USA Financial Securities is a business. And, as a business, our goal is to make a profit so that we can continue to improve our
services and products and fulfill our stated mission to power your legacy. Your best interest is our primary concern. There are,
necessarily, conflicts of interest that arise in the financial services industry. A conflict of interest is anything that could
cause USA Financial Securities to place its interests ahead of yours. These conflicts are found everywhere in our industry,
but we try to mitigate them and disclose them to you so that you are informed. In this section, we disclose conflicts
that you should understand and consider before investing.
USA Financial Securities is also a wholly owned subsidiary of USA Financial Corporation. USA Financial Corporation also owns
other companies: USA Financial Insurance Services Corporation ("USAF Insurance"), USA Financial Formulas Corporation
("USA Financial Formulas"), USA Financial Marketing Corporation ("USAF Marketing"), USA Financial Exchange Corporation
("USAF Exchange"), and USA Financial Protocol Corporation ("USAF Protocol"). USAF Insurance wholesales fixed insurance
products to independent insurance agents. USAF Formulas is an SEC-registered investment adviser. USA Financial Marketing
develops and distributes marketing and technology solutions for financial professionals. USAF Exchange is an SEC registered
investment adviser offering advisory platform services to financial advisers and registered investment advisers. USAF
Protocol serves as a marketing and brand-building resource for registered investment advisers. Investments made with our
affiliates will result in additional money — in the form of fees — paid to USA Financial, overall.
USA Financial Securities maintains expense-sharing agreements with its affiliates, whereby certain administrative expenses
are shared between two entities. These arrangements are essential to USA Financial Securities' ability to provide services
to its clients. USA Financial Formulas also serves as a sub-adviser option for advisory accounts on our platform. The two
most significant affiliate relationships for purposes of our advisory business occur between USA Financial Formulas and
USA Financial Exchange. USA Financial Formulas is available as a subadviser on USA Financial Securities’ advisory platform,
as described above. USA Financial Exchange is an SEC-registered investment adviser. USA Financial Exchange’s core business
is to offer operational support services, business support services (such as technology and marketing), and a turnkey asset
management program to independent, registered investment advisers ("RIAs") for use with their clients (the "Clients").
Both entities are affiliates by common ownership with USA Financial Securities.
For certain client assets and in very limited instances, USA Financial Securities outsources a portion of the investment
management to United Capital Financial Advisers, LLC ("United Capital"), an investment adviser not affiliated with USA
Financial Securities who serves as sub-adviser ("Sub-Manager"). Some of USA Financial Securities' clients will have
access to this investment while others will not. Additionally, clients utilizing United Capital will be participating
in different fee schedules and investments than those clients who do not have access to United Capital.
Because USA Financial Securities is a registered broker-dealer, the firm may receive commissions on any products that you
purchase through the broker-dealer. This may or may not create a conflict of interest. Furthermore, commissions paid to
USA Financial Securities may be higher or lower than those obtainable at other broker-dealers.
Many of USA Financial Securities' investment adviser representatives are also registered representatives of our broker-dealer.
These representatives may receive additional compensation and/or commissions from the purchase and sale of stocks, mutual funds,
variable annuities, other investment, and insurance products through the broker-dealer. This compensation includes 12b-1 fees.
Additionally, to provide the best service possible, USA Financial Securities offers clients the opportunity to invest with outside,
third-party money managers. These arrangements generally work one of two ways. If USA Financial Securities refers you to a third-party
money manager, our firm is the solicitor, and the third-party money manager is the registered investment adviser. However, some
third-party money managers simply provide investment platforms for USA Financial Securities to utilize, and while the third-party
money manager executes trades and directs the management of your assets, USA Financial Securities retains its investment adviser status.
Under both arrangements, USA Financial Securities receives a fee from the third-party. Our fee is a portion of the third-party adviser's
fee that you paid, as the client.
Finally, it is standard industry practice for registered representatives of broker-dealers to have marketing agreements with product
suppliers. These suppliers may include mutual fund companies, variable annuity companies, unit investment trust companies or real
estate investment trusts. These marketing agreements provide for payment of marketing expenses to the selling broker-dealer or its
registered representative in addition to commissions. These fees are not normally a direct expense of a product but are paid by
the sponsoring company to make up for costs incurred by the broker-dealer or its registered representative for marketing the product.
USA Financial Securities employs investment adviser representatives, who in their capacity as registered representatives of a broker-dealer,
may receive marketing allowances through their broker-dealer with respect to recommended products.
USA Financial Securities is primarily paid through its relationship with Pershing, LLC. We have substantial economic benefits
and incentives to use Pershing as our clearing firm, and to recommend investments on Pershing's platform. For example, each time
your financial professional buys or sells a security on the Pershing platform, we share in the commissions you pay on the transactions
executed through Pershing. We also receive revenue from Pershing based on the types of transactions recommended and investments held
in your brokerage account, including cash held in Pershing's Cash Sweep Vehicles. When acting as a broker-dealer, USA Financial makes
money primarily by ticket charges and other transactional costs associated with your brokerage account. On the advisory side of the
business, we make money primarily based off the advisory fee you pay monthly.
USA Financial Securities obtains many of its representatives through its affiliates. Advisors who connect with USA Financial through
one subsidiary typically elect to utilize USA Financial Securities as their broker-dealer/registered investment adviser. Additionally,
USA Financial Securities maintains expense-sharing agreements with its affiliates, whereby certain administrative expenses are shared
between two entities. These expenses include, but are not limited to, equipment rental, telephone services, health insurance,
cleaning services, and a security system. While these arrangements are essential to USA Financial Securities' ability to provide
services to its clients, we and our financial professionals have an incentive to sell products through our affiliated entities or
manage your assets on their platforms.
As stated elsewhere, USA Financial Formulas also serves as a sub-adviser option for advisory accounts on our platform. You are not
obligated to use USA Financial Formulas as a sub-adviser, it is simply an option available for those clients who would like active
management and access to USA Financial Formulas strategies through USA Financial Securities. However, we have an incentive to recommend
USA Financial Formulas as a subadvisor because it results in additional revenue for USA Financial, as a whole.
Recruiting arrangements in the financial services industry are not uncommon — whether the payment is up front or in the form
of additional compensation through affiliated entities. USA Financial does not offer up front recruiting bonuses. We do provide our
advisers with transition support dollars to help with the cost and loss of revenue associated with moving brokerage or advisory firms.
We also want our financial professionals to feel like partners. Therefore, USA Financial created the Advisor Legacy program.
The Advisor Legacy program has many components, but most important in terms of conflicts, is the Advisor SHARES program. Advisor
SHARES grants ownership interest to USA Financial's qualified financial professionals based on revenue submitted to USA Financial.
We do not favor one product or product category over another — financial professionals earn shares based on volumes submitted
across the products and services our company offers. However, you need to be aware of this program because it is an incentive for
advisers to move to USA Financial and place business with our firm. We believe we mitigate this risk by not favoring one product
over another and maintaining strict suitability reviews and standards to ensure that all recommendations are in your best interest
at the time the recommendation is made, without placing our financial or other interest ahead of yours. Additionally, the program
does not result in any compensation to the adviser expect upon the occurrence of specific events, such as a corporate change in control.
USA Financial does not use compensation structures or compensation thresholds that permit our financial professionals to disproportionately
increase compensation through incremental increases in sales. Your representatives may receive additional compensation and/or commissions
from the purchase and sale of stocks, mutual funds, variable annuities, other investment products, and insurance products through the
Your financial professional's compensation is based on a variety of factors, that include the amount of assets serviced, the products
or programs offered, the complexity of your needs, and the time required to service your accounts or financial plan. We do not use
compensation structures or thresholds that permit your financial professional to increase their compensation by selling specific products.
When your financial professional acts in a broker-dealer capacity, he or she receives cash compensation in the form of commissions,
markups/markdowns, sales charges, sales loads, or trails from the sale of transaction-based products. Brokerage compensation is based
on the number of transactions, the share class you select, and the product type you choose. USA Financial has also created the Adviser
Legacy Program, that includes the Advisor SHARES program. Advisor SHARES grants ownership interest to USA Financial's qualified financial
professionals based on revenue submitted to USA Financial. This program is an incentive for advisers to move to USA Financial and place
business with our firm.
When your financial professional acts as an investment adviser representative of the firm, he or she is paid a percentage that is based
upon the value of the assets in your account.
In some circumstances, your financial professional has the opportunity to receive "noncash compensation" in the form of travel-related
costs for educational conferences and due diligence meetings from investment companies, direct participation program sponsors, or
issuers of variable insurance. This creates a conflict of interest because it provides a financial incentive to recommend investment
products that offer this form of additional compensation over those that do not.
Conflicts of interest can also arise when we hire representatives. We may hire people with financial or regulatory disclosures because
of the book of business they bring to the firm, or we may establish hiring targets. We generally have oversight over those we hire,
to ensure we do not hire potentially ethically compromised individuals to meet sales goals. We will not hire those who are statutorily
disqualified. Hiring individuals who were previously associated with a "disciplined firm" can also have an adverse impact on a firm's
compliance culture and supervisory systems. We have taken steps to mitigate this conflict by limiting the number of people we hire
with problematic histories and using heightened supervision processes on representatives who may have a problematic financial or
USA Financial's business model is primarily to help investors who are at our nearing retirement manage income while preserving principal.
As a result, we do work with investors who rollover their 401k to an IRA Importantly, due to the nature of this business model, your
transaction likely involves rolling over a 401(k) to an IRA, as opposed to keeping the money within their employer's plan.
Recommendations that involve a rollover typically involve large sums of money. Your financial professional has an incentive to gather
assets, and rollovers are the largest source of contributions to IRAs. Your financial professional will earn commissions from the sale
of investments using funds from your rollover.
When you contemplate a rollover, you should consider several factors that include, but are not limited to:
Your financial professional may also have a conflict of interest when trading in your account. Your financial professional is paid
a commission or a mark-up when trading in your account at your direction. Your financial advisor has the discretion to set a
commission up to five (5) percent. USA Financial's supervisory principals review each trade to verify that your financial professional
charges a fair commission, and that the commission does not exceed the five percent rule.
In some circumstances, and dependent on the share class you select, when you purchase a mutual fund you are charged a "load." The load
serves as a sales charge or commission. You will pay the load through the fund, and the load serves to compensate and your financial
professional for his time and expertise in selecting the appropriate fund. Some mutual funds also continue to pay us and your advisor
if you continue to hold your shares. These payments are referred to as 12b-1 fees, or more commonly, trails and serve to compensate
us for marketing and distribution expenses.
Your financial professional may recommend mutual fund share classes that have a higher load or pay us 12b-1 fees. The mutual fund
you select may offer share classes that have a lower load, or do not pay 12b-1 fees. Other fund companies could pay lower upfront
commissions than the company you selected for similar investment styles. There are also other fund companies that do not pay 12b-1
fees. Your financial professional will review each mutual fund recommendation with you and evaluate whether there are reasonable
alternatives relative to the fund’s performance, risk, and price.
Some fund companies and issuers of variable insurance products provide your financial professional "non-cash compensation." This
can be in the form of education or training, merchandise, gifts and prizes, travel expenses, meals, and lodging. Industry regulations
require non-cash compensation to be paid through the broker-dealer. USA Financial requires fund companies to obtain our approval
before they provide a financial professional non-cash compensation.
We review any non-cash compensation proposal to ensure that it is reasonable, and in line with industry regulations. We do not permit
sales competitions. Non-cash compensation arrangements could create an incentive for your financial professional to sell a certain
product that has previously provided non-cash compensation.
Your financial professional will receive higher compensation for recommending some products rather than others. Products that pay
higher compensation include direct participation programs, such as Real Estate Investment Trusts and Business Development Companies,
variable universal life, and variable annuities. Your financial professional is required to complete additional training to sell
these products. In addition, these products carry additional features that require specialized knowledge. We believe these minimum
knowledge requirements for associated persons who may recommend certain products coupled with our best interest review of your
transactions mitigate the potential for a conflict of interest with respect to these types of products.
When you purchase a variable annuity, your financial professional will be paid a commission on the sale. Some products have longer
surrender periods. Products with longer surrender periods typically pay higher commissions. Your financial professional may have
an incentive to recommend you a product that pays a higher commission. Your financial professional will review variable annuity
recommendations with you and evaluate whether there are reasonable alternatives relative to the annuity’s performance, features, risk, and cost.
These disclosures are not complete, and only disclose material conflicts of interest identified herein. Additional disclosures
about any specific investment recommendations or conflicts of interests, including fees paid to your financial professional,
will be found in a prospectus or trade confirmation, and will serve to supplement or clarify your general disclosure.
USA Financial's Compliance and Operations departments coordinates conflict reviews with its financial professionals. Conflicts of
Interest are reviewed by our Board of Directors, and also during our internal branch office examinations. The Firm’s inventory of
COIs is updated as appropriate, and periodically shared with USA Financial's leadership team.
USA Financial will monitor the effectiveness of the Conflict of Interest policy and implement necessary changes from time to time.
We will notify our clients of any material conflict changes that may be relevant to you.
If you have any questions regarding our Conflict of Interest policy or our compliance with this policy, please contact you financial
professional or USA Financial's Compliance Department.
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