HUMAN INTEREST ADVISORS LLC
Investment Advisory Agreement (For Plan Participants)
Please read this investment advisory agreement (“Agreement”) carefully. As a participant in your company’s retirement plan (“Plan”), the company (as plan fiduciary) has chosen to make available to you the investment advisory services of Human Interest Advisors LLC (“Adviser”). Your use of these investment advisory services, which are described further below, will constitute your consent to this agreement.
PLEASE NOTE THAT THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION AND A CLASS ACTION WAIVER PROVISION. THESE AFFECT HOW ANY DISPUTES BETWEEN YOU AND ADVISER WOULD BE RESOLVED. PLEASE READ THEM CAREFULLY.
Last updated: March 14, 2023
1. Adviser’s Services Under This Agreement.
Investment Management Services
You appoint Adviser to provide the investment advisory services described in this Agreement (“Services”). Following the Service Effective Date (defined below), Adviser will recommend to you a Model Portfolio (defined below) based on information that Adviser has received and assumptions that Adviser makes regarding your financial circumstances and preferred risk level, unless you were a Plan participant before the revision date of this Agreement, in which case Adviser will not recommend a change to your current Model Portfolio or Participant Selected Portfolio (defined below), as applicable. A model portfolio will consist of the target percentages, if any, for the investment of your Plan account assets in one or more exchange-traded funds, mutual funds, money market mutual funds or similar investment vehicles (“Investment Vehicles”) that Adviser selects (“Model Portfolio”). The Investment Vehicles in a Model Portfolio will consist of investment alternatives available in your Plan (“Available Investments”) but may not include all of the Available Investments.
You are not required to accept any Model Portfolio that Adviser recommends. Instead, you can (a) complete or update a questionnaire related to your risk tolerance (“Risk Information”), in which case Adviser will recommend a Model Portfolio taking into account this updated information, (b) choose a Model Portfolio by telling us your risk tolerance, or (c) choose your own investments by selecting from among the Available Investments (a portfolio described in this clause (c), a “Participant Selected Portfolio”). You can make these choices by logging into your online Plan account at www.humaninterest.com (“Participant Dashboard”), but you may only change your choices once each day.
Because the company maintaining the Plan (“Plan Sponsor”) has designated Adviser’s investment advisory services as the “qualified default investment alternative” for the Plan, if you have not logged into your account to accept Adviser’s recommendation, update your information or choose your own investment allocations, Adviser will manage your Plan account assets in accordance with a default Model Portfolio that Adviser selects for you (in this case, you will be a “QDIA Participant”).
Information About You
You can provide and update your Risk Information at any time on the Participant Dashboard, but Adviser encourages you to provide this information upon the Service Effective Date. If you are a QDIA Participant and do not provide this information, Adviser will select a default Model Portfolio based on your current age, as specified by your Plan administrator.
Adviser does not base its recommendations or selections on information about your current investments, your holdings outside the Plan or your income or liabilities. The Services do not represent a comprehensive financial plan.
Investment Management and Rebalancing – Participants Using Model Portfolios (Including QDIA Participants)
Unless you choose a Participant Selected Portfolio, Adviser will determine, based on the applicable Model Portfolio, which securities to purchase or sell for your Plan account and the amount of the purchases and sales. Once each quarter, Adviser will determine whether to rebalance your Plan account assets based on the applicable Model Portfolio.
After you have accepted or selected a Model Portfolio (or, in the case of a QDIA Participant, Adviser has selected a default Model Portfolio for you), Adviser will not review your account to determine whether the Model Portfolio continues to be appropriate for you or to assess whether a different Model Portfolio would be better for you. If you would like to change your Model Portfolio, you may update your Risk Information on the Participant Dashboard, in which case Adviser will recommend a Model Portfolio taking into account this updated information, or you can choose a Model Portfolio by telling us your risk tolerance.
Adviser will periodically select a different Model Portfolio for you with the goal of gradually reducing the expected risk of your Model Portfolio as you age (unless you choose a Participant Selected Portfolio or opt out of this automatic portfolio adjustment process). After Adviser selects a different Model Portfolio for you, Adviser will make any subsequent rebalancing of your Plan account assets based on the replacement Model Portfolio. Adviser may determine the timing of any such change in its discretion and will generally make such determination based solely on your progression across age bands (which may span five, ten or more years) that Adviser establishes from time to time. Adviser’s automatic portfolio adjustment process is designed solely to gradually reduce the expected risk of your Model Portfolio as you age and does not reflect an assessment of your investment objectives or financial condition at the time of any adjustment. Reducing the risk in your Plan account assets may reduce your expected or actual investment returns. You may opt out of the automatic portfolio adjustment process by logging into the Participant Dashboard and declining this option.
Adviser is permitted to revise its Model Portfolios at any time based on factors it determines to be appropriate, which may include changes in market and economic conditions and changes in or availability of the Available Investments.
Investment Management and Rebalancing – Participants Using a Participant Selected Portfolio
If you choose a Participant Selected Portfolio, Adviser will not rebalance your account, and your contributions will be invested approximately in proportion to the targets you have established for the Participant Selected Portfolio (subject to the limitations described below). You may choose to receive a recommendation of a Model Portfolio from Adviser at any time using the Participant Dashboard, and you may elect to have the Adviser manage your Plan account assets based on a Model Portfolio by accepting the recommendation or by choosing a Model Portfolio (as described above) on the Participant Dashboard.
Investments May Vary from Model Portfolio or a Participant Selected Portfolio
You acknowledge that, on any particular day, the actual allocation of your Plan account assets may differ from the applicable Model Portfolio or from your Participant Selected Portfolio, as applicable. These differences may arise due to a variety of factors, such as rounding, minimum trade sizes, contribution size, market movements, changes to the Plan, availability of the Available Investments, timing of investment of contributions, variations in investment selection based on the costs of investing contributions or rebalancing investments (as determined in Adviser’s sole discretion), the capacity of your Plan’s provider of recordkeeping services or trustee (“Provider”) to execute Account Directions (defined below), and any legal, regulatory, or other trading restrictions, including those that securities exchanges or parties other than Adviser impose.
2. Adviser Will Not Vote Proxies.
Adviser is not responsible for voting proxies for the securities in your account or for acting on any class action litigation, corporate action, bankruptcy, or any other legal or administrative proceeding relating to any securities in your Plan account.
3. Account Directions.
Adviser will direct the Provider as to how to invest and reinvest your Plan account assets and how to invest and reinvest new contributions credited to your account (collectively, “Account Directions”). You authorize Adviser to give Account Directions (defined below) to the Provider for your Plan account without your approval of each transaction.
Notwithstanding anything in this Agreement to the contrary, Adviser will not hold any Plan assets or have any authority to obtain possession of Plan assets, and Adviser is not authorized or permitted to withdraw Plan assets except for purposes of withdrawing advisory fees in accordance with Section 4 below.
Adviser is authorized to begin making Account Directions for your Plan account immediately upon your Service Effective Date. Adviser will typically begin to make Account Directions for your Plan account a few days after your enrollment, but your actual experience may be affected by system maintenance cycles, data availability, your Plan, any applicable holds on the account and other factors. After your Service Effective Date, Adviser will, unless otherwise specified, issue Account Directions to transition your Plan account based on the applicable Model Portfolio or Participant Selected Portfolio over a transition period, which is subject to the provisions and requirements of your Plan, the availability of required data, the method of Plan enrollment and certain employer policies. The transition period may be lengthened or shortened in Adviser’s sole discretion and as appropriate for your account. After the completion of the transition period, Adviser expects that the Provider will buy, sell or transfer securities in your account to achieve the Account Directions; however, there is no guarantee that any particular Account Direction will be executed or be executed at a specific time and Adviser makes no such representation.
In consideration for making the Services available to Plan participants, and for other fiduciary services that Adviser provides to your Plan, your Plan has agreed to pay Adviser a fee based on the amount of each participant’s Plan assets. This fee will be automatically deducted from the Plan’s assets, and the applicable portion of this fee will be reflected in the balance of your Plan account.
In addition, mutual funds, exchange-traded funds, separate accounts, collective investment vehicles and other investments in which Adviser will invest your Plan assets incur costs in connection with their operation and activities and charge fees to investors, which may include sales charges or redemption fees. Fund prospectuses contain detailed information on fund fees and expenses. Should you incur such fees or costs as a result of the Services, you acknowledge that these fees or costs will be assessed on your purchase or deducted from your redemption proceeds, in accordance with the applicable policies of the particular fund or vehicle, or will, as applicable, be reflected in investment performance.
Adviser’s affiliate also provides services to the Plan and, in that capacity, receives fees for its services to the Plan.
5. Important Information About Adviser.
Adviser is registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser. You can find important information about Adviser and its services in Adviser’s brochure (Form ADV Part 2A) and Form CRS (available at www.humaninterest.com/hia/regulatory-filings), and you hereby acknowledge that you have received Adviser’s brochure and Form CRS. Adviser is a fiduciary under the Employee Retirement Income Security Act (ERISA) with respect to the services it provides to your Plan pursuant to its agreement with your Plan’s trustee or other named fiduciary (“Plan Agreement”).
6. Your Representations.
You represent and acknowledge that you are a resident of the United States or of such other jurisdiction as Adviser specifically approves in writing and that you have a mailing address in the United States or such other approved jurisdiction.
If your contributions to the Plan (individual and/or company matching contributions, if applicable) are eligible to be invested in publicly traded securities, you represent and acknowledge that, as of the Service Effective Date and on each date on which you make any election, choice or selection with respect to investment of your Plan account assets, you are not aware of any material nonpublic information regarding such securities. Should you become unable to make these representations after enrollment, Advisers may in its sole discretion terminate the Services.
You represent that any information you provide Adviser is true, accurate and complete. You agree to provide Adviser with updated information if any information you have provided changes at any time. Failure to update this information with Adviser could negatively affect Adviser’s ability to recommend or select a Model Portfolio appropriate for your financial circumstances and preferred risk level. You agree to verify the accuracy and completeness of your information on any communications from Adviser and to inform Adviser immediately of any inaccuracies.
7. Term and Termination.
The effective date for Services under this Agreement (“Service Effective Date”) is the later of: (1) the revision date of this Agreement, as it appears above; and (2) the date of your enrollment in the Plan. During the term of this agreement, you may choose to utilize the Services or, alternatively, to select a Participant Selected Portfolio.
This Agreement will terminate on the earlier of (1) the effective date of the termination of the Plan Agreement; and (2) the date on which you no longer have assets in your Plan account following your withdrawal from the Plan. Upon termination, Adviser will no longer provide Services under this Agreement. Accordingly, until you or others take action, your Plan account assets will remain in the investments and allocations as of the time of termination, subject to market movements, and Adviser will not direct the investment of new contributions. Sections 7 through 12 will survive termination of this Agreement.
8. Consent to Information Sharing and Storage
You agree to receive electronic communications from Adviser through Adviser’s website, the Participant Dashboard, and other digital media, and you acknowledge that Adviser intends to communicate to you primarily by posting information to its website or the Participant Dashboard or by sending you a notice that directs you to information on its website or the Participant Dashboard. For example, Adviser intends to deliver its required annual privacy notice, written disclosure statement and amendments to this Agreement to you by posting them on its website. Accordingly, you acknowledge that you should check the website and your account on the Participant Dashboard regularly. Adviser will not impose any additional charge to you for such electronic communication and will provide the specialized software, if any, needed to view such electronic documents at no charge to you. You are responsible for fees associated with internet access or usage.
Adviser may send communications to you at your mailing address or your e-mail address as provided to Adviser by you, the Provider or your Plan Sponsor, and you agree to accept all such communications. You agree to notify us promptly if your e-mail address changes and to keep all information given to the Provider, such as your mailing address, current and accurate.
10. Disclaimers/Limitation of Liability.
Adviser will use reasonable care, consistent with industry practice, in providing Services to you. Adviser does not and cannot guarantee the future performance of your account. Adviser does not promise that the investments it recommends or causes the Provider to purchase on your behalf will be profitable. Investment return and principal value will fluctuate with market conditions, and you may lose money. Losses may also result from the sale of the securities that were in your account prior to engagement of the Service. The investments that Adviser selects or causes Provider to purchase for your account are subject to various market, business, economic, and political risks.
Adviser relies on information about you, your Plan and your Plan account supplied by you, the Provider and your Plan Sponsor or other Plan fiduciary, and Adviser will not be liable for any loss caused by any errors in such information. Adviser will not be liable to you for any loss caused by (1) any decision, action or inaction that Adviser takes with the degree of skill, care, prudence and diligence under the circumstances that a prudent person, acting in a like capacity, would use, (2) following your instructions in good faith or (3) any other person, not engaged by Adviser, who provides services for your account. Adviser also is not liable for any losses caused by circumstances beyond its reasonable control. However, you have rights under federal and state securities laws or ERISA that may impose liability in some circumstances on investment advisers acting in good faith, and this provision cannot and does not waive these rights.
a. Your participation in the Services is valid evidence of consent to be legally bound by this Agreement. Adviser may amend this Agreement at any time and provide notice to you either by posting to our website or by written and/or electronic communications, and your continued participation in the Services following such notice will signify your assent to be bound by any such amended Agreement.
b. You may not assign this agreement, and Adviser may not assign this agreement (within the meaning of the Investment Advisers Act of 1940) without your consent.
c. This Agreement contains the entire agreement of the parties, and supersedes all prior agreements, understandings and arrangements, with respect to the subject matter hereof. This agreement shall be binding on your heirs, agents, and any others claiming a legal or beneficial interest in your Plan account.
d. If any part of this Agreement is found to be invalid or unenforceable, it will not affect the validity or enforceability of any other part of this Agreement, which will continue in full force and effect.
e. Nothing in this Agreement can be or may be read to waive compliance with the Investment Advisers Act of 1940 or the rules thereunder, or ERISA or the rules or any order thereunder.
f. This Agreement is governed by California law to the extent not preempted by federal law.
g. Adviser’s failure to insist on strict compliance with this Agreement, or any other course of conduct on its part, will not be deemed a waiver of its rights under this Agreement.
Any claim, dispute or controversy between you and Adviser, its agents, employees, successors, assigns and affiliates (collectively for purposes of this paragraph, “Adviser Parties”) about any matter arising from or relating to this Agreement, any prior agreement, or the services provided by Adviser Parties or the relationships which result from this Agreement, including the validity of this arbitration clause or the entire agreement, and not resolved by the parties shall be submitted for and resolved exclusively and finally by binding arbitration (unless prohibited by applicable law) administered by the JAMS under its Comprehensive Arbitration Rules and Procedures then in effect.
Arbitration hearings will be held in San Francisco, California and will be limited solely to the dispute or controversy between you and Adviser Parties. Neither you nor Adviser Parties shall be entitled to join or consolidate claims by or against other clients, or arbitrate any claim as a representative or class action or in a private attorney general capacity.
This transaction involves interstate commerce, and this provision shall be governed by the Federal Arbitration Act 9 U.S.C. sec. 1-16. Any award of the arbitrator(s) shall be final and binding on each of the parties and may be entered as a judgment in any court of competent jurisdiction.
Either you or Adviser Parties can bring a claim in arbitration that you (or Adviser Parties) could have brought in court, including, but not limited to, ERISA claims. The arbitrator can only award relief for a claim that could have been awarded by a court for the same claim. Any and all state law claims will be preempted in arbitration to the same extent that they would be preempted if asserted in court.
Arbitration is final and binding. By entering into this Agreement and agreeing to arbitration, you give up the right to resolve disputes in court, including the right to a jury trial, unless a waiver would violate applicable law. Arbitration differs from court proceedings in several ways. Discovery is generally more limited and follows different rules. The arbitrator's decision might not include factual findings or legal reasoning. Your right to appeal or seek to change the decision is strictly limited. Arbitrators are not judges, and where a panel of arbitrators is appointed pursuant to JAMS rules, the panel will typically include at least one member who was or is in the securities industry.
To the extent that the JAMS Policy on Consumer Arbitrations Pursuant to Pre-Dispute Clauses Minimum Standards of Procedural Fairness (the “Minimum Standards'') applies, to the extent this agreement to arbitrate conflicts with the Minimum Standards, the Minimum Standards in that regard will apply.