Product Compensation Disclosure

H. Beck, Inc. (“HBI”) offers a variety of mutual funds, insurance, investment advisory and alternative investment products to its clients. Pursuant to HBI’s Strategic Partner Program, the firm receives compensation called “revenue sharing” from some of the companies that distribute such products (“product sponsors” and their affiliates). Such revenue sharing compensation is in addition to typical sales-based compensation such as loads, commissions and premiums; 12b-1 fees, and other asset-based fees and expenses – all of which are borne by the investor.[1]  By contrast, revenue sharing payments are paid directly to HBI by the product sponsor or its affiliates.

In addition to revenue sharing compensation which is typically paid in the form of a percentage of initial sales of products and/or a percentage of annual assets held, HBI receives compensation in the form of flat fees for providing sponsors access to conferences and meetings (together, revenue sharing and conference fees are referred to herein as “product compensation”).

In exchange for product compensation, which may vary by sponsor, HBI provides access to the firm’s financial advisors for educational, training, and marketing support with respect to products distributed by the Strategic Partners. HBI believes that the Strategic Partner Program helps to make its financial advisors more knowledgeable about the products and therefore better able to service the needs of its clients.

From time to time, HBI also receives payments from Strategic Partners that are used to reimburse HBI’s financial advisors for expenses incurred in connection with client-related activities, including but not limited to, client seminars, client appreciation events, meet and greet events and charitable events. HBI may also receive other payments that are used to reimburse its financial advisors for expenses incurred by them, including expenses for travel, accommodations and meals while attending educational or training events. Financial advisors also may receive occasional non-cash benefits from Strategic Partners including, but not limited to, meals, entertainment and tickets to sporting events. HBI has policies that limit the type and amount of financial reimbursement and non-cash benefits that its financial advisors may receive.

HBI’s financial advisors do not receive any part of the revenue sharing payments. Nor are they compensated any more for recommending products that are part of the Strategic Partner Program. Accordingly, HBI does not believe the revenue sharing creates any incentive for its financial advisors to recommend one product over another based on the amount of compensation received by the financial advisor. Nonetheless, the educational, training and marketing activities provided by the Strategic Partners create greater visibility for their products and therefore could lead financial advisors to focus more on products from sponsors who make revenue sharing payments to HBI when recommending investments to clients – as opposed to products from sponsors that do not make such payments.

HBI does not allow the absorption of ticket charges by product sponsors and does not accept directed brokerage transactions.

Below is information about payments received during 2016 from Strategic Partners that participated in the HBI Strategic Partner Program. HBI expects to receive similar amounts from its Strategic Partners in 2017. The amounts shown below do not include reimbursement of financial advisor expenses or other noncash benefits received by HBI and/or financial advisors from Strategic Partners.

Mutual Funds

The following mutual fund families provided HBI with product compensation in the form of conference fees of up to $70,000 and an additional $8,000 for marketing-related expenses in 2016.

  • American Funds 

Insurance Products

The following insurance companies provided HBI with product compensation in the form of conference fees of up to $70,000 and revenue sharing of up to 20 bps on sales in 2016.  Revenue sharing payments of up to $70,000 per sponsor may be applied to conference expenses.

  • Jackson National
  • Great-West Life Assurance
  • Nationwide Life
  • Prudential Financial

Investment Advisory Products

The following 3rd party money managers provided HBI with product compensation in the form of revenue sharing of up to 7 bps on sales and up to 4 bps on AUM in 2016.  Revenue sharing payments of up to $70,000 per sponsor may be applied to conference expenses.

  • Assetmark
  • Loring Ward

Alternative Investment Products

The following alternative investment product sponsors provided HBI with product compensation in the form of revenue sharing of up to 25 bps on sales in 2016.  Revenue sharing payments of up to $70,000 per sponsor may be applied to conference expenses.

  • Dividend Capital
  • Franklin Square
  • Northstar Realty

Minnesota Life

Among the insurance products HBI distributes are variable and fixed annuity products from Minnesota Life Insurance Company and its affiliate, Securian Life Insurance Company (together “Minnesota Life”), both of which are affiliates of HBI’s parent company, Securian Financial Group, Inc. (“Securian”) HBI receives quarterly payments equal to 0.25% of the amount of purchase payments received by Minnesota Life for the sale of its annuity products through HBI.
Minnesota Life also paid $30,000 for conference expenses in 2016.

Other Compensation

In addition to the revenue sharing described above, HBI also received product compensation from alternative investment product sponsors in the form of flat fees for access to and participation at HBI conferences and meetings and for marketing-related expenses.  The following firms provided HBI with such fees in amounts up to $31,000 in 2016:

Alternative Investment Products

  • Griffin American Capital
  • Inland Securities
  • Resource Real Estate
  • Steben

Compensation Received in Connection with FundVest Funds

In addition to serving as an investment adviser, H. Beck is the introducing broker-dealer of record for brokerage accounts established in connection with the following investment advisory programs: H. Beck Choice, H. Beck Freedom and H. Beck Advisory Choice Asset Management Plus (ACAMP+), (the "IA Programs"). Approved trades in these brokerage accounts are introduced by H. Beck to Pershing, LLC ("Pershing"), H. Beck’s clearing broker. Pershing (member FINRA/SIPC) is a global provider of financial business solutions to institutional and retail financial organizations and independent registered investment advisors. Pershing is a subsidiary of The Bank of New York Mellon Corporation.

Pershing makes certain mutual funds (the "FundVest Funds") available to brokerage accounts established in connection with the IA Programs. The FundVest Funds do not have transaction fees (e.g., front end sales loads or deferred sales charges), provided they are held for at least three months. If FundVest Funds are held for less than three months, H. Beck bears any transaction fees in those cases. H. Beck receives 12b-1 fees through Pershing from the FundVest Funds or other mutual funds available through this program which are in addition to the investment advisory fees H. Beck receives from its clients under the IA Programs. H. Beck also receives from Pershing 55% of the service fees (defined below) Pershing receives in connection with the sale and retention of certain FundVest Funds. These fees are paid in accordance with an asset based formula. The FundVest program is not a part of H. Beck's Strategic Partner Program, and H. Beck will not receive FundVest payments where funds participate in H. Beck’s Strategic Partner Program.

In addition, in association with certain other FundVest Funds, Pershing will pay 15% of the service fees that Pershing receives from such FundVest Funds to H. Beck. “Service Fees” are fees other than Rule 12b-1 Plan Fees paid directly or indirectly by a Fund pursuant to an agreement between Pershing and the parties that distribute the funds. Service fees are paid to Pershing in exchange for Pershing's administration of the FundVest program.

Effective April 1, 2017, for the IA Programs, H. Beck will credit back to client accounts FundVest program payments H. Beck receives from Pershing as a result of 12b-1 fees paid to Pershing from the FundVest funds with respect to assets held in a client's account.  H. Beck shall retain payments of Service Fees. The Freedom programs have credited such 12b-1 fees back to client accounts since their inception.

For additional details regarding the FundVest program, please refer to www.pershing.com/mutual_fund.htm.

For more information about the Strategic Partner Program, you may contact the HBI Compliance Department by calling our toll-free number: 1.800.333.6884.

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[1] Sales-based compensation is disclosed in the sponsoring company’s prospectus for the specific investment.

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