereceiveandnotsolelyonthenature,costorqualityofcustodyandbrokerageservicesprovidedtoyouandourotherclients.Nevertheless,inaccordancewithourCode,weplaceyourinterestsaheadofours. Inadditiontobrokerageandcustodyservices,theseservicesmayincludeaccesstoaccount information; access to investments generally available to institutional investors;research,softwareandeducationalopportunities.


Beacon Capital Management provides access to investment service programs in whichclientaccountsaremanagedbyindependentthirdpartyinvestmentadvisors.SelectionandRecommendation of broker dealers or custodians are not applicable to the advisoryoperationsofBeaconCapitalManagement.

B. SOFTDOLLARBENEFITS

Wehavenot entered into any softdollar agreementswith anybroker‐dealer.Wearenotrequiredtoaffectaminimumvolumeoftransactionsormaintainaminimumdollarof client assets to receive services from the broker‐dealers. However, commissionsand other fees for transactions executed through the broker‐dealers may be higherthancommissionsandotherfeesavailableifyouuseanotherbroker‐dealertoexecutetransactions and maintain custody of your account. We believe, however, that theoverall level of services and support provided to our clients by the broker‐dealersoutweighsthebenefitofpossiblelowertransactionscostwhichmaybeavailableunderotherbrokeragearrangements.

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C. BROKERAGEFORCLIENTREFERRALS

BeaconCapitalManagementdoesnotreceiveclientreferralsfrombroker‐dealersorthirdpartiesinexchangeforusingthatbroker‐dealerorthirdparty.

D. DIRECTEDBROKERAGE

BeaconCapitalManagementdoesnotpermitclientstodirectbrokerage.

E. ORDERAGGREGATION


BeaconCapitalManagement,attimes,aggregatessaleandpurchaseordersofsecuritiesforadvisory accounts with similar orders in order to obtain the best pricing averages andminimize trading costs. This practice is reasonably likely to result in administrativeconvenience or an overall economic benefit to the Client. Clients also benefit relativelywith better purchase or sale execution prices, lower commission expenses or beneficialtiming of transactions or a combination of these and other factors. Our policies andproceduresmandate aggregatingmultiple orders. Aggregate orderswill be allocated toClientaccountsinasystematicnon‐preferentialmanner.BeaconCapitalManagementwillaggregateor “bunch” transactions foraClient’saccountwith thoseofotherClients inanefforttoobtainthebestexecutionunderthecircumstances.

2.Third‐PartyMoneyManagementServices

Beacon Capital Management investment advisory services involve advising clients withrespecttochoosingthirdpartymoneymanagerstomanagetheiraccountportfolios. Dueto the nature of these consulting agreements, order aggregation is not applicable to noraffecttheinvestmentmanagementpoliciesofBeaconCapitalManagement.SeeItem12A.

ITEM13 REVIEWOFACCOUNTS

A. PERIODICREVIEWS

BeaconCapitalManagementscriterionforreviewingclientaccountsisasfollows:

1. PORTFOLIOREVIEWS

Beacon Capital Management reviews the third party money managers’ investmentstrategies including current portfolio holdings on a continual basis. We review theinvestmentprogramsofthethirdpartymoneymanagerstoanalyzewhetheryourportfoliois aligned with your investment goals and objectives. Our Investment AdviserRepresentativesareresponsibleforconductingthereviewofclientaccounts.Thereviewsare monitored by our Chief Compliance Officer. The reviews consist of determiningwhetheryourportfolioisalignedwithyourinvestmentgoalsandobjectives.

2. MONITORINGOTHERADVISERS

Wemayattimesmonitortheperformanceofthethirdpartymoneymanagersandifnecessaryrecommendthenewmanagers.

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B. INTERMITTENTREVIEWFACTORS

Intermittent reviews may be triggered by substantial market fluctuation, economic orpoliticalevents,orbychangesinyourfinancialstatus(suchasretirement,terminationofemployment, relocation, or inheritance). Clients are advised to notify Beacon CapitalManagement promptly if there are any material changes in their financial situation,investmentobjectives,oriftheywishtoplacerestrictionsontheiraccount.

C. CLIENTREPORTS

Youwillreceiveareportat leastquarterly fromthebroker‐dealerorcustodian,detailingyour account performance. The statements will be mailed by or made availableelectronically through the account custodian. Please review the account statementscarefully by comparing asset values, holdings, and advisory fees to that in previouslyreceivedstatements,confirmations,andadvisoryfeeinvoices.

ITEM14 CLIENTREFERRALSANDOTHERCOMPENSATION

A. ECONOMICBENEFITSFORADVISORYSERVICESRENDERED

Beacon Capital Management has arrangements with third‐party money managers. Wereceivecompensationfromthirdpartyinvestmentadvisoryfirmsforclientreferrals.IfthereferredpersonsorentitiesbecomeClientsoftheFirm,theSolicitorwillreceiveaportionoftheinvestmentadvisoryfeecollectedfromtheClient.Thisagreementisfullydisclosedinwritingtoallpersonsorentitiessolicitedandallowsforthesharingoffees.ThefeepaidbytheClienttotheFirmisnotincreasedduetothereferralagreementwiththeSolicitor.

B. COMPENSATIONFORCLIENTREFERRALS

BeaconCapitalManagementdoesnotcompensateanythird‐partyforclientreferrals.

ITEM15 CUSTODY

A. CUSTODIANOFASSETS


Custody means holding, directly or indirectly, client funds or securities, or having anyauthority to obtain possession of them. Beacon Capital Management does not havephysicalcustodyofanyclientfundsorsecurities.Ourfirmhascustodyofyourfundsandsecurities by virtue of our ability to deduct advisory fees. While Beacon CapitalManagementdoesnothavephysicalcustodyofClientfundsorsecurities,feesarepaidbythecustodianfromthecustodialbrokerageaccountthatholdsClientfundspursuanttotheClient’saccountapplication.

Prior to permitting direct debit of fees, each client provides written authorizationpermitting fees be made direct from the custodian. As part of the billing process, theclient’s custodian is advised of the amount of the fee to be deducted from that client’saccount. On at least a quarterly basis, the custodian is required to send to the client a

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statement showing all transactionswithin the account during the reporting period. ThecustodiandoesnotcalculatetheamountofthefeetobedeductedanddoesnotverifytheaccuracyofBeaconCapitalManagement’advisorycalculation.Therefore,itisimportantforclients to carefully review their custodial statements to verify the accuracy of thecalculation, among other things. Clients should contact Beacon Capital Managementdirectlyiftheybelievethattheremaybeanerrorintheirstatement.

Asnoted,BeaconCapitalManagementwillnotmaintainphysicalpossessionofClientfundsand securities. Instead, Client’s funds and securities are held by a Beacon CapitalManagement preferred qualified custodian. Please refer to Item 12 for our informationregardingourBrokeragePractices.


Our client’s assets are held by qualified custodians utilized by our recommended thirdpartymoneymanagers.

B. ACCOUNTSTATEMENTS

Althoughweareyouradviser,yourstatementswillbemailedbyyourqualifiedcustodian.Inaddition,clientsmayreceiveadditionalaccountstatementsfromthethirdpartymoneymanagers, ifavailable. Whenyoureceivethesestatements,pleasereviewthemcarefully.Please compare asset values, holdings, and fees on such statements to those in thestatementsreceiveddirectlyfromthequalifiedcustodian.

ITEM16 INVESTMENTDISCRETION


It is Beacon Capital Management’s customary procedure to have full discretionaryauthorityinordertosuperviseanddirecttheinvestmentsofyouraccounts.YougrantthisauthorityuponexecutionofourInvestmentManagementAgreement(“Agreement”).Thisauthority is for the purpose of making and implementing investment decisions withoutyourpriorconsultation.

Generally, Clients will grant to Beacon Capital Management complete discretion andauthority tomake all investment decisionswith respect to the types of securities to bebought or sold and the amount of securities to be bought or sold. Our discretionaryauthoritydoesnotgiveauthoritytotakeorhavepossessionofanyassetsinyouraccountortodirectdeliveryofanysecuritiesorpaymentofanyfundsheld intheaccounttoourFirm.Furthermore,ourauthoritybyagreementdoesnotallowustodirectthedispositionof such securities or funds to anyone except the account owner. Notwithstanding theforegoing, all discretionary trades made by Beacon Capital Management on behalf of aClientwillbeinaccordancewiththatClient’sarticulatedinvestmentobjectivesandgoals,and,assuch,couldbesubjecttovariouslimitations.


Beacon Capital Management will allocate the assets of its clients among a relativelyconcentratedgroupofthirdpartymoneymanagers.Theselectionandallocationofassets

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among the third‐party money managers will be in the sole and exclusive direction ofBeaconCapitalManagement.YougrantusthisauthorityuponexecutionofourInvestmentAdvisoryContract.

Themoneymanagerswillbegranteddiscretionarytradingauthoritytoprovideinvestmentsupervisory services for thatportionof the clients’ portfolios allocated to thatparticularthirdpartymoneymanager.BeaconCapitalManagementatalltimesretainstheauthorityto terminate the relationshipwith the third‐partymoneymanagers or to add new thirdpartymoneymanagers.BeaconCapitalManagement’srolewillbetomonitortheoverallfinancial situation of the client portfolios, and to monitor the investment approach andperformanceofthemoneymanager.

Thethird‐partymoneymanagerswilltradeindependentlyofoneanother.Therecanbenoassurance that the trading strategies employed by a third‐partymoneymanagerwill besuccessful. The third‐party money managers make investment decisions on selectingsecurities typesandspecific securities. Thirdpartymoneymanagerswill also rebalanceand reallocate your accounts when the third‐party money manager determines suchrebalancingorreallocatingisappropriate.PleasenotetheBeaconCapitalManagementwillnot make any decisions on selecting any securities types of specific securities for theaccountsmanagedbythethird‐partymoneymanagers.

ITEM17 VOTINGCLIENTSECURITIES

BeaconCapitalManagementanditsrepresentativesdonotparticipateinproxyvotingonbehalf of clients. Our clients are responsible fordirecting theirownproxies solicitedbyissuers of securities. You are responsible formaking elections relative to anymergers,acquisitions,tenderoffers,bankruptcyproceedingsandothertypeeventspertainingtothesecurities in your account. Youwill receive proxy and other solicitation information bymail from the broker‐dealer. You must follow the solicitation instructions for votingincludedwiththeinformation.

ITEM18 FINANCIALINFORMATION

A. BALANCESHEETREQUIREMENT

BeaconCapitalManagementdoesnotrequireorsolicitprepaymentofmorethan$1,200infeesperclient,sixmonthormoreinadvance.

B. FINANCIALCONDITION

BeaconCapitalManagementdoesnothaveanyfinancialimpairmentthatwillprecludeitfrommeetingcontractualcommitmentstoclients.

C. BANKRUPTCYPETITIONFILINGS

BeaconCapitalManagementhasnotbeenthesubjectofabankruptcypetitionatanytime.

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PRIVACYPOLICY

beacon firm brochure mar 14 2017v3€¦ · b. types of advisory services 1. portfolio management...

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