Advisory Service Brochures
For a full description of Waddell & Reed, Inc.’s investment advisory programs and services, including fees and expenses, please refer to the relevant Advisory Services Brochure (ADV Part 2A) below:
SMA Program and Step Out Trades
Waddell & Reed, Inc. (WRI) offers the Separately Managed Accounts Strategies (SMAS) program which provides access through third-party or independent investment management firms (Sub-Manager) to its clients. As a part of the SMAS program, Sub-Managers generally place trades through WRI’s clearing and custodial firm, Pershing LLC. On some occasions, Sub-Managers place trades through other broker-dealers. When Sub-Managers place trades through other broker-dealers, these are referred to as “step-out trades.” This document explains step-out trades at WRI and additional costs that usually occur.
Cash Sweep Program
A cash sweep provides the ability to automatically transfer the uninvested cash balance in your investment account into a preselected, low-risk, liquid investment option that allows you to earn a return on your cash without incurring transaction charges. Uninvested cash balances could result from incoming cash deposits, dividends, or money from sell orders without having investment instructions on file.
Uninvested cash balances are commonly swept into a bank deposit or a money market fund. A money market fund is a type of fixed income mutual fund that invests in debt securities and is characterized by short maturities and minimal credit risk, which may make it appropriate for a short-term cash sweep. A money market fund will typically seek to maintain a stable net asset value of $1.00 per share.
Revenue Sharing Disclosure
Waddell & Reed, Inc. (“WRI”) offers a variety of products and programs including mutual funds, annuities, life insurance, retirement platforms, and investment advisory programs both directly and through third parties. WRI has entered into agreements with select product providers referred to as revenue sharing arrangements.
Client Relationship Summary(Form CRS)
Waddell & Reed, Inc.’s Form CRS summarizes information about the services it offers, the fees and costs associated with the services, conflicts of interest, legal standard of conduct, and disciplinary history. The relationship summary follows a standardized question-and-answer format that allows retail investors to more easily compare services and firms.
Regulation Best Interest Disclosure
Waddell & Reed, Inc.’s Regulation Best Interest Disclosure provides information about the scope and terms of the relationship and business practices of WRI with broker-dealer clients as well as material conflicts of interest. Additionally, the Regulation Best Interest Disclosure serves as an overview of items a retail investor may wish to consider when deciding whether to work with WRI and its financial advisors.
Expenses and Fees Disclosure
Waddell & Reed, Inc.’s Expenses and Fee Disclosure provides information about general characteristics, costs and fees associated with investment products and services it offers in a broker-dealer capacity to assist you in making an informed decision when buying, selling or holding securities and/or variable insurance products. For expenses and fees related to advisory services offered by Waddell & Reed, Inc., please refer to the applicable advisory services brochure.
Waddell & Reed, Inc.’s Schedule of Product Expenses and Miscellaneous Account Services Fees provides an overview of the account and service fees associated with a Waddell & Reed, Inc. brokerage or advisory account held on the Pershing platform.
SEC-Required Report on Routing of Customer Orders
Waddell & Reed, Inc. ("W&R") introduces transactions on a fully disclosed basis to our clearing firm, Pershing LLC ("Pershing"). In November 2000, the U.S. Securities and Exchange Commission ("SEC") adopted new rules aimed at improving the quality and availability of disclosure related to order execution and routing practices. Pershing has prepared reports pursuant to SEC Rule 606 that requires all brokerage firms to make publicly available quarterly reports on their order routing practices. The report provides information on the routing of "non-directed orders" - any order that the customer has not specifically instructed to be routed to a particular venue for execution. For these non-directed orders, our clearing firm has selected the execution venue on behalf of its customers.
The report is divided into four sections: one for securities listed on the New York Stock Exchange, one for securities listed on The Nasdaq Stock Market, one for securities listed on the American Stock Exchange or regional exchanges, and one for exchange-listed options. For each section, this report identifies the venues most often selected by the clearing firm, sets forth the percentage of various types of orders routed to the venues, and discusses the material aspects of the respective clearing firm's relationship with the venues. W&R directs its equity order flow to its clearing firm, Pershing, for routing and execution based upon where the customer's account is held. W&R does not receive compensation for directing order flow to Pershing.
Click here if your account is held at Pershing (enter WADDELL & REED, INC when prompted for the broker-dealer's full name).