PROGRAMS, PRODUCTS & SERVICES

Beacon Program

InterOcean Wealth Management LLC ("IOWM"), through InterOcean Securities, LLC ("IOS"), an affiliate of IOWM, offers the Beacon Program, a professional and flexible asset management program. Below is a description of the program:

For clients with investment assets over $50,000, IOWM offers clients access to a diversified suite of mutual funds ("funds"), utilized to manage different components of a client's targeted asset allocation based upon the client's financial circumstances, goals and investment objectives.  Client accounts are held at IOS on a fully disclosed basis through Bear Stearns Securities Corp. ("Bear Stearns"). The Beacon Program requires the funds that comprise the list of approved funds to meet certain due diligence criteria established by IOWM.  However, the client may direct the purchase of other funds.

The Beacon Program is offered as a wrap fee program whereby IOWM functions as the wrap fee program sponsor.  IOWM will suggest mutual funds to manage different components of the clients' asset allocation.  The services provided by IOWM under the Beacon Program are on a "non-discretionary" basis.  This means that clients will have sole discretion whether to approve or reject any recommendation submitted by IOWM to the clients and which funds to select for investment.  A client will be asked to maintain a portion of the Assets in cash to cover the payment of all fees due hereunder and any fund redemption fees, if any.  Accordingly, except to the limited extent set forth herein, IOWM will effect only such transactions in shares of funds as the clients instructs it. 

Research Process.
IOWM oversees a rigorous multi-phase approach to researching and selecting funds suitable for participation in the Beacon Program.  Funds are evaluated using data and information from several sources, including the independent fund databases.  Among the types of information analyzed are historical performance, investment philosophy, investment style, historical volatility and correlation across asset classes.  Also reviewed are the fund's prospectuses.  To ensure accuracy, IOWM attempts to verify all information by comparing it to publicly available sources and use industry standards to calculate the performance of the selected funds.  Funds are replaced based on poor relative risk/return performance against their peers and relative benchmarks.

How We Design Your Program
The Beacon Program offered to IOWM clients is predicated on asset allocation models that take into account various aspects of the client's personal circumstances, particularly the client's investment goals, time horizon, age and risk tolerance based on information and investment criteria provided to IOWM by the client.  The asset allocation methodology employed relies on modern portfolio theory (applying certain mathematical principles to the historical performance of certain asset and sub-asset classes and combining these asset classes) to identify asset allocations that attempt to maximize the client's rate of return within the constraints imposed by the client's individual circumstances.

Establishing a Program Account
If you are interested in establishing an account, you will need to sign and provide the following documentation:

• Investment Advisory Agreement for IOWM;
• Account opening forms;
• Acknowledgement of IOWM's advisory fees and receipt of Schedule H for IOWM;
• Information regarding client risk profile which collects financial and goal data; and
• Account Transfer Application, if applicable (if you have assets to be transferred from another firm).

The minimum amount of assets required to be placed in a program account is $50,000.

Account Management
Mutual funds included on IOWM's approved lists ("Recommended Funds") are selected by IOWM from mutual fund databases that meet certain quantitative criteria, including a minimum length of track record, minimum performance levels, minimum amounts invested or under management ("quantitative criteria"), and certain qualitative criteria, including consistency of investment style, efficiency and capacity, as revealed in the fund's prospectus and other publicly available information ("qualitative criteria").  Recommended Funds included in databases utilized by IOWM are reviewed quarterly against IOWM's initial quantitative criteria to determine whether a fund is eligible for continuation as a Recommended Fund.

Recommended Funds are reviewed periodically to determine whether they continue to meet quantitative maintenance criteria adopted by IOWM and/or IOWM Investment Committee or when market conditions or specific issues to a Recommended Fund warrant.  Any Recommended Fund that fails to meet IOWM's maintenance criteria is removed from the approved list and the client is informed of such removal.

Mutual Funds that are not Recommended Funds will be available for investment in the Program ("Non-Recommended Fund").  IOWM will review each client's asset allocation periodically in order to make informed asset allocation decisions. 

Rebalancing may cause a taxable event.  In addition certain funds may impose redemption fees for redemption that are made within stated periods after purchase.  The amount of any redemption fee and the period during which it may be imposed will vary from fund to fund.  Please consult your tax advisor prior to selecting any rebalancing.  In addition, client-directed transactions may affect the need to rebalance the client's Account, which may exacerbate the tax consequences of the rebalancing.

Communication
Clients of IOWM will have access through IOS to a secure website on the internet to review their accounts.  On a quarterly basis, performance reports detailing the performance of each account will be mailed to clients.  Wealth Advisors of IOWM will review the performance of the account and each fund on a quarterly basis.

Additional Information about Our Services, Fees and Important Disclosures
For more detailed information regarding our services to you, fees and important disclosures please contact an InterOcean Wealth Advisor Contact Us.