Facet allocates investment management assets of its Member accounts, on a discretionary basis, among one or more of its asset allocation programs (i.e. Aggressive, Moderately Aggressive, Moderate, and Conservative) which is based on the Member’s investment profile developed with the Member’s financial planner. Facet’s asset allocation strategies have been designed to comply with the requirements of Rule 3a-4 of the Investment Company Act of 1940. Rule 3a-4 provides similarly managed investment programs, such as Facet’s asset allocation programs, with a non-exclusive safe harbor from the definition of an investment company. Facet primarily allocates Member investments to exchange traded funds (ETF’s) and if applicable, will manage other existing assets such as various mutual funds, individual equities (stocks) and debt instruments (bonds) the Member has based the Member’s designated investment objective(s).

Facet shall utilize the following methods of security analysis:

1. Fundamental – (analysis performed on historical and present data, with the goal of making financial forecasts)
2. Technical – (analysis performed on historical and present data, focusing on price and trade volume, to forecast the direction of prices.
3. Cyclical – (analysis performed on historical relationships between price and market trends, to forecast the direction of prices)

Investing in securities involves risk of loss that Members should be prepared to bear.

Tax-Optimized Model Implementation
Facet uses an algorithm to incorporate a Member’s legacy assets in taxable accounts into our investment management program in order to disperse/minimize the tax impact of transferring assets to Facet by not immediately selling existing assets that are at a tax gain. Facet’s proprietary algorithm will select the set of our model ETFs that best match the legacy assets the Member owns. These algorithms are developed, overseen, and monitored by Facet’s Chief Investment Officer.

Facet conducts testing designed to ensure that our algorithm continues to function as intended when new code is introduced and existing code is updated. Although such testing is intended to ensure that code changes do not create unintended consequences, Members should understand that testing, no matter how comprehensive, cannot guarantee the absence of code-related issues with our algorithms.

Permanent Model Substitutes
As part of the Tax-Optimized Model Implementation process there may be instances when a member’s existing mutual fund position closely matches our target ETF fund, but overall there is no material difference in the underlying investment. In order to act in our member’s best interest, we will allow the mutual fund share class to be held rather than the ETF share class that is part of our target portfolio.

Tax-Loss Harvesting (“TLH”)
TLH is a technique designed to help appropriately reduce a Member’s taxes while maintaining the expected risk and return profile of the Member’s portfolio. It harvests previously unrecognized investment losses to offset taxes due on the Member’s other gains and income by selling a security at a loss to accelerate the realization of capital loss and investing the proceeds in a security with closely correlated risk and return characteristics. The realized loss can be applied to reduce the Member’s tax liability and the tax savings can be reinvested to grow the value of the Member’s portfolio. Facet’s TLH strategy, which is only applied to ETFs, is available to all Members with a taxable Managed Account.

• Facets tax-loss harvesting strategy is not intended as tax advice, and does not represent in any manner that the tax consequences described will be attained or that Facet’s investment strategy will result in any particular tax consequence. The tax consequences of this strategy and other Facet strategies are complex and may be subject to challenge by the IRS. This strategy was not developed to be used by, and it cannot be used by, any investor to avoid penalties or interest. Members and their personal tax advisors are responsible for how the transactions in the Member’s account are reported to the Internal Revenue Service (“IRS”) or any other taxing authority. Facet assumes no responsibility to you for the tax consequences of any transaction, including any capital gains and/or wash sales that may result from the tax-loss harvesting strategy.
• When Facet replaces investments with “similar” investments as part of the tax-loss harvesting strategy, it is a reference to investments that are expected, but are not guaranteed, to perform similarly and that might reduce a Member’s tax bill while maintaining a similar expected risk and return on the Member’s portfolio. Expected returns and risk characteristics are no guarantee of actual performance.
• The performance of the new securities purchased through the tax-loss harvesting service could be better or worse than the performance of the securities that are sold for tax-loss harvesting purposes.
• If a Member has accounts outside of Facet containing the same securities (or options contacts) as their Facet account(s), they cannot sell the same securities, 30 days before or after Facet executes the sale of those securities in the Member’s facet account(s). This will ensure the losses are usable by the Member and avoid possible wash sale rule violations. Wash sales can diminish the effectiveness of tax-loss harvesting by deferring a tax loss to a future year rather than using it to offset income or capital gains in the current year. For more information on the wash sale rule, please read IRS Publication 550.

Short Term Strategy
Facet’s Short-Term Strategy is designed for investments that need to remain highly stable, over short periods of time, usually 1-3 years. Our strategy consists of a set of Exchange-Traded Funds (ETFs) that invest in very short-term, high-quality bonds. This is not a money market fund or bank account. It is an investment strategy held in a brokerage account. Rates will fluctuate over time and some small volatility and or losses are possible.

Environmental, Social and Governance (ESG)
ESG investing is a strategy that keeps a sharp focus on a company’s impact on the planet and society when prioritizing your investments. Facet’s ESG philosophy empowers you to express your beliefs and values through your money while working toward your financial goals. Our ESG portfolio is designed to have a similar risk and profit profile as our traditional portfolio, but avoids profiting from activities not aligned with your beliefs. When directed by the Member, ESG investments may be included in the Member’s portfolio. An exclusionary approach for equities is used, which allows our strategy to avoid certain companies with involvement in certain activities. ESG investments have subjective qualities and characteristics and may or may not align with your beliefs, values, or desired investment performance. There are risks specific to ESG investing that should be considered before making an investment. These include a lack of long term investment history, industry and business standards that are generally undefined, a limited investment universe, and fees and expenses that have the potential to be higher than traditional investments.

Tax-Sensitive Fixed Income Strategy (TSFI)
Facet uses ETFs to create a diversified portfolio consisting of equity and fixed income positions. The Tax-Sensitive Fixed Income Strategy is applied to the fixed income portion of our models and tailors a Member’s allocation between tax-free municipal bonds and taxable bonds. These allocations are based on market conditions and the Member’s own marginal tax rate. Our standard fixed income program separates Members into three tax bracket groups: “high” (32% bracket and higher), “middle” (22% and 24% brackets), and “low” (12% or lower bracket). This model consists of either taxable bonds or municipal bonds in each grouping depending on the optimal allocation at that time.

For Members in New York or California, the model will consist of ETFs in those states instead of a national muni fund.

Facet Non-Managed Account Recommendation System
Facet’s Non-Managed Account Recommendation System is designed to help our members with accounts that Facet cannot manage. This most commonly includes employer-based defined contribution programs, such as 401k, 403b, 457, or the Thrift Savings Plan (TSP). It could also include 529, HSA plans or any other program where our member has a defined set of investment options but cannot move the money to an outside manager. Recommendations are based on Facet’s automated proprietary machine learning algorithm which is designed to take any set of mutual fund or ETF options and return the mix of investments that would most closely resemble what Facet would recommend if we were managing that same account. For manual reviews, Recommendations are based on the member’s current plan investment options provided to Facet by the member. Members are responsible for accepting and implementing recommendations. Mutual funds, closed-end funds and exchange-traded funds are subject to market, exchange rate, political, credit, interest rate, and prepayment risks, which vary depending on the type of fund. International investments involve special risks, including currency fluctuations and political and economic instability. Asset allocation and diversification do not eliminate the risk of experiencing investment losses. Fund purchases may be subject to investment minimums, eligibility and other restrictions, as well as charges and expenses.

High Yield Account
Facet’s High Yield brokerage account is a fundamental component of almost every financial plan. This account is offered through Apex Clearing. Apex Clearing is not a bank. The cash balance in the high yield account will be swept from the brokerage account to deposit account(s) at one or more third-party banks (Program Banks) that have agreed to accept deposits from Facet members. The Program Banks will pay a variable rate of interest. All accounts through Apex are covered by SIPC while the funds in the High Yield Account invested in the program banks are covered by FDIC.

Long and Short Term Purchases
Long Term Purchases and Short- Term Purchases are fundamental investment strategies. However, every investment strategy has its own inherent risks and limitations. For example, longer term investment strategies require a longer investment time period to allow for the strategy to potentially develop. Shorter term investment strategies require a shorter investment time period to potentially develop but, as a result of more frequent trading, could incur higher transaction costs when compared to a longer-term investment strategy. Please see attached (Investment White Paper) for additional information regarding our investment strategy.

Exchange Traded Funds
Exchange traded funds are available directly to the public. Thus, a prospective Member can obtain many of the funds that may be utilized by Facet independent of engaging Facet as an investment advisor. However, if a prospective Member determines to do so, he/she/they will not receive Facet’s initial and ongoing investment advisory services. In addition to Facet’s planning fee and any miscellaneous custodian fees, Members will also incur, relative exchange traded fund purchases, charges imposed at the fund level (e.g. management fees and other fund expenses). ETF performance typically does not exactly match the performance of the index or market benchmark that the ETF is designed to track because 1) the ETF will incur expenses and transaction costs not incurred by any applicable index or market benchmark; 2) certain securities comprising the index or market benchmark tracked by the ETF can, from time to time, temporarily be unavailable; and 3) supply and demand in the market for either the ETF and/or for the securities held by the ETF may cause the ETF shares to trade at a premium or discount to the actual net asset value of the securities owned by the ETF.