I. Safety & Security of Client Assets
III. About Our Firm
IV. Conexus Capital Difference
V. Pertinent Information
VI. Even More Pertinent Information
I. Safety and Security of Client Assets
1. Where are my assets held?
Charles Schwab is the preferred custodian we utilize for our clients.
2. Does Conexus Capital Management, LLC (hereinafter “Conexus Capital”) have custody of my funds?
No. Your assets are always held with the custodian (Schwab). We are granted limited rights such as trading, disbursements of funds to your address of record and limited withdrawal rights as it only pertains to our agreed-upon fees (of which Schwab monitors and authorizes release).
3. Are my funds co-mingled with any other client funds?
No. Your investments are ALWAYS held in your specific account, under your name (or trust or entity of your direction) and your tax ID number. Your money is always held separately in your accounts.
4. Does Conexus Capital have access to my funds?
No. However, we have limited access to trade your account(s), and to collect our previously agreed upon fee which the custodian monitors. Additionally, we have the ability to process distributions of funds to your address of record. And, to accounts where there is a signed authorization by you which is registered with the custodian.
5. What happens if Schwab goes out of business?
Given how the financial industry is structured, your funds are not assets of the custodian (with the exception of “cash” or money market funds, which have SIPC protection limits). In the unlikely event they were to go out of business, you can transfer your funds to another institution (i.e., just like the brokerage clients of Lehman Brothers and Bear Stearns did in the 2008 crisis).
1. Can Conexus Capital wire money without my signature authorization?
No. A wire requires a client signature
2. Can Conexus Capital disburse funds to an address other than the address I have authorized (i.e., whatever you have indicated as your primary mailing address)?
3. Can I get regular distributions?
Yes, of course. Many of our clients receive scheduled monthly deposits to their preferred banks. In fact,
for your protection, scheduled monthly deposits may only be transferred to accounts that are titled the same.
4. Can I set up linked bank accounts and standing wire instructions to other accounts that I personally own and control (i.e., personal or business account)?
Yes. However, that needs to be done via your signature and set up and authorized by the custodian, Charles Schwab & Co., Inc.
5. What happens if someone impersonates me using my own email account and instructs you to wire or send money?
- All wire or distribution requests must be verified with a phone call.
- Any distribution request to addresses or non-linked accounts (such as indicated above) cannot be completed without the account owner signing new paperwork authorizing such distributions (per Schwab rules, they will not act on instructions from our office without your signature).
6. What happens if someone (including myself) tries to change my address?
You are notified of such a change, and your account is put on distribution restrictions for a period of time.
7. Can I securely store documents with your firm?
Yes, our clients have 24/7 access to their encrypted Black Diamond account and document vault. Black Diamond maintains administrative, technical, physical, and procedural safeguards reasonably intended to protect the security of Personal Information and Account Data.
8. For your client portal, what security measures are in place?
There are 4 levels of security on transmission / viewing:
- SSL 128bit encryption
- X509 certificate
- Time stamping with time limited allowed variation
- SSL HTTPS encryption using a private key
- Additionally, access is only granted with a valid user name, unique password including numbers and a private “phrase.” Site access is also nsProtect™ monitored.
9. Is everything we talk about confidential?
Yes, we adhere to industry and client privacy standards, so conversations and client data are confidential and protected. However, our conversations are not protected by the same standards as the attorney/client privilege.
10. For example, can my ex-spouse’s attorney access documents or conversations that are recorded?
Since we are not practicing attorneys we cannot provide legal guidance, however, we do believe our files and our staff can be compelled by court order to share certain information. However, please consult with your attorney for specific guidance.
11. What if something happens to Conexus Capital?
Your money is held directly with the custodian (Schwab), and we are simply a servicing advisor you have linked to your accounts. While we have disaster recovery and backup systems in place, you can always assign a new advisor with the stroke of a pen.
12. Where can I view my account holdings?
You can view your portfolio any time, at your convenience and on any device, through your secure, personal Conexus Capital Client Portal.
III. About our Firm
1. What are the origins of Conexus Capital?
Conexus Capital Management, LLC was established by the two co-principals Scott Altschul and Gregg Denhoffer with the objective of creating a wealth management firm to provide solutions to address some of the shortcomings of traditional trust companies, banks, and wirehouses. Those shortcomings included an insufficient client service model, inflexible portfolio management, outdated technology, and an overall inability to listen to the needs of the client.
This was the basis for creating our axiom “connecting clients with results.”
2. Why did you create Conexus Capital?
We created the firm to solve for some of the weaknesses in the services provided by traditional trust companies and brokerage houses: some of these weaknesses include inferior investment performance, inflexible and inactive portfolio management and account administration, inherent conflicts in providing investment advice and lackluster client service.
3. What makes your firm different?
Communication-We believe that communication is paramount in any relationship. Especially relationships that involve clients’ wealth. Clearly, listening is an important element in effectively communicating. And, so one of our core principles is “to listen first.”
Flexibility-For us to be proficient and successful at doing our jobs, flexibility is an important component. Markets are frequently dynamic and the ability to have flexible investment choices may enable us to capture upside and potentially reduce downside risk.
Innovation-We need to be innovative which means embracing cutting edge technology allowing us to provide an optimal client experience.
Responsiveness-We have adopted a 24 hour or less policy in responding to client needs and questions. If we have learned anything in our 50 years of collective experience, nothing frustrates a client more than not responding in short order.
Risk Mitigation-When constructing portfolios, we have the ability to use liquid alternative strategies and derivatives that complement traditional long only investing.
4. What is your investment minimum?
Our investment minimum is $ 1,000,000. However, depending on the circumstances there are exceptions to our minimum.
5. Is Conexus Capital a Registered Investment Advisor (RIA)?
Yes, Conexus Capital is a Registered Investment Advisory (RIA) firm with the state of Colorado, upholding the highest level of fiduciary duty to work in the best interest of our clients and to put the needs of our clients first, above all else.
6. Are you a fiduciary?
Yes, we are a fiduciary since our founding.
7. How long has your firm been in business?
Since 2016. Collectively, the principals have been working in financial services for 50 plus years and have known each other for 40 plus years.
IV. The Conexus Capital Difference
1. Who does your firm best serve?
We serve business owners, professionals, individuals affected by significant life transitions, and corporate executives.
2. Why should I work with Conexus Capital?
Our clients tell us they are working with Conexus Capital Management, LLC because they prefer to work with a firm that takes the time to listen and understand their needs. They also tell us they prefer to work with our firm because we utilize cutting edge technology that provides clients with a sophisticated and high touch wealth management experience. Additionally, our clients tell us they prefer an investment management boutique whose singular focus is providing highly personalized, superior risk adjusted returns utilizing a combination of long only investments and liquid alternative strategies.
3. Please describe your investment process and how it relates to how my individual portfolio is managed?
Your portfolio will be invested within the guidelines set by Conexus Capital’s Investment Committee. Initially, every client completes an evaluation to determine goals, risk tolerance, tax situation, and time horizon which ultimately leads to an investment objective. Conexus Capital constructs an investment portfolio based upon or utilizing a strategic asset allocation model. Each investment portfolio is constructed utilizing a combination of individual stocks, bonds, etfs, mutual funds, closed end funds, real assets and alternative strategies as set forth in an Investment Policy Statement. Tactical changes are made based upon economic and market conditions as well as Conexus Capital’s extensive library of buy-side and sell-side investment research.
4. What are the means to communicate with the firm and how frequent is the communication?
We communicate through all appropriate means. Telephone, e-mail, client portal, client statements, ongoing face-to-face meetings. Communication between Conexus Capital and its clients are regular and at a minimum initiated by the firm at least monthly. But, it is as frequent as you desire.
5. Please describe who comprises my service advisory team?
The two principals of Conexus Capital Management, LLC collectively manage each of the firm’s clients. Additionally, clients are supported by our team which is comprised of compliance, accounting, and custodial services provided through Charles Schwab & Co., Inc.
6. What other types of services do you provide?
You will have the benefit of a full range of wealth management solutions to best meet your life and legacy goals. This includes comprehensive financial planning, retirement and estate planning review, investment planning, risk analysis, etc.
7. What is your firm’s investment performance?
Performance will vary depending on the client. It is measured against the client’s goals, objectives, risk tolerance, time horizon, and liquidity needs.
8. Does your firm subscribe to active or passive managers and why?
We use active and passive managers. We tend to use active management where the manager has a consistent track record of beating its commensurate benchmark. And, the manager has also demonstrated a track record of outperforming its peers in the same asset class/strategy. This is typically in asset classes/strategies where skilled managers can exploit inefficiencies in the market.
We typically use passive managers in most other circumstances.
9. What are your fees and how are you compensated?
Investment management fees are based upon a percentage of assets that Conexus Capital manages. The fees charged for personal wealth management by Conexus Capital will be charged monthly based upon the average monthly balance in arrears. Fees for financial planning services may also apply depending upon your relationship with Conexus Capital. See our Part 2A ADV for disclosure language regarding fees.
10. How do you coordinate your services with the other professionals I am currently working with (e.g. Attorneys, CPA’s, investment bankers)?
At Conexus Capital, we view our role as part of the team of the wealth management professionals you utilize. What we have learned is that by communicating with your team of professionals, it leads to producing optimal results in a collaborative framework.
11. Is my money managed on a discretionary basis or am I actively involved?
Your money is managed on a discretionary basis. However, our clients actively participate in determining their cash flow needs, investment time horizon, risk tolerances, and investment objectives. Through this process our clients actively collaborate in creating their Investment Policy Statement.
12. Do you offer estate planning services?
We offer guidance. We will compile questions to be shared at your discretion with your attorney.
13. Do you provide detailed information to my CPA?
Yes. A composite year end summary is provided which includes dividends and distributions, interest income, and accrued interest paid on purchases. Additionally, realized short-term and long-terms gains and losses, as well as a realized gain summary, a summary of fees and expenses, and a cost basis disclosure.
14. Can you manage qualified plans?
Yes, of course. Depending upon the plan, Conexus Capital has the ability to manage qualified plans.
V. Other Pertinent Information
1. Do you sell insurance or insurance products?
No. We do not sell any products for a commission.
2. Do you do my taxes?
No. We coordinate our efforts with your professionals (CPA) to determine appropriate investment tax strategy.
3. Can you manage my 401(k)
Yes, of course. Depending upon the plan, Conexus Capital has the ability to manage 401(k) plans.
VI. Even More Pertinent Information
1. Do you provide my CPA or other tax professional detailed information during the year and at year end?
Yes, of course we do. At the end of every calendar year we produce a form 1099 Composite and Year-End Summary for every client. Included in that report is detailed information such as qualified and non-qualified dividends, interest income, tax exempt income, short-term and long-term realized capital gains (losses), and foreign tax paid (if any). As well as, a summary of fees and expenses.
During the year we can carbon copy your tax professional with any statements, trade confirmations that you authorize us to.
2. Are your fees tax efficient?
Yes, they are tax efficient especially if you itemize your tax deductions. As a result, a portion of your investment management fee may be deductible against your adjusted gross income. Please consult with your Tax Advisor regarding your specific tax circumstances. As noted above, every client receives a Tax Year End Summary which enumerates the fees paid in the previous calendar year. Please consult with your Tax Advisor regarding your specific tax circumstances.
3. I just received a large sum of money from a lawsuit, inheritance, and/or divorce. Can you help budget my income and expenses? Can you help manage the investments?
Yes. Our services include comprehensive wealth planning, financial planning, and investment management. We frequently work with clients that receive large sums of money who need guidance with budgeting (cash flow planning), income projections, and investment management. In fact, we work with your attorney to help facilitate the appropriate settlement and maintenance.
4. Can you help me understand why I am currently invested the way I am?
We are frequently approached by perspective clients with questions why their current advisor has them invested in certain holdings. We provide a complimentary portfolio analysis that enables us to answer more detailed questions regarding your current investments.
5. I hold a single stock concentration. Does that make sense and can you discuss strategies to manage my risk?
Clients come to us with concentrated holdings from their former employer, legacy holdings from their family, or an individual stock that has performed exceptionally well with low cost basis. Only upon a thorough analysis can we determine the risk/reward metrics to evaluate the appropriateness of holding a single stock concentration. Once that question is answered, a determination is made as to what strategies are available to mitigate the risks associated with single stock concentrations.
6. Can you help me build a portfolio that will help me generate cash flow in the current low interest rate environment?
Yes. There are a number of alternative investments and strategies that we employ on behalf of clients to generate cash flow in this interest rate environment. Such as, direct holdings in private commercial real estate, covered call strategies, and non-traditional fixed income investments. These investments are not suitable for every client because of certain risks, including, but not limited to, liquidity risk. A determination is dependent on your specific circumstances, including your tolerance for risk.
7. Does your firm embrace modern technology to help improve my investment performance and reduce risk?
Yes. We utilize a number of different technology vendors to optimize investment performance and mitigate risk.
8. Does your firm facilitate securities based loans?
Yes. We facilitate securities based loans through several national banks at very competitive rates.
9. Describe how your firm gets to know me and my family and how that relates to investing?
Through our wealth management process, we get to know you and your family on an intimate basis. This allows us to personalize your portfolio which should lead to a superior client experience.