First Citizens Investor Services Inc. Regulation Best Interest Brokerage & Insurance Conflicts of Interest Disclosure

First Citizens Investor Services Inc.

Regulation Best Interest

Brokerage & Insurance Conflicts of Interest Disclosure

Contents

INTRODUCTION 2 ....................................................................................................................

CONFLICTS OF INTEREST DEFINED 2...................................................................................

YOUR BROKERAGE RELATIONSHIPS WITH FCIS 3..............................................................

FULL-SERVICE BROKERAGE RELATIONSHIP 4 ..............................................................................

SELF-DIRECTED BROKERAGE 5.....................................................................................................

MATERIAL BUSINESS RELATIONSHIPS WITH AFFILIATES AND OTHERS 6........................

Sponsors and Vendors 6 .....................................................................................................................

Broker Dealer Participation Program 7 .................................................................................................

Cash Sweep Program Feature 7 ..........................................................................................................

Acting in Other Capacities 7................................................................................................................

FCIS AND YOUR FCIS INVESTMENT PROFESSIONAL’S COMPENSATION 8........................

BROKERAGE PRODUCTS AND SERVICES 9..........................................................................

Mutual Funds 9 ...................................................................................................................................

Unit Investment Trusts 11....................................................................................................................

Annuities 12........................................................................................................................................

Exchange-Traded Funds (ETFs) 12 .....................................................................................................

Equity Investments 13 .........................................................................................................................

Bonds, Municipal Securities, Treasuries, and Other Fixed Income Securities 14 ....................................

US Government-Issued Securities: 14.................................................................................................

Treasury Inflation-Protected Securities 15 ............................................................................................

Municipal Securities 15.......................................................................................................................

529 Plans 16......................................................................................................................................

Brokered Certificates of Deposit 16 ......................................................................................................

Market Linked and Structured Products 17 ...........................................................................................

Market Linked Brokered Certificates of Deposit or “CDs” 17..............................................................

Structured Notes 18 .........................................................................................................................

INSURANCE 19 ........................................................................................................................

UNDERSTANDING INVESTMENT RISKS 20............................................................................

TRADE CORRECTIONS AND ADJUSTMENTS TO COMPENSATION 20.................................

pg. 2 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

INTRODUCTION

First Citizens Wealth Management is a registered trademark of First Citizens BancShares, Inc., including

First Citizens Investor Services, Inc. (“FCIS,” “we,” “us,” “our”), a wholly owned subsidiary of First

Citizens Bank & Trust (“FCB”). FCIS a broker-dealer and investment adviser registered with the U.S.

Securities Exchange Commission. Member FINRA, SIPC and registered with the Municipal Securities

Rulemaking Board. FCIS operates across the United States and offers securities, investment products

and services, and investment advisory services in all fifty states, Puerto Rico, and the District of

Columbia. FCIS is also an insurance agency, registered in all states except New York.

FCIS seeks life-long relationships with our customers (“You,” “Your”), and we understand that the

foundation of any sustainable relationship is trust and forthrightness. That is why we feel it is important

that you have the information necessary to make informed decisions about our internal practices and the

products and services that we offer.

This Brokerage & Insurance Conflicts of Interest Disclosure document has information about certain

business practices, products, compensation, and conflicts of interest related to the brokerage and

insurance business of FCIS for retail customers. This document describes potential material conflicts of

interest, compensation, fees, expenses, risks, cost of investments and measures we take to manage

material conflicts of interest as required by applicable securities laws. This document is specific to FCIS

Broker-Dealer services, accounts, and insurance services and does not include the investment advisory

services and accounts offered through the FCIS investment adviser. (For conflicts of interest relating to

the FCIS Investment Adviser please see our FCIS FORM ADV.) You should carefully review this

Brokerage & Insurance Conflicts of Interest Disclosures document along with the FCIS Form CRS and

any other disclosure documents provided to you before making an investment or insurance decision.

It is important to note that investments and insurance products and services are:

• Not insured by the FDIC or any other governmental agency;

• Not bank deposits or obligations of or guaranteed by First Citizens banks or any of its affiliates;

and,

• May involve investment risk, including the possible loss of principal.

CONFLICTS OF INTEREST DEFINED

We have an obligation to act in your best interest. To this purpose, we adopted written supervisory

policies and procedures reasonably designed to identify and either: eliminate, mitigate, or, at a minimum,

disclose conflicts of interest associated with recommendations covered by Regulation Best Interest. This

means when we provide recommendations to you, we must act in your best interest and not put our

interests ahead of yours. Conflicts of interest may occur when we are motivated to achieve our goals

ahead of yours. For example, the way we earn revenue may create potential, perceived, or actual

material conflicts with our customers.

FCIS will not be able to eliminate all identified conflicts of interest, potential, perceived or real, which may

materially affect a retail investor’s decision to conduct business with our firm. In these cases, FCIS will

work to mitigate the conflict, if possible, or will try to take actions such as declining to make a

recommendation where the conflicts are too significant. While FCIS makes reasonable efforts in this

document and other disclosures to disclose material conflicts of interest, it may be impossible to capture

a complete list because of items we have yet to consider. However, we strive to include those that we

believe to be the most material. As we identify additional material conflicts of interest, this document will

be updated accordingly.

pg. 3 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

YOUR BROKERAGE RELATIONSHIPS WITH FCIS

FCIS offers both “Full Service” brokerage and “Self- Directed” brokerage services and products to Retail

Customers. FCIS is a fully disclosed introducing broker-dealer which clears its securities transactions

through Pershing LLC (“Pershing”), an unaffiliated, independently owned SEC registered broker - dealer

and Member FINRA and SIPC. Your FCIS Account is introduced to Pershing on a fully disclosed basis

which means, among other things, that Pershing is the custodian of your assets, including uninvested

cash. In the case of direct relationships with insurance companies, 529 Plans, mutual funds, and other

investment providers, custody of your investments is maintained directly with such investment providers.

FCIS do not allow Investment Professionals to accept discretionary trading authority in brokerage

accounts and we do not provide on-going monitoring of your brokerage account. It is your responsibility

to monitor the investments in your brokerage account, and we encourage you to do so regularly.

Account Types: FCIS offers many different brokerage account types to include individual and joint

accounts, custodial accounts, collateral accounts, Delivery Versus Payment (DVP) accounts, estate and

trust accounts, partnership accounts, individual retirement accounts and other types of retirement

accounts as outlined in our account agreement(s).We provide brokerage services through either a cash

brokerage account or a margin (or collateral) brokerage account based on your eligibility and selection.

In a cash brokerage account, you must pay for your purchases in full at the time of purchase. In a margin

brokerage account, you must eventually pay for your purchases in full, but you may borrow part of the

purchase price from our clearing firm. This is generally referred to as a “margin loan.” The portion of the

purchase price that is loaned you is secured by eligible securities and assets in your account, also

referred to as the “collateral.” You will incur interest costs as a result of your margin loan activity. Given

that a margin brokerage account has specific eligibility requirements, unique costs, and additional

regulatory requirements, our default brokerage option is our cash brokerage account. You must execute

a separate margin agreement before engaging in margin brokerage activity. Included with your margin

agreement is our clearing firm’s Margin Disclosure Statement. Additionally, we will provide you our

Margin Disclosure, Requirements and Interest Charges document which provides general information

related to the risks of margin accounts and margin account requirements and interest calculations

details.

Compensation: FCIS earns sales commissions, concessions, mark-ups, mark-downs, and payments

from third parties for products and services FCIS provide to you in your brokerage account. Based on the

nature of your investments, FCIS receives direct or indirect compensation in connection with the services

provided to you. This disclosure document discusses our obligation to make investment

recommendations in your best interest and our conflicts of interest in making such recommendations.

Trade Execution: When providing brokerage products and services to you, there are potentially some

trade execution related conflicts of interest. To address these potential conflicts, FCIS has policies in

place that are reasonably designed to ensure customers receive best execution, taking into consideration

prevailing market conditions. In an effort to deliver best trade execution Pershing routes customer orders

to market centers, including national securities exchanges, alternative trading systems, market makers,

and electronic communication networks. In doing so, Pershing receives compensation by sending trades

to specific destinations, selecting execution venues for your orders (when we have not been instructed to

route your order to a specific venue) to receive compensation or avoid charges to a specific market

center. Customers can be confident that industry rules and regulations dictate our obligations to ensure

best execution for our customers and that our policies and procedures are designed to ensure that we

meet our best execution obligations. Refer to our Trade Execution Disclosure.

Principal Transactions: Sometimes, we act as a trader of, and dealer in, securities both as riskless

principal and on behalf of you in the ordinary course of trading and dealing activities. When acting in our

capacity as your broker dealer, we may buy securities from you, sell securities to you, or engage in

transactions with you for our own account. These transactions may conflict between our interests as

pg. 4 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

buyer or seller as we are paid based on the compensation from those transactions. In addition, we may

be incentivized to trade with you on a principal basis as we may earn more compensation than would

otherwise receive when trading with you in our capacity as an agent. It is our responsibility not to put our

interests ahead of yours and ensure that we execute your transaction in your best interest.

Agency Cross Transactions: We have the ability to effect “agency cross” transactions (i.e.,

transactions for which we act as a broker for both sides of the transaction when permitted by applicable

law. We may receive compensation from each party to the transaction which may create the potential for

diverging loyalties and conflicting division of responsibilities regarding the parties to the transaction.

Again, it is our responsibility not to put our interests ahead of yours and ensure that we execute your

transaction in your best interest.

FULL-SERVICE BROKERAGE RELATIONSHIP

In a Full-Service Brokerage relationship, in addition to acting as your agent to complete securities

transactions at your direction and on your behalf, FCIS and/or your FCIS Investment Professional will

provide you with investment recommendations and other services which are tailored to your specific

investment goals, risk tolerance, time horizon and circumstances. However, we do not accept any

discretionary authority or responsibility to monitor your brokerage account on an ongoing or periodic

basis for any purpose unless otherwise stated in writing. FCIS may, however, from time to time and in

our sole discretion, review your brokerage account(s) for the purpose of determining whether to make a

recommendation to you, but any such voluntary review of your brokerage account(s) does not constitute

our agreement to undertake responsibility for monitoring your brokerage account(s). You are reminded

that you bear the responsibility to monitor your brokerage account(s) to ensure the activity and holdings

remain consistent with your investment profile.

Brokerage accounts are different from advisory accounts. Your brokerage relationship with FCIS is a

transactional relationship and, unless all parties expressly agree otherwise in writing:

a) All recommendations regarding purchases or sales in your brokerage account will be

made by your FCIS Investment Professional in a broker-dealer capacity only.

b) Your FCIS Investment Professional is not required to update any previously provided

recommendations.

c) FCIS and its Investment Professionals have no discretionary authority to buy, sell or

otherwise transact business with regard to investments or other assets held in your

brokerage account (or otherwise directly with an investment provider); and

d) After each transaction in your brokerage account(or directly with an investment provider)

made by you (or any other person authorized to transact in your account on your behalf) is

completed, we will not have any continuing or ongoing obligation to review, monitor, or

make recommendations for the investment of securities, cash, annuities, insurance

policies, guaranteed investment contracts or any other form of investment held in or

through your brokerage account (or otherwise).

As your broker-dealer, FCIS and its Investment Professionals are acting as your agent or principal. When

acting in our capacities as your securities broker, FCIS and its Investment Professionals have conflicts of

interest, due to the fact that we earn compensation from your transactions, with respect to investment

recommendations and other relationships with you and the many insurance companies, mutual fund, and

other investment providers we also represent. Under applicable laws, rules, and regulations, when

making investment recommendations to retail customers, FCIS has a duty to act in your best interest.

We mitigate these conflicts of through education of our Investment Professionals, principal review of

transactions, training our Investment Professionals and Supervising Principals, and limiting the

percentage of liquid net worth to be invested.

pg. 5 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

FULL-SERVICE BROKERAGE COMMISSION SCHEDULE

Commission and Fee Schedules (firstcitizens.com)

For a complete listing of all fees and commissions associated with Full-Service Brokerage please call 1-

800-229-0205.

Full-Service brokerage services are more expensive than Self-Directed brokerage services and charge

higher commission rates on securities transactions as noted in the above schedule. Full-Service

brokerage accounts are eligible to invest in variety of securities on our platform which FCIS make

available to such accounts. Availability of investments will vary over time. FCIS reserves the right, in its

sole discretion, to determine at any time and from time to time, and with or without advance notice, which

securities, share classes, tranches, and other investments it will make available to its customer’s Full-

Service Brokerage accounts. This creates a potential conflict of interest in that not all available

investment products are available for recommendation through FCIS. Therefore, Investment

Professionals are limited to products and services chosen by the firm. This conflict of interest is mitigated

by disclosing it to you, training of the Investment Professionals, actions and undertakings of the

Investment Products Committee which oversees product selection, and supervisory principal review of

each recommendation made by the Investment Professional.

SELF-DIRECTED BROKERAGE

If your brokerage account is self-directed; this means that you or someone you designate are solely

responsible for deciding whether and how to invest in the securities, strategies, products, and services

offered by FCIS. You or your designee are also solely responsible for the ongoing review and monitoring

of the investments held in your FCIS Self Directed Account. FCIS will not monitor any investment made

by you or the investments held in your Account. You are responsible for independently ensuring that the

investments in your FCIS Account remain appropriate given your investment profile.

There is no minimum requirement to open a self-directed brokerage account, but there are minimums to

purchase some types of investments. All transaction commissions will be identified to you in the

confirmation of a transaction or in the account statement FCIS sends to you on a periodic basis. Please

see the FCIS Account Customer Agreement (“Customer Agreement”) and the FCIS Brokerage

Commission and Fee Schedule (“Schedule”) for information regarding the transaction fees and other

charges that apply to your FCIS Account, including trade execution, clearing, and other services provided

by our clearing firm, Pershing.

Self-Directed brokerage accounts are eligible to invest in listed and OTC securities and any mutual fund

on our platform which FCIS makes available to such accounts. Availability of investments will vary over

time. FCIS reserves the right, in its sole discretion, to determine at any time and from time to time, and

with or without advance notice, which securities, mutual fund shares, mutual fund share classes and

other investments it will make available to its customer’s Self-Directed brokerage accounts. Self-Directed

brokerage accounts are not permitted to invest in alternative products (complex products such as

structured notes, equity linked Certificates of Deposits, Triple Levered ETFs, Non-Traded REITS, etc.…),

annuities or other insurance products.

FCIS receives a portion of the ongoing fees you pay to each mutual fund family. Such fees can include

Rule12b-1 fees and shareholder services fees charged to the operating expenses of each mutual fund

and indirectly paid by you through the mutual fund’s internal expense ratio. These charges increase the

mutual funds expenses and correspondingly reduce your investment returns associated with such

investments.

• In addition, FCIS receives payments for shareholder services, omnibus recordkeeping services

and other services provided to some, but not all, mutual fund families,

pg. 6 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

• FCIS will charge a transaction fee of $25 or the purchase of no-load funds in Self-Directed

brokerage accounts,

• FCIS will charge $6.95 for OTC equities and $40 for Call Center Assisted transactions.

The compensation FCIS receives in connection with the Self-Directed account investments in certain

mutual funds and mutual fund share classes described above creates a conflict of interest and incentive

for FCIS to not offer to its customers mutual funds and share classes which do not offer similar

compensation to FCIS. FCIS mitigates this conflict of interest by disclosing it to you. But FCIS cannot

eliminate this conflict of interest as it is inherent in the business model of a typical securities broker to be

compensated in connection with its mutual fund distribution services.

SELF DIRECTED BROKERAGE COMMISSION SCHEDULE

Commission and Fee Schedules (firstcitizens.com)

For a complete listing of all fees and commissions associated with Self Directed Brokerage please call 1-

800-229-0205.

MATERIAL BUSINESS RELATIONSHIPS WITH AFFILIATES AND OTHERS

As a wholly owned subsidiary of First Citizens Bank & Trust, FCIS and First Citizens Bank & Trust have

entered into a networking agreement. As a result, products included on the FCIS Approved Product List

may be determined and limited by FCB. We and our affiliated financial services firms are wholly owned

subsidiaries of our parent, First Citizens Bank & Trust. While providing services to you, we may enter into

transactions with, or accept services from, other members of First Citizens Bank and Trust. We are

compensated by providing products and services to you for which you pay us. We also earn revenue

from other sources, including from our affiliates, which may be seen as involving a conflict of interest or

potential conflict of interest. In these situations of conflicts involving First Citizens Bank & Trust, we may

be financially motivated to encourage you to enter into transactions with other members of First Citizens

Bank, or to enter into more transactions with us to our benefit. We will only enter into these transactions

where they are permitted under applicable securities laws. We have policies and procedures to identify

and manage these conflicts and ensure that we act in your best interest.

Sponsors and Vendors: FCIS as a Broker-Dealer, or Insurance Agency receives cash compensation

from third party product providers (Product Sponsors). Third-Party compensation varies between Product

Sponsors depending on several factors. We receive marketing and training support payments,

conference subsidies, and other types of financial and non-financial compensation and incentives from

certain mutual fund companies, insurance and annuity companies, other investment product sponsors,

distributors, and other vendors to support the sale of their products and services to our customers. These

third parties may pay vendors directly for services on our behalf. These payments sometimes include

reimbursement for our participation in sales meetings, due diligence trips, seminars and conferences

held in the normal course of business. These payments also include reimbursements for costs and

expenses incurred by us in sponsoring conferences, meetings, and similar activities. We receive these

payments in connection with our overall relationship with the relevant third party, and the payments are

not dependent on or related to the amount of assets invested in any individual account.

The providers independently decide what they will spend on these types of activities and do not share

this information with us, subject to regulatory guidelines and our policies. The amount of any expense

reimbursement or payment to us is dependent on which activities we participate in or sponsor, the

amount of that participation, prior sales and asset levels and other factors, and is determined by the

provider. We coordinate with certain product sponsors in developing marketing, training and educational

plans and programs, and this coordination might be greater with some sponsors than others, depending

on relative size, quality and breadth of product offerings, customer interest and other relevant factors.

pg. 7 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

Representatives of approved sponsors — whether sponsors remit these payments or not — are typically

provided access to our branch offices and Investment Professionals for educational, marketing, and

other promotional efforts subject to the discretion of our managers. Although all approved sponsors are

provided with such access, some sponsors devote more staff or resources to these activities and

therefore may have enhanced opportunities to promote their products to our Investment Professionals.

FCIS incurs costs associated with the development, implementation, and maintenance of platforms,

tools, or services. FCIS sometimes receives reimbursements or allowances from Product Sponsors or

Vendors for such enhancements. These enhanced opportunities could, in turn, lead FCIS and its

Investment Professionals to focus on those products when recommending investments to customers

over products from sponsors that do not commit similar resources to educational, marketing, and other

promotional efforts.

Broker Dealer Participation Program

FCIS has entered a Broker Participation Program, with our clearing firm whereby FCIS has elected to

mark-up certain customer account related fees and charges. Currently, FCIS receives a portion of the

Annual Maintenance Fees for Traditional and Roth IRAs, Inactivity Fees, Account Transfer Fees,

Termination Fees, Confirmation Fees on Equities, Paper Statement Fees, and Wire Fees. Accordingly,

FCIS has elected not to charge to your account certain fees that are assessed by our clearing firm such

as eDelivery of customer communications and online account access.

For a complete list of account related fees and charges please see our Full-Service Brokerage

Commission Schedule referenced above on page 5.

Additionally, pursuant to our agreement, our clearing firm has made available to us certain incentives,

such as credits to cover implementation, technology, and strategic plan support costs and an annual

cash incentive based upon the net annual growth in assets we introduce to our clearing firm, exclusive of

market value changes. These incentives, if received, will not be passed on to FCIS customers. Although

these incentives, if received, may be considered compensation to FCIS, they will not be applied towards

our Investment Professional’s production in connection with the determination of their production-base.

Cash Sweep Program Feature

Your Brokerage Account includes a core account that is used for settling transactions and holding free

credit balances. You can elect to have your free credit balances automatically transferred to a money

market option which we make available to you. Our brokerage account Cash Sweep Program

(“Program”) has several options. Under the Program, and with your initial written consent, uninvested

cash balances in your Account will be automatically swept into an available money market fund selected

by you. If you do not select one of the options, your un-invested cash balances will automatically be

directed to a default option “Liquid Insured Deposits Tiered.” First Citizens Bank receives a portion of the

income earned from that option. For terms and conditions regarding the FCIS Cash Sweep Program

please refer to the FCIS Cash Sweep Option form which you sign.

Acting in Other Capacities

While providing services to our other customers and as a participant in global markets, we or our

affiliates may engage in activities that compete with or could otherwise adversely affect your account or

your investments. For example, we may obtain material non-public information that we are prevented

from disclosing to you as a result of our internal policies, procedures, and applicable securities laws,

which if known by you could impact the way you make investment decisions or conduct transactions

involving securities. We may recommend securities of a public company to you in instances where our

affiliate has been retained to provide services to the public company. Our policies and procedures are

reasonably designed to ensure information barriers are in place in such situations and we restrict trading

when engaged by such public company customers in any distribution. Further, our affiliates conduct

research on securities and may, in the ordinary course of business, provide research reports and

investment advice to investors on investment matters. Our research reports contain conflicts disclosures.

pg. 8 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

Without limiting the immediately preceding paragraphs in this section, when acting as a fiduciary with

respect to retirement accounts subject to Title I of ERISA, we will not provide or receive nonmonetary

compensation that we believe would result in any breach of our fiduciary duty or result in a nonexempt

prohibited transaction under ERISA or the Code.

FCIS material business relationships with affiliates and others poses several conflicts of interest wherein

FCIS and its Financial Principals may be inclined to put their interests ahead of yours. FCIS mitigates

these risks by disclosing them to you, training of Financial Professions and Supervising Principals,

monitoring and review of transactions generated by each Investment Professional, management review

of all compensation received, management review of all contracts and intercompany agreements,

management periodic review of all sweep options, and management due diligence on sponsors and

vendors.

FCIS AND YOUR FCIS INVESTMENT PROFESSIONAL’S COMPENSATION

FCIS and your FCIS Investment Professional are compensated for their services in many ways,

depending on the type of investment such as a mutual fund, the amount invested, share class,

underwriter, carrier, or provider. Therefore, FCIS and its Investment Professionals have conflicts of

interest because we earn compensation from your transactions, with respect to investment

recommendations we make to you. Under applicable laws, rules, and regulations, when making

investment recommendations to you, FCIS has a duty to act in your best interest. We mitigate this

conflict of interest by disclosing it to you and implementing internal controls reasonably designed to

ensure that FCIS Investment Professionals act in your best interest.

Investment Professionals receive competitive benefits under the FCB compensation program, subject to

qualifications. Beyond typical benefits, the program includes 401 K matching contributions. FCIS

profitability contributes to FCB profitability, and these programs are administered and approved by Bank

associates and executive management. Depending on role, Investment Professionals are compensated

in one of two methods (1) Salary and a small commission of 10%, or (2) Commission ranging from 20% -

50% based on a rolling 12 month of production.

From time to time, similar to the compensation discussed above under “Sponsors and Vendors”, certain

third parties, such as investment product distributors, mutual fund companies, insurance and annuity

companies, broker-dealers, wholesalers, etc. provide Investment Professionals or FCIS and its affiliates

with non-monetary gifts and gratuities, such as promotional items (e.g., coffee mugs, calendars or gift

baskets), meals, invitations to events, entertainment, and access to certain industry-related conferences

or other events of reasonable value. Sponsor and vendors may also give FCIS associates gifts up to a

total value of $100 per provider per year, consistent with industry regulations. Gifts and entertainment

must be appropriate, customary, and reasonable and clearly not meant to influence our business or

serve as a “quid pro quo” for it to be accepted. Product Sponsors and Vendors may occasionally pay for,

reimburse, or assist FCIS and its Investment Professionals in connection with customer educational

meetings, seminars, events, open house, holiday gatherings, workshops, training, or other advertising

initiatives, including for the purpose of identifying prospective Customers. These arrangements could

incent FCIS and its Investment Professionals to favor the products of those sponsors or vendors when

making a recommendation to you.

FCIS mitigates compensation conflicts of interest by disclosing it to you, reviewing each transaction

recommendation generated by Investment Professionals, training, site reviews and guidelines on the

percentage of a customer’s liquid net worth that may be invested. We have implemented policies and

procedures intended to ensure that we avoid actual or perceived conflicts when giving to or receiving

gifts and entertainment and other non-monetary compensation from relevant parties by limiting the

maximum value that any individual is permitted to receive in any calendar year and review of such items.

pg. 9 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

BROKERAGE PRODUCTS AND SERVICES

FCIS limits recommendations of products available through an Approved Product List. Our Approved

Product List does not contain the entire universe of securities or products available in the marketplace.

Other broker-dealers and investment advisory firms may have additional securities available to you that

we do not offer, some of which may be available at a lower cost.

Securities and other investments available to FCIS brokerage account customers include securities listed

on U.S. securities exchanges, mutual funds, annuities, unit investment trusts, 529 Plans and certain

other unlisted investments which are (1) made available to our customers by Pershing and (2) other

investments whose sponsors or affiliates have contracted directly with us to provide selling and

distribution services. The fact that an investment is available on our platform is not any form of

investment recommendation. All investments are subject to market risks and fluctuate in value,

so that an investor’s shares, when redeemed may be worth more or less than their original cost.

Not all associates of FCIS are registered and licensed to offer brokerage, insurance, and investment

advisory products and services. Some associates are limited to a subset of products on our Approved

Product List. For example, some associates may only recommend mutual fund and annuity products and

are not able to make recommendations on individual equities or fixed income products (i.e., stocks and

bonds) or provide investment advisory products or services.

Mutual Funds

A mutual fund is a diversified portfolio of investments professionally selected and managed under a

stated investment objective. Funds can be invested in U.S. or international stocks, bonds, money market

instruments or a blend of these investments. The investment company owns the investments and sells

shares of the fund to individual investors. Diversification does not ensure against loss and does not

assure a profit. Like most investments, there are certain charges associated with mutual funds. The

prospectus spells out the charges you pay, including sales charges and annual operating expenses.

These charges vary by share class.

Sales charges are levied on either the front-end or the back end of a mutual fund transaction that your

FCIS Investment Professional recommend. Front-end charges are levied when you purchase certain

classes of shares. Back-end charges, or contingent deferred sales charges (CDSC), are levied when you

sell certain classes of shares. However, back-end charges decline over time, so you pay less or nothing

at all in sales charges as you hold your shares for longer periods of time. When choosing a mutual fund,

you will want to ask about sales charges and take the type of charge into consideration based on your

investment goals.

Sales Charges, 12b-1 Fees, and other Compensation: Fund operating expenses include management

fees, SEC Rule 12b-1 fees, the costs of shareholder communications and other expenses. Some funds

carry higher sales charges or operating expenses (including 12b-1 fees and shareholder service fees)

than others. Operating expenses are deducted from the fund’s assets, reducing investment returns,

although they are not charged as an additional fee separate from the mutual fund’s internal expenses.

Operating expenses vary by fund, fund family, investment objective and share class such that higher

operating costs correspondingly reduce mutual fund investment returns. The fund’s prospectus will

provide you with a record of the fund’s expense ratio, so that you can compare the expense costs of

various funds. There are several different classes of mutual fund shares. Each share class has different

fees and expenses, which affect the fund’s results. As discussed previously in this guide, mutual fund

share classes we recommend to FCIS customers vary by brokerage relationship (Self-Directed or Full

Service). Class A Shares often carry front-end sales charges. These are deducted from your initial

investment. The front-end sales charge can range up to 5.75%. A Shares also typically charge annual

12b-1 fees of 0.25%.

pg. 10 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

•Breakpoint Discounts. Most Class A mutual funds offer breakpoint discounts for large

investments, so that, the larger your investment in a fund, the lower the sales charge percentage

applied to the investment. Many mutual fund groups count holdings in related accounts toward

this breakpoint. This privilege is referred to as rights of accumulation.

•Letters of Intent. Some mutual funds will grant breakpoint discounts at a lower investment level

if an investor signs a Letter of Intent claiming an intention to invest a specified amount in the fund

over a specified period of time. Each fund’s rules about rights of accumulation and letters of intent

differ, so be sure to ask your FCIS representative about a fund family’s rules before investing so

that you can take steps to qualify for any available discounts.

Class B Shares (not currently offered by FCIS) generally do not carry front-end sales charges, but

their operating expenses are typically higher than those of A Shares. B Shares normally impose a

contingent deferred (back-end) sales charge (CDSC). The CDSC is typically reduced each year and is

usually eliminated if you hold your shares for seven or eight years. (In most cases, Class B Shares

convert to A shares at this point) subject to the terms of your mutual fund’s prospectus. Please read the

prospectus carefully before investing.

Class C Shares do not generally carry front-end sales charges and generally impose a lower CDSC,

often 1 percent for one year. C Shares typically charge an annual 12b-1 fee of 0.50% to 1%. In most

cases there is also a contingent deferred sales charge. FCIS has adopted a policy of, where available

and permitted by the applicable mutual fund company, C-Share mutual fund shares held in Full-Service

brokerage accounts are converted by FCIS to Class A shares after being held for a period of eight years

subject to the terms of each mutual fund’s prospectus.

Other Mutual Fund Share Classes

Recommendations from FCIS Investment Professionals to customers enrolled in Full-Service brokerage

accounts are limited to share classes of mutual fund, annuities, unit investment trusts and similar

investments which compensate FCIS your Investment Professional for distribution and shareholder

services through sales charges, 12b-1 and/or shareholder service fees as more fully described in each

investment Prospectus and Statement of Additional Information. FCIS does not offer certain mutual funds

and share classes to its Full-Service Brokerage customers which do not offer compensation to FCIS.

Full-Service brokerage accounts will not be recommended to invest in no-load, lower cost share classes

of mutual funds which FCIS, in its sole discretion, shall make available to Self-Directed Brokerage Full-

Service brokerage customers have the ability to access other share classes on an unsolicited basis only.

Mutual Fund Share class available for purchase in connection with an FCIS Full-Service brokerage

relationship are limited to Class A shares, Class C Shares and other similar share classes which

compensate FCIS and your FCIS Investment Professional (“Eligible Share Classes”). Eligible Share

Classes generally have higher operating expenses than other available share classes and will charge

sales loads and 12b-1 and/or shareholder service or other fees which are used to compensate FCIS and

your FCIS Investment Professional representative.

o Rule 12b-1 fees and shareholder services fees charged to the operating expenses of each

mutual fund and are indirectly paid by you through the mutual fund’s internal expense

ratio. These charges increase the mutual funds expenses and correspondingly reduce

your investment return associated with such investments.

o In addition, FCIS receives payments for shareholder services, omnibus recordkeeping

services and other services provided to some, but not all, mutual fund families.

o Your FCIS Investment Professional receives a portion of the compensation received by

FCIS.

pg. 11 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

o Your FCIS Investment Professional’s compensation is generally based on a compensation

formula applied to the front-end sales charge described in the fund’s prospectus for A

Shares, or to the selling fee or sales concession for C Shares.

o A portion of the ongoing payments on mutual fund shares (known as residuals or trails)

that are set by the fund family are also paid to FCIS and its Investment Professionals.

In addition, there are many other share classes of funds including, but not limited to no load funds,

institutional class shares, or retirement class shares we may make available to our customers through

our clearing firm, Pershing on our self- directed platform. Some mutual funds’ discounts, fee waivers or

different share classes are not available at FCIS and are available only if you purchase the mutual fund

directly from the mutual fund company or its distributor, or through financial intermediaries other than

FCIS.

The compensation FCIS and its Investment Professionals receive in connection with your Full-Service

Brokerage account investment in certain mutual funds and mutual fund share class selection described

above creates a conflict of interest and economic incentive for FCIS and its Investment Professional.

FCIS Investment Professionals have an economic incentive to sell certain funds because the higher

sales charge and/or operating expense level will result in a higher compensation amount to the FCIS

Investment Professional. FCIS mitigates this conflict of interest by disclosing it to you, training our

Investment Professionals and Supervising Principals on appropriate recommendations, and by reviewing

investment recommendations made by the FCIS Investment Professional. However, FCIS cannot

eliminate this conflict of interest as it is inherent in the business model of a typical securities broker to be

compensated in connection with its brokerage services.

You should ask your FCIS Investment Professional how they will be compensated for any mutual fund

transaction. For more information regarding the risks associated with your mutual fund purchase please

carefully review the prospectus provided by your Investment Professional at the time of the transaction.

For more information about share class expenses, see FINRA ‘s Mutual Fund Expense Analyzer which

can assist you in determining the appropriateness of share class selection.

Fund Analyzer | Tools & Calculators (finra.org)

Other Compensation to FCIS From Mutual Fund Families and Others

Certain mutual fund companies pay FCIS or Pershing an administration and record-keeping charge for

each fund in your account. A written statement of each mutual fund’s policies can be found in its

Prospectus or Statement of Additional Information (SAI), which is available from the fund family. If you

have any questions about these practices, please ask your FCIS Investment Professional.

FCIS regularly receives voluntary monies from several different partner firms that are used for the

general education and training of FCIS Investment Professionals. The participation by partner firms in

these educational settings is voluntary and does not constitute an agreement with us to favor the product

and services of the participating partner firms. Our receipt of this additional compensation creates a

conflict of interest that FCIS or an FCIS Investment Professional would favor a participating partner firm

over one that does not participate. In order to minimize this conflict of interest, we disclose this conflict of

interest to you and supervise the recommendations of your FCIS Investment Professional. Your FCIS

Investment Professional does not share in any additional compensation FCIS receives in connection with

education and training.

Unit Investment Trusts

A unit investment trust (UIT) is a registered investment vehicle that invests in a fixed portfolio of

securities for a predetermined period of time, typically from 12 months to five years. UITs enable

customer to own a basket of securities with one single purchase, rather than trying to select individual

pg. 12 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

stocks or bonds that meet their objectives. UITs differ from mutual funds because they follow a “buy and

hold” philosophy, rather than active management. This means that the maturity of the UIT defines the

holding period of the securities. UITs can be liquidated on a daily basis at the redemption price, less any

possible deferred sales charges, which may be more or less than the original purchase price. UITs are

primarily offered in two types: equity and fixed income. Within these types, various investment objectives

and risk levels are offered, such as diversified UITs vs. sector oriented UITs, or taxable fixed income vs.

municipal fixed income, index based, and strategy based. UITs are required by law to redeem units at

their net asset value, less any deferred sales charges, which is based upon the current market value of

the underlying securities. This price upon redemption may be more or less than the original purchase

price. Upon maturity of a UIT, the shareholder has the option to: (a) receive the cash value of the units,

(b) roll into a new UIT, or (c) receive shares of the underlying securities held in the portfolio if the account

meets a certain size requirement. Your options are communicated to you at least thirty calendar days

prior to maturity. If upon maturity, no liquidity choice is chosen, the UIT will automatically be redeemed

for cash. Please read your UIT prospectus provided by your Investment Professional.

We are compensated in ways that vary depending on the type and terms of the UIT portfolio selected.

UITs offer varied compensation that could influence an Investment Professional to recommend a product

based upon its ability to generate higher commissions and revenues which creates a conflict of interest.

The types of fees received by us are typically derived from fund marketing and distribution expense fees,

as disclosed in the UIT prospectus. We mitigate these conflicts of interest by disclosing it to you, training

the Investment Professions and Supervisory Principals on this product, approving the product sponsor in

the Investment Products Committee, and reviewing each UIT recommendation. For more information and

details about the UIT you are purchasing ask your Investment Professional to provide a copy of the most

recent prospectus to you.

Annuities

FCIS offers a variety of annuities, including registered-index, fixed and variable annuities. Under

arrangements with insurance companies, we receive commissions from the insurance companies for the

sale of annuities, as well as trail commissions on some products. Commissions and trails paid to us vary

by product type and may vary by insurance carrier. The gross commissions we earn for these products

generally range from 0.25% to 7.00% with trails (as applicable) typically ranging from 0.25% to 1.00%

annually.

FCIS receives ongoing annual compensation on these contracts through trail commissions, if available,

and are typically based on contract values. A portion of the commissions is shared with the Investment

Professional. Therefore, we have an economic benefit to offer annuity products to our customers which

creates a conflict of interest. In some instances, FCIS and its Investment Professionals potentially earn

more compensation and revenue when a customer makes an existing contract addition purchase versus

the purchase of a new annuity contract. This creates a conflict of interest in that it may provide incentive

to recommend a customer adds to an existing contract rather than purchasing a new contract. We

mitigated the conflict of interest by disclosing it to you, training the Financial Professions and Supervisory

Principals on this product, reviewing each annuity recommendation, reviewing the product in the

Investment Products Committee, and we level the initial amount of gross production allocated to

Investment Professional’s compensation grid to a maximum of 5% of contract premiums.

Exchange-Traded Funds (ETFs)

FCIS offers ETFs sponsored by third parties. Traditional ETFs are typically registered unit investment

trusts or open-end investment companies whose shares represent an interest in a portfolio of securities

that track an underlying benchmark or index. Unlike traditional UITs or mutual funds, ETFs typically trade

throughout the day on an exchange at prices established by the market.

pg. 13 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

Non-traditional ETFs, include leveraged, buffered, and inverse, and should only be considered by you

after careful examination of the ETF’s terms and features to include how they are designed to perform,

how they achieve that objective, the impact of market volatility, their use of leverage, your intended

holding period, and how the ETF’s features may impact performance. FCIS does not recommend triple

leveraged and/or inverse ETFs to customers. However, unsolicited orders may be accepted for these

products and a case-by-case basis.

We receive compensation on ETFs in brokerage accounts via transaction charges (commissions) for the

purchase or sale of ETFs. FCIS does not charge a commission or other transaction fee for ETFs

purchased in a self-directed online account but will charge a transaction fee if purchased through an

FCIS Representative. You will pay a fee on the sale of any ETF, which will be identified in a transaction

confirmation sent to you. The typical cost of a transactions is based on the size of the trade and number

of shares (see the FCIS Commission Schedule).

The compensation FCIS and its Investment Professionals receive in connection with your Full-Service

brokerage account investment recommendation in ETFs described above creates a conflict of interest

and economic incentive for FCIS and its Investment Professional to recommend ETFs to you. FCIS

mitigates this conflict of interest by disclosing it to you, and by supervising investment recommendations

made by the FCIS Investment Professional. However, FCIS cannot eliminate this conflict of interest as it

is inherent in the business model of a typical securities broker to be compensated in connection with its

brokerage services.

For more information about the specific risks associated with an ETF, please review, and read carefully

the most current prospectus or summary prospectus provided by your FCIS Investment Professional.

Equity Investments

Common stock is a type of equity investment in which holders exercise control by electing a board of

directors and voting on corporate policy. The typical cost of equity investments depends on the number

of shares traded and the dollar amount of the transaction, (see our FCIS Commissions Guide) Common

stockholders have the lowest claim on the issuer’s assets and earnings in the issuer’s capital structure.

FCIS offers both common stocks traded in the United States on public exchanges and over the counter

(“OTC”), as well as common stock traded in non-US exchanges, which may trade or settle in currency

other than US dollars and be subject to additional fees and risks, including currency exchange risk. FCIS

permits customers to take both “long” and “short” positions in common stock.

Holders of long positions buy and own the shares and believe that the value of the common stock will

generally increase over time. Holders of short positions, on the other hand, believe that the stock will

decrease. A holder of a short position (also known as a “short seller”) does not own the shares, but

instead borrows the shares in anticipation of a price decline and sells them to a third party.

The short seller is required to return an equal number of shares to the lender at some point in the future.

If the price drops, the short seller can buy the stock back at a lower price. When the short seller returns

the repurchased stock to the lender, they will make a profit on the difference in price. If the price of the

stock rises, when the short seller buys the stock back, the customer will incur a loss on the difference in

price. For this reason, short selling is typically for more experienced customers with a higher risk

tolerance. For this reason, short selling is typically for more experienced customers with a higher risk

tolerance.

Preferred Securities are investments with both equity and fixed income characteristics.

Preferred securities include:

• Preferred Stock — Preferred stock pays quarterly dividends at a fixed rate, floating rate or fixed to

floating rate (i.e., pays a fixed rate for a specific period of time and then switches to a floating

pg. 14 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

rate) and ranks ahead of common stock in any claim on the issuer’s income and assets. These

securities are perpetual, noncumulative, and typically non-callable for five years. Unlike common

stocks, preferred stocks generally do not carry voting rights in the issuer.

• Senior Notes — Senior notes, also known as “baby bonds,” pay interest quarterly or

semiannually. Should the issuer declare bankruptcy, holders of these securities have the same

rights as other senior debt holders — i.e., their claims are repaid ahead of junior creditors.

• Trust Preferred and Enhanced Trust Preferred Securities — Trust preferred and enhanced trust

preferred securities have fixed, long-term maturities — typically 30 to 60 years. They generally

pay quarterly interest and have payment priority over equities and traditional preferred stock of

the issuer. Trust preferred securities and enhanced trust preferred securities are non-callable for

five years. Trust preferred securities and enhanced trust preferred securities are “cumulative.”

The compensation FCIS and its Investment Professionals receive in connection with your Full-Service

brokerage account investment recommendation in Equities described above creates a conflict of interest

and economic incentive for FCIS and its Investment Professional to recommend Equities to you. FCIS

mitigates this conflict of interest by disclosing it to you, and by supervising investment recommendations

made by the FCIS Investment Professional. However, FCIS cannot eliminate this conflict of interest as it

is inherent in the business model of a typical securities broker to be compensated in connection with its

brokerage services.

Bonds, Municipal Securities, Treasuries, and Other Fixed Income Securities

FCIS offers fixed income securities including, among others, corporate bonds, U.S. Treasuries, agency

and municipal bonds, and CDs. You can purchase fixed income securities from us in two ways: directly

from the issuer (new issues) in the primary market and through the broker-dealer in the secondary

market.

Fixed income securities are debt obligations issued by a company, government, municipality, agency, or

other entity. A customer who purchases a fixed income security lends money to the issuer of the security.

In return, the issuer makes a legal commitment to pay the customer interest on the principal (at a fixed or

floating rate) and, in most cases, to return the principal when the security comes due, or matures, at a

certain date. Fixed income securities can provide a regular income stream from the interest paid prior to

maturity but are also subject to certain unique risks, some of which are described below. Customers

commonly use fixed income securities to diversify their portfolios and balance their exposure to other

types of investments, including equities.

US Government-Issued Securities: The United States Government, its agencies and sponsored

enterprises raise money by issuing debt, commonly in the form of bills, notes and bonds. US

Government-issued securities include Treasury Bills Treasury Bills (or T-Bills) are short-term securities

issued by the US Treasury that mature in a few days to 52 weeks. Standard T-bills have maturities of

four, eight, thirteen, 26 or 52 weeks. Another type of T-Bill, the cash management bill, is issued in

variable terms, usually of only a matter of days. T-Bills do not pay interest, but typically are sold at

discount to their par amount (or face value). T-Bills are guaranteed by the full faith and credit of the US

Government. Treasury Notes Treasury Notes (or T-Notes) are longer-term securities issued by the US

Treasury that have maturities of two, three, five, seven or ten years. T-Notes pay interest at a fixed rate

of interest every six months. T-Notes are guaranteed by the full faith and credit of the US Government.

Treasury and Agency Bonds Treasury Bonds (or T-Bonds) are long-term securities issued by the US

Treasury that have maturities of ten to thirty years. T-Bonds pay interest at a fixed rate every six months.

Agency Bonds are similar to T-Bonds, except they are issued by US Federal agencies, such as the

Federal Housing Administration and the Small Business Administration. T-Bonds and Agency Bonds are

guaranteed by the full faith and credit of the US Government

pg. 15 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

Treasury Inflation-Protected Securities Treasury Inflation-Protected Securities (or TIPS): TIPS are

inflation-indexed bonds issued by the US Treasury that have maturities of five, ten or thirty years. The

principal of a TIPS is adjusted up or down based on changes in the Consumer Price Index, a common

measure of inflation. TIPS pay interest at a fixed rate every six months. TIPS are guaranteed by the full

faith and credit of the US Government. More information on various Treasury securities is available

online at: https://www.treasurydirect.gov/savings-bonds/.

Government Sponsored Enterprise (GSE) Bonds Government Sponsored Enterprise Bonds (or GSE

Bonds) are issued by certain enterprises created by Congress to foster a public purpose, such as

Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Bank and the Federal

Farm Credit Banks Funding Corporation. GSE Bonds may have a fixed or variable interest rate, and their

structure varies. The issuers are not government agencies but receive certain government oversight and

support. GSE Bonds are not guaranteed by the full faith and credit of the US Government and in some

cases and are callable by the issuer. Municipal Bonds Municipal bonds are debt securities issued by

states, cities, counties and other government entities in the United States and its territories that have

maturities that range from short term (2 to 5 years) to long term (30 years). Interest payments from

municipal bonds are exempt from federal taxes and from most state and local taxes if the customer

resides in the state in which the bond is issued.

Municipal Securities include General Obligation Bonds: General obligation bonds are not secured by any

particular assets or revenues of the issuer but are instead backed by the “full faith and credit” of the

issuer, which has the power to tax residents to pay bondholders. Revenue Bonds Revenue bonds are

backed by revenues from a specific project or source, such as highway tolls or other fees, rather than

from taxes. Some revenue bonds are “non-recourse,” meaning that if the revenue stream backing a non-

recourse bond dries up, the bondholders do not have a claim on the underlying revenue source. Conduit

Bonds Governments issue conduit bonds on behalf of private entities, including not-for-profit colleges

and hospitals, to fund projects or development with a public purpose. These “conduit” borrowers typically

agree to repay the government that issued the bonds, which in turn pays the interest and principal on the

bonds. Note, however, that if the conduit borrower defaults on its repayment obligation, the issuer usually

is not required to pay the bondholders. Corporate Bonds Like governments, public and private

corporations also raise money by issuing bonds. Corporations use the proceeds of these offerings for a

wide variety of purposes, such as financing an expansion, refinancing debt or funding new research and

development. Corporations issue bonds with varying maturities, which range from short-term (1 to 3

years) to medium-term (3 to 10 years) to long-term (over 10 years). They also issue bonds at varying

interest, or coupon, rates, which may be fixed (meaning that they stay the same throughout the term),

floating (meaning that they reset at certain intervals) or zero coupon (meaning that they do not make

periodic interest payments but instead make one “balloon” payment at the bond’s maturity that exceeds

the bond’s original purchase price). Credit rating agencies (such as S&P, Moody’s and Fitch, among

others) evaluate certain factors related to the creditworthiness of corporations and assign credit ratings to

issuers and their bonds. Based on those ratings, bonds are broadly classified as either investment or

non-investment grade Investment Grade Investment-grade bonds are issued by corporations with a

relatively low risk of default and generally include bonds rated Baa3 (by Moody’s) or BBB- (by S&P and

Fitch) or above; or Non-Investment Grade (or High-Yield) Non-investment grade bonds, also known as

high-yield or “junk” bonds, are issued by corporations with a lower credit rating and higher risk of default

and, in return, generally offer higher interest rates to account for their increased risk.

RISKS

In general, the bond market is volatile and fixed income securities carry interest rate risk (i.e., as interest

rates rise, bond prices usually fall, and vice versa). Interest rate risk is generally more pronounced for

longer-term fixed income securities. Extremely low or negative interest rates can magnify interest rate

risks. Changing interest rates, including rates that fall below zero, can also have unpredictable effects on

markets and can result in heightened market volatility. Fixed income securities also carry inflation risk,

liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Tax code changes

can impact the municipal bond market. Lower-quality fixed income securities involve greater risk of

pg. 16 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

default or price changes due to potential changes in the credit quality of the issuer. Foreign fixed income

investments involve greater risks than U.S. investments, and can decline significantly in response to

adverse issuer, political, regulatory, market, and economic risks. Fixed income securities sold or

redeemed prior to maturity are subject to loss.

FIXED INCOME FEES, COSTS AND EXPENSES

In facilitating fixed income customer transactions, FCIS may act either as an “agent” (or broker) and

purchase or sell your securities through another counterparty (that is, with another firm or outside buyer

or seller) or FCIS may act as a “principal” (or dealer) and complete your trade by purchasing a security

from a counterparty for sale to you in a “riskless principal” transaction. FCIS acts as an agent and

charges a commission with respect to certain fixed income securities, including:

(i) USD denominated corporate debt securities;

(ii) US Agency debt securities; and

(iii) Municipal Securities.

Note that FCIS may offer discounts from its standard commission rates under certain riskless

circumstances (including market conditions) subject to negotiation and firm oversight. When acting as a

principal in a sales transaction, FCIS customarily charges a mark-up, which is the difference between the

price FCIS paid to purchase the security and the higher price that FCIS charges to its customer; when

FCIS sells a security for a customer, FCIS may markdown the security and pay the customer less than it

can sell the security for to another customer or third party. Please note that maximum mark-ups and

mark-downs for fixed income products vary depending on multitude of factors, which include, but are not

limited to:

• Product type;

• Time to maturity;

• Price of the security;

• Bid/offer side of trade;

• Call features; and

• Liquidity of the market for a security.

529 Plans

A 529 Plan is a tax-advantaged savings plan designed to encourage saving for future education costs.

529 Plans, legally known as “qualified tuition plans,” are sponsored by states or state agencies. Most 529

Plans offer investment portfolios consisting of mutual funds and/or exchange-traded fund portfolios and

can offer more than one share class to investors and each class has different fees and expenses.

Distributions that are used for qualified education expenses are not taxed at the federal level. If you

withdraw money for something other than qualified education expenses, you will owe federal income tax

on earnings and can face a 10% federal tax penalty as well. 529 Plans offered by each state differ both

in features and benefits. Some states offer residents an incentive to invest in their state-sponsored 529

Plans by offering state tax benefits. Most plans offer investment portfolios consisting of mutual funds

and/or exchange- traded fund portfolios. A plan can offer more than one share class to investors and

each class has different fees and expenses. By investing in a 529 Plan outside your state of residence,

you can potentially lose certain state tax benefits depending on your state of domicile. 529 Plans are

subject to enrollment, maintenance, administration, and management fees and expenses. You should

consider each specific 529 Plan’s investments, risks, expenses, and tax implications prior to investing.

This and other valuable information about 529 Plans are contained in the 529 Plan’s disclosure

document and prospectus. Read these and the Participant Agreement carefully before you invest. The

sales charges of our 529 Plan offerings range from 0% - 5.75%. The range of the 12b-1 fees

(shareholder servicing fees) ranges from 0% - 1%.

Brokered Certificates of Deposit

Brokered Certificates of Deposits (CDs) are issued by banks via a “master CD” to deposit brokers, which

in turn sell interests in the master certificate to individual retail investors. The master CD is a negotiable

instrument that represents a certain number of individual CDs. FDIC insurance is attached to the

pg. 17 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

individual CDs represented in the master CD. Any broker-dealer that sells brokered CDs is a deposit

broker. We are compensated through your purchases and sales of brokered CDs though an upfront

gross fee paid by the issuing bank on new offering purchases. This gross fee typically ranges from

0.25% to 2.5% depending upon the issuing bank and maturity. Compensation on secondary market

transactions is received by either a mark-up on top of the CD price, which may be discounted, when you

purchase a CD or a mark-down that is subtracted from the CD price, which may be discounted, when

you sell a CD. The mark-ups and mark-downs are typically in the range of .25% - 3.00%.

New issue CDs are offered without an additional transaction fee. FCIS also makes certain new issue

fixed income securities available without a separate transaction fee. With respect to fixed income

securities purchased or sold through the secondary market, the cost for the transaction (commonly called

a “markup” for purchases or “markdown” for sales) is included in the purchase or sale price. In addition to

any markup or markdown, an additional transaction charge can be imposed by FCIS when you place

your order through an FCIS Representative, depending on the type of fixed income security you

purchase.

FCIS receives compensation from the issuer for participating in new issue offerings of bonds and CDs.

Information about the sources, amounts, and terms of this compensation is contained in the bond or CD

related offering documents. For secondary market transactions, FCIS receive compensation by marking

up or marking down the price of the security which ranges between .25% -2.5%.

FCIS and its Investment Professionals are compensated in connection with the purchase and sell of fixed

income securities in your FCIS Account. FCIS Investment Professional’s compensation is not affected by

whether the security is purchased or sold as a new issue or in a secondary market transaction and is

paid irrespective of whether our Investment Professional recommended the transaction to you. FCIS

Investment Professional’s compensation is based on the type of fixed income security that you buy, with

compensation for CDs and U.S. Treasury Bonds being lower than for other types of fixed income

securities. As a result, these Investment Professionals have a financial incentive to recommend certain

fixed income products over others. We address this conflict by providing our Investment Professionals

and Supervising Principals with appropriate training and tools to ensure that they are making

recommendations that are in your best interest, supervising investment recommendations made by our

Investment Professionals, and disclosing these conflicts so that you can consider them when making

your financial decisions.

Market Linked and Structured Products

Market Linked Brokered Certificates of Deposit or “CDs”

FCIS offers equity indexed certificates of deposit or equity linked certificates of deposit (both of

which are referred to herein as “ELCD”) is an FDIC insured CD that ties the rate of return to the

performance of a stock index such as the S&P 500. The term of an ELCD varies, typically two to

seven years. The financial institution calculates the rate of return on the date the ELCD matures

based on the final index value; therefore, there may be no guarantee that any payment in excess of

your original investment will be paid, unless there is a guaranteed minimum coupon on the ELCD. A

CD is a time deposit offered by depository institutions, such as a commercial bank or savings and

loan association. All CDs FCIS sells are FDIC insured up to a maximum amount of $250,000

(principal and accrued interest combined) if held to maturity but must be aggregated with any other

deposits at the depository institution held by the depositor in the same insurable capacity (e.g.,

individual, joint, IRA) for purposes of FDIC insurance limits. Brokered CDs are available in a range

of time frames and structures, including non-callable, callable, and step-rate CDs. In general,

customers can buy most brokered CDs with a minimum investment of $1,000, and thereafter in

$1,000 increments. The amount of commission you pay to buy a market-linked investment will be

pg. 18 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

stated in the offering document for the investment. These commissions vary in range, and we

typically receive from 2% to 5% of the purchase amount. If you buy or sell the product in the

secondary market, commission transaction charges will most likely also apply. For complete

information about your purchase please refer to the “Equity Linked Certificate of Deposit Disclosure”

provided by your Investment Professional at the time of the transaction.

Structured Notes

An equity indexed note or equity linked note (“Note”) is a non-FDIC insured note that ties the rate of

return to the performance of a stock index such as the S&P 500, or to a basket of selected equity

securities. The terms of a Note vary, typically two to seven years. The financial institution will calculate

the rate of return based on the terms of the chosen Note. Therefore, there may be no guarantee that any

payment in excess of your original investment will be paid, unless there is a guaranteed minimum

coupon on the Note. Further, depending on the terms of the Note, there could be the risk of receiving an

amount lower than the original investment due to market risk or credit risk. Some risks associated with

these Notes include:

• No FDIC Insurance - The Notes are not deposit liabilities or other obligations of a bank and are

not insured by the Federal Deposit Insurance Corporation or any other governmental agency or

program of the United States or any other jurisdiction. An investment in the Notes is subject to the

credit risk of the Issuer, and in the event that the Issuer is unable to pay its obligations as they

become due, you may not receive the full payment at maturity of the Notes.

The Notes are Subject to the Credit Risk of Issuer - The Notes are senior unsecured obligations of

the Issuer, and are not, either directly or indirectly, an obligation of any third party. The Notes will rank on

par with all the other unsecured and unsubordinated debt obligations of the Issuer, except such

obligations that may be preferred by operation of law. Any payment to be made on the Notes, including

any return of coupons or principal at maturity, depends on the ability of the Issuer to satisfy its obligations

as they come due. As a result, the actual and perceived creditworthiness of the Issuer may affect the

market value of the Notes and, in the event the Issuer were to default on its obligations, you may not

receive the amounts owed to you under the terms of the Note.

Liquidity Risk - Investors may have limited opportunities, if any, to redeem their Note before

maturity. There is no guarantee of a secondary market. Therefore, you may not be able to

redeem your Note when you may need or want money available. If a secondary market exists or

the financial institution allows withdrawal, you may pay a penalty and you may lose principal

value and accrued interest.

• Market Risk - If the Note is sold or redeemed before maturity, it may be worth less than its

purchase amount or face value. The Note is subject to stock market volatility, bond market

volatility, changes to the components of the linked index and other variables. Notes on your

brokerage account statements may be valued at more or less than your original investments

based on current market conditions. Further, depending on the terms of the Note, the principal

value of some Notes is subject to market risk and may result in loss of principal according to the

terms of the respective Note.

• Call Risk - Your Note may be callable. If called, your rate of return may be less, and the yield

may be less than if held to maturity.

• Calculations of Return - Many financial institutions calculate the return on the Notes by

averaging the closing price of the underlying securities or index at specified intervals over a

specific period of time, rather than simply using price upon maturity. The formulas used to

calculate your rate of return may lessen the impact of a declining market. However, if the market

moves steadily upward during the period you hold the Note, your return may be significantly less

pg. 19 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

than the underlying securities or index gain during this period. The formulas used by the financial

institution usually do not take into consideration the dividend yield of the stock index.

• Participation Rates - Some Notes have a participation rate. The participation rate determines

how much of the index’s increase will be used to compute the return. For example, if the

securities or index increase 10% and your participation rate is 70%, you will earn 7%.

Caps - Some Notes set a cap on your gain per year regardless of how well the securities or index

performed. For example, if the index goes up 20% and the participation rate is 70%, but the cap is 10%,

your return will not be 14% (70% of 20%) but will be capped at 10%.

Tax Treatment - Notes may be treated differently than traditional fixed income products for tax purposes.

Before investing in these products, you should carefully review the disclosures concerning the reporting

of interest income and consult a tax adviser.

The compensation FCIS and its Investment Professionals receive in connection with your Full-Service

brokerage account investment recommendation in Structured Products described above creates a

conflict of interest and economic incentive for FCIS and its Investment Professional to recommend

Structured Products to you. FCIS mitigates this conflict of interest by disclosing it to you, training the

Investment Professionals and Supervisory Principals on appropriate recommendations, supervising

investment recommendations made by the FCIS Investment Professional, Investment Products Committee

review and approval of the product, and limiting the percental of your liquid net worth that can be

invested. However, FCIS cannot eliminate this conflict of interest as it is inherent in the business model

of a typical securities broker to be compensated in connection with its brokerage services.

INSURANCE

FCIS offers a variety of insurance products including Variable Universal Life Insurance (VUL), Term Life

Insurance, Universal Life Insurance, Long Term Care Insurance, and Disability Income Insurance

policies. Customers must qualify for coverage and premiums are generally most impacted by factors

such as age, health, and lifestyle. Under arrangements with insurance companies and insurance broker

general agencies, we receive commissions from the insurance companies for the sale of these policies,

as well as trail/renewals commissions on some products. Insurance broker general agencies are third

party, independent, non-affiliated firms that help our Investment Professionals with among other items:

product knowledge, case design, point of sale and application servicing and processing.

Commission and trails paid to us vary by the product offerings and by insurance carriers. The gross

commissions we earn for these products typically range up to 25% to 95% of target premiums with

additional commission up to 1% to 10% of any excess premiums paid above target premium amount.

Also, some policies pay additional compensation for policies maintained past the first year (trail

compensation) and/or for premiums paid after the first year. Trail compensation typically can range up to

1% annually of the contract value and compensation for additional premiums is generally 1% to 3% of

the premium. The amount of gross commission FCIS receives is net of the amount paid to the insurance

broker general agency.

Revenue generated to FCIS from underwritten life insurance, is applied to our Investment Professional’s

progressive grid payout. This potential increased payout is a conflict of interest in that it may provide

economic incentive to increase sales in this product. We mitigate this risk by disclosing it to you, training

our Financial Consultants and Supervising Principals on insurance products and appropriate

recommendations, and reviewing each transaction.

pg. 20 FCIS REGULATION BEST INTEREST CONFLICTS OF INTEREST DISCLOSURE DEC 2023

UNDERSTANDING INVESTMENT RISKS

It is important for you to understand that all of the aforementioned investments and recommendations

made by FCIS Investment Professionals involve risk, including the potential risk that you may lose your

entire principal before you invest. Further, some investments involve more risk than other investments.

Higher-risk investments may have the potential for higher returns but also for greater losses. The higher

your “risk tolerance,” meaning the amount of risk or loss you are willing and able to accept to achieve

your investment goals, the more you may decide to invest in higher-risk investments offering the potential

for greater returns. We align risk tolerances with investment needs and objectives, time horizon and

liquidity need to offer a recommendation that is in your best interest. You should carefully read the

prospectus or offering memoranda provided to you by your FCIS Investment Professional and consider

the risks associated with the investment before you make a final decision.

TRADE CORRECTIONS AND ADJUSTMENTS TO COMPENSATION

Occasionally, a trade error will occur for a variety of reasons. When a trade error happens, FCIS strives

to correct the trade error in a manner that is fair and equitable to our customers in a timely manner. In

cases where a customer causes the trade error, the customer will be responsible for any loss resulting

from the correction. Depending on the circumstances of the trade error, generally, the customer is not

able to receive any gains generated as a result of the error correction. Situations where the customer is

not the cause of the trade error, the customer will be made whole as soon as possible. FCIS or the

custodian will absorb losses and gains resulting from the trade error based on fault. If the trade

correction, as a result of an FCIS or custodian error results in a gain, the customer will not receive the

profit. Investment Professional trading errors resulting in losses may be charged either dollar for dollar

against an Investment Professional’s income or charged against their gross production (revenue). The

effect of charging against gross production is that the Investment Professional and our firm share in cost

of the trade correction.