Lakeland's Advisor Fiduciary Disclosure
The Department of Labor (DOL) adopted new rules relating to fiduciaries in April 2016 and effective beginning June 10, 2017, which re-define who is acting as a fiduciary with respect to services provided to retirement accounts, including IRAs. This disclosure and notice is provided to the general public and to those investors who receive financial/investment advice regarding defined benefit pension plans, defined contribution 401(k) plans and/or individual retirement accounts (IRAs) from Lakeland Investor Services, Inc. This disclosure is provided to confirm the advisor’s relationship with the firm's investors under the new DOL Fiduciary Rule.
Lakeland Investor Services, Inc. is a Fiduciary
Investment advisors registered with the SEC or a state securities regulator are fiduciaries, subject to the duty of loyalty and due care with their clients. They are typically compensated by asset management fees and are expected to act in the best interests of their clients. Lakeland Investor Services, Inc. (collectively referred to herein as “the firm” or “LIS”), a Registered Investment Advisor registered with the Commonwealth of Pennsylvania’s Department of Banking and Securities, and the firm’s Investment Advisor Representative (collectively referred to herein as “IAR”), serve the firm’s clients in the capacity of a fiduciary, in accordance with the terms disclosed in the firm’s Investment Advisor Agreement, and as disclosed/updated annually in the firm’s Forms ADV Part 2A and Part 2B.
Lakeland Investor Services, Inc. is a “Level Fee Fiduciary”
The DOL defines a "Level Fee Fiduciary" accordingly: "A Financial Institution and Adviser are Level Fee Fiduciaries if the only fee or compensation received by the Financial Institution, Adviser and any Affiliate in connection with the advisory or investment management services is a “Level Fee” that is disclosed in advance to the Retirement Investor." Furthermore, the DOL defines a "Level Fee" accordingly: "A Level Fee is defined as a fee or compensation that is provided on the basis of a fixed percentage of the value of the assets or a set fee that does not vary with the particular investment recommended, rather than a commission or other transaction-based fee."
Lakeland Investor Services, Inc. believes that, according to these definitions, the firm operates as a “Level Fee Fiduciary”, of which your advisory fee is disclosed to you in advance with the execution of the firm’s Investment Advisor Agreement, and is provided as a fixed percentage of the value of your assets, assessed quarterly (or as otherwise agreed) to your investment account. LIS’s advisory fee is assessed separately per account, rather than as an aggregated relationship based fee. LIS receives no additional remuneration in any form or capacity from any Vendors, Custodians, or Manufacturers of financial related products/services, including Insurance, Investment, and/or Trust companies.
How Lakeland Investor Services, Inc. Complies with the Impartial Conduct Standards
The Impartial Conduct Standards requirement for Advisers and Financial Institutions within the new DOL Fiduciary Rule require that: “Advisers and Financial Institutions provide investment advice in the Retirement Investor's Best Interest, not recommend transactions that they anticipate will result in more than reasonable compensation, and not make misleading statements to the Retirement Investor about recommended transactions.”
Further, as defined in the new regulations, the Financial Institution and/or Adviser must act in the best interest of a Retirement Investor when they provide investment advice “that reflects the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, based on the investment objectives, risk tolerance, financial circumstances, and needs of the Retirement Investor, without regard to the financial or other interests of the Adviser, Financial Institution or any Affiliate, Related Entity, or other party.”
Lakeland Investor Services, Inc. utilizes various methods of information gathering in order to “know the client” to a high standard, including but not limited to: LIS’s New Account Form, LIS’s Investment Advisor Agreement, LIS’s new Fiduciary Due Diligence for IRA Rollovers form, and any financial planning framework completed on behalf of the firm’s clients. Investment portfolios are then built within the constraints and limitations of each client’s investment objectives, risk tolerance, financial circumstances, and other considerations communicated to the advisor from the firm’s retirement investors. The firm and its IAR believe the client’s risk profile information provided on the firm’s New Account Form and Investment Advisor Agreement is sufficient in determining the best course of investment advice to the firm’s clients.
LIS presently utilizes highly reputable market based target risk benchmarks to continually monitor and assess a given retirement portfolio’s risk/return profile, and to help determine if a client’s investment objectives and risk tolerance constraints are being adhered to. LIS encourages the firm’s clients to participate in the firm’s comprehensive financial/retirement/estate planning services, which are included automatically within the firm’s level fee advisory fee structure for each and every client’s benefit. The determination to participate/not participate in the firm’s comprehensive financial/retirement/estate planning services is at the discretion of the individual client. While LIS encourages the firm’s clients to participate in advanced planning services, LIS cannot compel the firm’s clients to participate to this capacity.
Potential Conflicts of Interest to Clients of Lakeland Investor Services, Inc.
Mark W. Petro, an Investment Advisor Representative (IAR) of the firm, acts as sole advisor to the firm’s clients. Investments and advisory services, as disclosed in the firm’s Investment Advisor Agreement and as disclosed/updated annually in the firm’s Forms ADV Part 2A, are offered through Lakeland Investor Services, Inc., a Registered Investment Advisor.
Mark W. Petro also operates dually as a licensed insurance agent in Pennsylvania, Ohio, Florida, New Jersey, and Virginia (collectively referred to herein as the “agent”). Insurance related products and services offered through Mark W. Petro, as agent, are offered independently of Lakeland Investor Services, Inc. and said insurance related products/services are not affiliated in any capacity with the firm’s stated service offerings. In this capacity as agent, Mark W. Petro may from time to time solicit insurance products to clients of the firm, including life insurance, fixed and indexed annuities, Medicare insurances, and other health insurance products. Solicitations of insurance related products/services by Mark W. Petro are compensated through commissions received through the agent’s various contracted insurance affiliates. These insurance affiliates are not directly related to Lakeland Investor Services, Inc. in any capacity.
Mark W. Petro, operating within his capacity as a licensed insurance agent, and when offering insurance products/services associated with defined benefit pension plans, defined contribution 401(k) plans and/or individual retirement accounts (IRAs), would be considered a fiduciary when offering said products/services and therefore would be required to comply independently and in accordance with the DOL Fiduciary Rule Prohibited Transaction Exemption (PTE) 84-24 for Certain Transactions Involving Insurance Agents and Brokers, Pension Consultants, Insurance Companies and Investment Company Principal Underwriters; a separate standard within the framework of the new regulations that is specifically required of insurance agents.
Commissions received by Mark W. Petro, operating within his capacity as a licensed insurance agent, might be considered a “conflict of interest” to clients of LIS. Such compensation is deemed to create a conflict of interest if rollover advice (fiduciary advice) to/from insurance related products/services sold through the agent trigger a rollover and additional compensation for the advisor, and/or fail to meet the Impartial Conduct Standards as set forth in the new regulations. Mark W. Petro, providing financial services in a dual capacity as IAR of Lakeland Investor Services, Inc. and licensed insurance agent, has a duty to notify and disclose such conflicts of interest to clients of the firm wherever such conflicts may exist. This disclosure document is intended to serve as such notice.
To request a copy of Lakeland Investor Services, Inc.’s Forms ADV Part 2A and Part 2B disclosure documents, please contact the firm at (814) 382-6681 or email Mark W. Petro at Lakeland@zoominternet.net.