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Brokerage and Investment Advisory Relationships: Choosing What is Best for You

Concourse Financial Group Securities is a dually registered investment advisor and a broker-dealer and this means that we can offer both investment advisory and brokerage services. Depending on your needs and your investment objectives, your Concourse Financial Group Securities financial professional can help you determine whether a brokerage or investment advisory account may be most appropriate for some or all of your assets. There are important differences between brokerage and advisory accounts. You should carefully consider these differences. Keep in mind, there are circumstances where you may benefit from both a brokerage account and an advisory account for different portions of your investment portfolio.

Brokerage account

As a broker-dealer, we will buy or sell securities based on specific instructions from you. We do not make investment decisions for you or manage your accounts on a discretionary basis. Your financial professional may provide you point-in-time recommendations related to your investment portfolio but does not have an ongoing obligation to update those recommendations and will not provide ongoing monitoring of your investments.

As a broker-dealer, Concourse Financial Group Securities is not a fiduciary, but has a duty to deal fairly with its brokerage clients. If a Concourse Financial Group Securities financial professional makes a recommendation about a security in a brokerage relationship, Concourse Financial Group Securities has an obligation to determine that the recommendation is suitable for you based on your stated investment objectives, risk tolerance, and other financial information.

Financial professionals can provide you with access to a variety of securities products, including mutual funds, stocks, bonds, variable annuities, unit investment trusts, non-traded alternative products, and other types of individual securities. In our capacity as a broker-dealer, we may provide recommendations concerning whether to buy, sell, or hold securities.

Depending on what you buy or sell, you typically will pay us transaction-based compensation, consisting of a commission or sales charge, for each transaction. For mutual funds, the sales load is typically paid upfront, is charged directly against the investment, and is based on the amount of assets invested. For example, if you buy $1,000 of a mutual fund Class A share with a 5% front-end load, you will pay a $50 sales charge and the remaining $950 is invested in the fund. The applicable sales charge is described in the prospectus provided to the client in connection with the investment. As a broker-dealer, we may also receive other types of fees and compensation from product sponsors, such as trail payments (also called 12b-1 fees).

Investment Advisory account

We act as your investment advisor when a financial professional provides you with and is compensated for, ongoing investment advice and services. In this instance, you pay an ongoing advisory fee based on your portfolio value instead of a commission or sales charge at the time of each transaction.

Concourse Financial Group Securities offers a number of investment advisory programs and services through financial professionals on both a non-discretionary and discretionary basis. In non-discretionary accounts, financial professionals provide investment recommendations and you decide whether to implement them. In discretionary accounts, you grant financial professionals or a third party the authority to make investment decisions on your behalf.

As an investment advisor, Concourse Financial Group Securities is a fiduciary to its advisory clients and is obligated to act solely in your best interests and disclose all material conflicts of interests we have. Concourse Financial Group Securities will deliver to you at the time of engagement a Form ADV disclosure brochure containing important information about our services, fees, and potential conflicts. Once you select to receive managed account services from us, you will enter into a written agreement establishing the terms of the advisory relationship.

For these services you pay an advisory fee, which is negotiated between you and the Concourse Financial Group Securities financial professional. The fee is a percentage of the value of billable assets in the account. Ongoing services and fees are set out in the Investment Advisory Agreement between you and Concourse Financial Group Securities. This agreement can be terminated at any time by either party.

What to consider when deciding between a Brokerage and an Investment Advisory relationship

Factors affecting pricing: It is difficult to compare commission and fee-based options solely on the basis of price. You may pay more or less in a fee-based program than you would pay if you purchased the products and services separately in a transaction-based account. The costs of either type of account depend on a number of factors, including:

Product and service preferences
Size and value of your account(s)
Mix of products you hold
Frequency with which you trade
Administrative or management fees associated with the products or services you purchase

Please consider the costs and services associated with each option carefully and speak with your financial professional about which approach is most appropriate for you.

Licensing: Just because a financial professional offers brokerage products does not mean that she can offer investment advisory services. An individual must have specific professional registrations (either the Series 65 or 66 licenses) or have attained certain credentials (e.g., CFP) to offer advisory services. Without them, your financial professional may only offer brokerage services. If you prefer an investment advisory relationship but your financial professional is not appropriately licensed, please ask to be assigned to a professional that is.

A Brokerage relationship may be appropriate if you desire:

To make the investment decisions yourself and you just need your representative to execute your orders.
Occasional advice or recommendations on particular investments from a financial professional.
A buy-and-hold strategy for an extended period of time without ongoing monitoring from a financial professional.
To pay your financial professional for each transaction that you make rather than an ongoing fee based on the assets in your account.

An Investment Advisory relationship may be appropriate if you desire:

A financial professional to manage your investment portfolio and provide ongoing monitoring.
To engage a financial professional as a fiduciary with a duty to provide ongoing investment advice and services.
To hold a number of securities and to effect transactions to rebalance your portfolio on a frequent basis.
To work with a financial professional where the fee is a consistent percentage of your managed assets, and not tied to the number or type of transactions in the account.

We encourage you to carefully consider the differences between brokerage and investment advisory services, particularly in terms of our obligations to you, the services provided, and the costs. Keep in mind that your needs and goals may change over time, and how you transact business with your financial professional may change as well. As such, this should be a topic you review periodically over the course of your relationship. If you have any questions about the differences between an advisory and brokerage relationship, you should ask your financial professional, who is a valuable resource to help you make the investment decisions that are best for you.

The disclosure documents for our investment advisory services are available upon request.

February 2018

In the normal course of business, Concourse Financial Group and its registered representatives and investment advisor representatives receive compensation and other payments related to the sale of securities and to the financial planning, financial advisory, and asset management services provided by Concourse Financial Group and its investment advisor representatives. The investment advisory services offered by Concourse Financial Group and its investment adviser representatives include "sub-advisory" arrangements with third-party money managers. For the investment management services that Concourse Financial Group provides, it may receive compensation and other payments in the form of:

Advisory fees from our customers based on the amount of assets under management by our Firm (or by third-party money managers) or upon the financial planning and/or advice services provided by our investment advisor representatives.
Cash payments from product sponsors as reimbursement for training and educational expenses incurred by our investment advisor representatives when attending educational meetings or conferences that are held by Concourse Financial Group or by the product sponsor.
Cash payments from product sponsors through the Firm to its registered representatives as reimbursement for product marketing efforts or attendance at due diligence meetings (in accordance with FINRA rules).

If a client enters into an advisory agreement with a third party money manager, Concourse Financial Group may receive payments from such third party money manager for the advisory services Concourse Financial Group performs under its investment advisory services agreement with the client based upon the amount of Assets under Management (AUM) that is held with a particular manager.

In addition to compensation that Concourse Financial Group receives for its advisory services provided to the client, Concourse Financial Group may receive compensation from the third party money manager based on any or all of the following: (i) the amount of assets invested with a particular third party manager in a given year; (ii) the amount of AUM that is held with a particular manager; (iii) a percentage of the total management fee charged by a manager; and (iv) a flat fee from the manager. These compensation arrangements are typically known as “revenue sharing.” In addition, Concourse Financial Group may receive greater compensation from certain third party money managers, compared with others, and that may give Concourse Financial Group incentive to choose one third party money manager over another.

Because Concourse Financial Group may receive revenue sharing from third party money managers, Concourse Financial Group has a financial interest in recommending that clients engage the investment advisory services of a third party money manager with whom Concourse Financial Group has an agreement. Clients should understand that entering into an advisory relationship with a third party money manager is voluntary, and that if the client chooses to do so, then Concourse Financial Group will have a financial interest in bringing together that relationship. However, all investments made by Concourse Financial Group clients, including those made with third party money managers, are evaluated by a supervising principal for suitability, based on the client’s individual needs and objectives.

Concourse Financial Group and its registered representatives sell a variety of securities, including mutual funds, options, money market instruments, variable products (variable annuities and variable life insurance), stocks, bonds, Section 529 college savings plans, and alternative investments (such as real estate investment trusts, oil and gas partnerships, Section 1031 exchange programs and similar programs). Concourse Financial Group may execute transactions in these securities and receive compensation and other payments in the form of:

Commissions from product sponsors based on transactions effected.
Recurring distribution fees from product sponsors based on assets held in an investment, commonly referred to as trail commissions or 12b-1 fees.
Cash payments from product sponsors to Concourse Financial Group for research and due diligence associated with securities offered for sale by the Firm.
Cash payments in the form of rebates and incentives from Concourse Financial Group's clearing firm, Pershing, to Concourse Financial Group for distribution assistance (including client asset levels maintained in certain money market sweep funds), and participation credits (monthly margin debit interest, free credit interest rebates and account inactivity fee rebates) on certain client account balances. Concourse Financial Group may also from time to time receive special incentives from Pershing for its participation in temporary marketing programs. Examples of prior programs include incentives to increase the number of incoming account transfers and retirement account openings. Because Concourse Financial Group receives rebates and incentives from Pershing as described above, Concourse Financial Group has a financial interest in recommending that you allocate a portion of your assets to certain money market sweep funds. Concourse Financial Group may also participate in temporary marketing programs for which it receives rebates and incentives from Pershing, and therefore may have a financial interest in recommending to you products or services included within the temporary marketing program. You should understand that you may choose to allocate your assets to money market sweep funds that do not produce a cash incentive for Concourse Financial Group and you may choose not to participate in any temporary marketing program.
Other cash payments from our "product partners" to Concourse Financial Group, as discussed in more detail below.

Markups of Certain Costs Charged by Third Party Service Providers 

Concourse Financial Group’s clearing firm, Pershing, as well as other third party service providers, may assess certain incidental charges associated with account services, including but not limited to annual check writing and debit card fees on Corestone accounts, wire fees, check stop payment fees, returned check fees, ACH return fees, security transfer and redemption fees, reorganization processing fees, trade confirmation fees, outgoing account transfer fees, margin extension fees, margin debit interest, IRA annual maintenance fees, IRA termination fees, amounts charged to produce year-end statements and account reports, paper surcharge fees foreign security transaction fees, initial document review and ongoing annual service fees for special products, including but not limited to limited partnerships, mail courier fees, bank charges and/or transactions charges related to processing. These charges are assessed against the customer’s account and may consist of both charges that Concourse Financial Group pays to the clearing firm or third parties as well as additional charges that Concourse Financial Group assesses for these account services. Concourse Financial Group may also mark up any other charges passed through by its clearing firm or other third parties but not specifically identified above.

Product Sponsors 

The product sponsor of a mutual fund, variable contract or alternative investment generally funds all or some portion of the commissions and distribution fees for the investment through fees and expense charges that are associated with that investment. These fees and expense charges are described in the prospectus, private placement memorandum, or other disclosure documents for that investment. Fees based on assets under management and for financial planning services are disclosed in the client’s investment advisory and financial planning agreements with Concourse Financial Group.

Product Partners 

Concourse Financial Group has also entered into marketing arrangements with a number of mutual fund, variable contract and alternative investment product sponsors and third-party money managers. These “product partners” are sometimes invited to attend or participate in educational meetings and conferences for Concourse Financial Group registered representatives and investment adviser representatives, and may be featured more prominently on the Concourse Financial Group website or other communications than other product sponsors. As a result, these product partners may have greater access to our registered representatives and investment advisor representatives than other product sponsors.

As of the date of this disclosure, the Firm's product partners include:
Blackstone
Bluerock
Brighthouse (MetLife)
Brinker Capital
CLS
Efficient Market Advisors
Envestnet
Forlines
Franklin Square
Hines Real Estate Securities
Jackson National
Loring Ward
Martin
Mutual of Omaha
Owl Rock
Protective Life
Prudential
Resource Real Estate
Sammons
SmartStop
TransAmerica
Triloma
US Energy
Voya

 

Concourse Financial Group may add or eliminate product partners from time-to-time without prior notice.

Product partner marketing arrangements include provisions for cash payments to Concourse Financial Group. The cash payments may be based on a fixed amount per year, on a percentage of the amount that Concourse Financial Group customers have invested with the product partner, or both.

Concourse Financial Group registered representatives and investment advisor representatives do not receive additional compensation for selling securities offered by a particular product sponsor, whether it is a product partner or not. Furthermore, they are not required to achieve a sales quota with respect to investments or services offered by any product sponsor. Concourse Financial Group also has a policy against accepting reimbursement through brokerage transactions directed to the Firm by product sponsors.

The Firm believes that, in general, the product partners offer investment and advisory products and services of a high quality. However, Concourse Financial Group does not guarantee that these products and services will perform better than others that may be available, and encourages its registered representatives, IARs and customers to consider any product sponsor or third-party money manager whose products and services might be suitable for the customer.

Registered representatives and IARs of the Firm who are associated with Everence may be eligible for incentives provided through Everence Trust (such as eligibility for deferred compensation and health benefit programs and matching certain charitable contributions made by the representative) based on their sales of Praxis Mutual Funds and other products (such as insurance) that are offered by Everence or its affiliates.

Trading and Fee Disclosures

SEC RULE 606: ORDER ROUTING PRACTICES

Concourse Financial Group is required to make available quarterly reports of our routing practices. These reports identify the significant venues to which our customer's orders were routed for execution during the previous calendar quarter.

Concourse Financial Group transmits all equity orders to our clearing firm, Pershing, who may then route customer orders to various venues for execution. A written copy of this report is available by contacting your registered representative.

Our firm's quarterly report is available at: www.orderroutingdisclosure.com

In the box next to "enter broker-dealer's full name" type in: Concourse Financial Group
Concourse Financial Group (“Concourse Financial Group”) is registered with the U.S. Securities and Exchange Commission (“SEC”) and the Municipal Securities Rulemaking Board (“MSRB”). As such, Concourse Financial Group is subject to the regulations and rules on municipal securities activities established by the SEC and MSRB. For more information about the Municipal Securities Rulemaking Board please visit their website at www.msrb.org. Additionally, customers may access the MSRB Investor Brochure, which describes the protections that may be provided by the Municipal Securities Rulemaking Board rules and how to file a complaint with an appropriate regulatory authority, by accessing the following web page: http://msrb.org/msrb1/pdfs/MSRB-Investor-Brochure.pdf
Costs Associated with “Step-out Trading” in Fee-Based Investment Advisory Programs

When you choose to participate in an advisory relationship with Concourse Financial Group, you have the option of investing through a fee-based investment advisory program. In a fee-based investment advisory program managed by a third-party manager, you generally pay an ongoing investment advisory fee based on the value of the assets held in your account and will not incur brokerage costs for each transaction, except as otherwise disclosed in the program’s Form ADV, Part 2A.

While the ongoing investment advisory fee is the primary expense of these types of accounts, you may incur other fees and expenses as disclosed in the program’s Form ADV, Part 2A. One category of expenses you may incur is expenses associated with “step-out trading.” Step-out trading occurs when your trades are executed through broker-dealers whose commissions or other fees are not included within your investment advisory fee and, as a result, you incur additional commissions or fees.

Each third-party manager is free to consider its associated broker-dealers’ or clearing firms’ trading capabilities versus other broker-dealers’ trading capabilities as part of its duty to obtain best-execution for your trades. Periodically, the third-party manager may believe they are able to obtain better execution using step-out trades. Additional brokerage costs are reflected in the net purchase or sale price for step-out trades but are not disclosed separately in the trade confirmation.

Concourse Financial Group does not evaluate whether a third-party manager is meeting its best-execution obligations to clients when trading away, as it is not a party to such transactions and is not able to negotiate the price nor transaction-related charge(s) between the third-party manager and the executing broker or dealer. Concourse Financial Group does not discourage or restrict a third-party manager’s ability to trade away. Clients participating in accounts managed by a third-party manager should review the third-party manager’s Form ADV Disclosure Brochure carefully prior to deciding to do business with any third-party manager. To further assist you in understanding the additional costs you may incur as a result of step-out trades, a list of the third-party managers’ strategies and the associated costs for the most recent calendar year are provided in the following chart.

Other Disclosures

Purpose


The purpose of this document is to provide our customers with information about the actions we will take if an emergency or other event substantially disrupts our normal business operations either for the firm as a whole, or one or more of our offices. We have described a number of different scenarios below to give you a general understanding of the policies and procedures that we will employ in the event of business disruptions of different lengths and severity, such as a fire in one of our offices, a hurricane or flood that forces the evacuation of a city or county, or a terrorist attack that disrupts business for weeks throughout an entire region.


Concourse Financial Group's mission is to ensure the continuous delivery of service to our customers while maintaining compliance with applicable regulatory requirements.


Contacting Us


You may contact Concourse Financial Group by phone (800-288-3035), email, or at our website. If you cannot access us by any of these means you should contact your registered representative for instructions.


The Concourse Financial Group business continuity plan is subject to modification at any time. Updated plans will be promptly posted on our website. You may also obtain an updated plan by requesting a written copy of the plan by mail, at 2801 Highway 280 South, Birmingham, AL 35223.


Scenario Responses


The following activities will cause Concourse Financial Group to declare a business continuity event and activate the plan.


Business Disruption Event:
A disruption that affects only Concourse Financial Group's ability to conduct business, such as a failure of our computer systems.


  • Estimated Length Of Time For Recovery:
    One hour or less

  • Actions Concourse Financial Group Will Take:
    Associates will be able to place trades via phone directly to our clearing firm, Pershing.

Business Disruption Event:
One of our buildings must be evacuated or is unavailable as a result of a specific building-related issue.


  • Estimated Length Of Time For Recovery:
    Four to eight hours to relocate associates to an alternate facility

  • Actions Concourse Financial Group Will Take:
    Associates in that building will be relocated locally and will service customers from that location.

Business Disruption Event:
An event occurs that forces the evacuation of a business district, or prevents people from having access to the area


  • Estimated Length Of Time For Recovery:
    Four to twelve hours to relocate associates to an alternate facility
  • Actions Concourse Financial Group Will Take:
    Associates in the affected area will be relocated locally and will be able to service customers from that location.

Business Disruption Event:
An event occurs that affects an entire city


  • Estimated Length Of Time For Recovery:
    One day to relocate affected associates to an alternate regional location

  • Actions Concourse Financial Group Will Take:
    Associates in the affected area will be relocated and will be able to service customers from that location.

Business Disruption Event: 
An event occurs that affects an entire regional area, such as a county or multiple counties


  • Estimated Length Of Time For Recovery:
    Two days or more to relocate associates to another area

  • Actions Concourse Financial Group Will Take:
    Relocate associates to another region or to a mobile office unit.

Assumptions


Our ability to take the actions described in this notice will depend on a number of factors, some of which may be beyond our control:


  • Availability of critical infrastructure (such as electricity, water, heat, ventilation, telecommunications, air conditioning, U.S. Mail or overnight delivery service, etc.) for as long as the alternate facility is needed
  • Availability of adequate staffing
  • Accessibility of roads or public transportation available to allow Concourse Financial Group associates to reach alternate location
  • Availability of our clearing firm, Pershing LLC
  • Accessibility and operation of alternate offices, customer sites and other facilities to be used by displaced Concourse Financial Group associates

Concourse Financial Group believes that the needs of the investor should always come first. As an investor, you have important rights, including the right to high quality products and services from the securities firm you choose.


At the same time, investors need to shoulder certain responsibilities themselves — for example, to plan carefully to meet their investment goals and to stay informed about the risks and rewards of their investments.


Your Rights As An Investor


As an investor, you have the right:

Quality Service

  • To be treated in a fair, ethical, and respectful manner in all interactions with a securities firm and its employees and affiliates.
  • To receive competent and courteous service and advice (if provided by your firm) at a fair price.
  • To select your own representative or request a different one if you are not satisfied.
  • To move your account to another representative or a new investment firm whenever you wish in a simple, efficient manner.

Full, Clear Reporting

  • To clear, accurate, easy-to-understand descriptions of all your transactions, statements, and other communications from your investment firm.
  • To be informed clearly about all the costs associated with your account and the costs related to individual transactions, including commissions, sales charges (or loads), and other fees.
  • To accurate and timely regular statements of your account, including detailed transactional information.
  • To be provided with clear descriptions of your firm's policies and practices for protecting the privacy of non-public, personal information.

Responsible Investment Advice

  • To be provided with responsible investment recommendations based on your personal objectives, time horizon, risk tolerance, and other factors, as disclosed by you.
  • To be apprised of significant conflicts of interest identified in a financial relationship between an investor and his or her broker-dealer or account representative.
  • To expect that your investment firm will provide professional assistance to help you clarify your investment goals and risk tolerance.
  • To be able to rely on your firm's assistance also in setting realistic expectations about the long-term performance and associated risks of various securities. The firm will present you with reasonable investment alternatives designed to meet those expectations, and disclose the comparative risks, benefits, and costs.

Prompt, Fair Resolution Of Problems

  • To fair consideration and a prompt response from your investment firm, if any problem with your account ever arises.
  • To a clearly defined process for raising and resolving a complaint. Your firm will provide you with full information about this process, particularly about how you can elevate an issue to the appropriate level of the firm's management to gain satisfaction.
  • To be apprised of alternatives if your investment firm is unable to resolve a dispute to your satisfaction.

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: when you open an account with Concourse Financial Group, we will ask for your name, physical address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other government-issued identifying documents

  • Concourse Financial Group Securities financial advisors may only transact business in states where they are registered. Follow-up and individualized responses involving either affecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Concourse Financial Group Securities and/or the financial advisor is not properly registered.
  • This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. To determine what is appropriate for you, please contact us directly or consult with your financial advisor.
  • You are leaving the website maintained by Concourse Financial Group Securities. Any links to third party websites are provided for informational purposes only. These links are offered for use at your own discretion. Concourse Financial Group Securities does not endorse, authorize or sponsor the following website or its respective sponsors. Concourse Financial Group Securities is not responsible for the content of the website or the collection or use of information regarding the website's users and/or members.
  • Third party posts found on Concourse Financial Group Securities social media pages do not reflect the views of Concourse Financial Group Securities nor its associated persons/affiliates, and have not been reviewed by Concourse Financial Group Securities as to the accuracy or completeness of any statements.
  • For Twitter Retweets: Views expressed in this retweet are the current opinion of the author, but not necessarily those of Concourse Financial Group Securities or your financial advisor. The author's opinions are subject to change without notice. The information contained was received from sources believed to be reliable, but accuracy is not guaranteed.
  • As federal and state tax rules are subject to frequent changes, you should consult with a qualified tax advisor prior to making any investment decision.
  • The S&P 500 is an unmanaged index of 500 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all stocks traded on the NASDAQ over-the-counter market. The Dow Jones Industrial Average is an unmanaged index of 30 widely held securities. It is not possible to invest directly in an index.

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