About Our Firm
Frontier Solutions LLC (“Frontier”) markets products exclusively to financial professionals, qualified individual customers, and institutional customers, and does not allow advertising to the general public. This section of our website is to provide our retail customers with additional information beyond the Frontier’s Form CRS. Prospective customers should consult an appropriate professional advisor as to whether any investment product offered by Frontier Solutions is suitable for them. Any investments described on this web site are not suitable for every customer. If you are unsure about the meaning of any of the information contained within this web site, please consult your financial or other professional advisor.
About Our Representatives
Frontier is a limited purpose Broker-Dealer that provides compliance and back-office support to licensed brokers who are registered affiliates of Frontier (“Representatives”). Each Representatives is an independent contractor, and not an employee of Frontier. Representatives usually work under their own Doing Business As (“DBA”) entity either as a sole proprietor or with other representatives. Frontier does not offer proprietary investment products, underwrite securities, or provide research. Frontier also does not hold customer funds or offer a traditional brokerage account. Representatives source their own offering engagements and maintain their own customer relationships, while Frontier develops and supervises the compliance program to support the Representatives.
About Our Investment Products
Frontier and our Representatives are limited to recommendations of private investments, which are inherently illiquid and are only suitable for sophisticated high net worth customers. Some investments may be in private funds, which represent pools of money invested in real estate, real asset, public and/or private equity, or other securities or investments which have strict customer purchase qualifications that are imposed by the product sponsor, federal regulations, and state regulations. Frontier also offers investments directly into private placements of privately held operating companies, usually either early or late-stage private company offerings. A traditional brokerage will offer products and services not available through Frontier, including custody features and financial planning.
Alternative investments, including public and private equity funds: (1) involve a high degree of risk, (2) often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, (3) can be highly illiquid, (4) are not required to provide periodic pricing or valuation information to customers, (5) may involve complex tax structures and delays in distributing important tax information, (6) are not subject to the same regulatory requirements as mutual funds, (7) often charge high fees which may offset any trading profits, and (8) in many cases execute investments which are not transparent and are known only to the investment manager. The performance of alternative investments, including public and private equity funds, can be volatile. A customer could lose all or a substantial amount of his or her investment. Often, fund sponsors have total trading authority over their funds or accounts. The use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often limited or no secondary market for a customer’s interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products, including public and private equity funds, often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments may entail commodity trading, which involves substantial risk of loss. Past performance is not necessarily indicative of future results.
About Our Fees
When retail customers purchase private placement securities we recommend, they do not pay any fees or other compensation directly to us. Instead, we are paid by issuers, seller, or fund managers. The issuer, seller, or fund manager agrees to pay us a placement fee negotiated at the time we enter a selling or solicitation agreement. That transaction fee is a percentage of the dollar amount of securities we sell. The fee may vary from one transaction to another but, in most cases, it is the same for all sales that are part of the same private placement offering. When selling fund interests, we may also, or alternatively, receive fees equal to a percentage of the management and incentive fees received by the fund manager for its services to a retail customer. We receive those fees over time, as long as a retail customer maintain an investment in the fund. In addition, we are usually reimbursed for the expenses we incur in connection with each private placement. You should understand that the issuer, seller, or fund pays our fees and costs out of the proceeds of investments made by you and other customers. Details about the effect of offering expenses on your investment return are included in the offering materials we deliver to you. The issuer, seller, or fund pays our private placement fees regardless of whether the offering is considered a success and regardless of whether you make or lose money on your investment. Fees and costs will reduce any amount of money a retail customer make on your investments over time. Please make sure you understand what fees and costs you are paying. Your financial professional will provide you with private placement offering materials, prospectuses and/or other product-related documents that describe specific fees and costs.
About Our Obligations
SEC Regulation Best Interest (“Reg. BI”) is a new standard of conduct as of June 30, 2020. The regulation requires the Firm to act in the best interest of its retail customers without placing its own financial or other interests ahead of the customers’ interests. Along with this regulation is the obligation to make use of a Form CRS (Customer Relationship Summary) by presenting to retail clients at the time a recommendation is made, filing the Form CRS with FINRA, and making available on our public website.
The Reg. BI obligation is satisfied ONLY if the Frontier complies with these four component obligations:
- Disclosure (inform about scope and terms of relationship and conflicts of interest associated with the recommendation).
- Care (apply diligence, care and skill when making recommendations; determine best interest).
- Conflict of Interest (identify/disclose conflicts associated with recommendations; use procedures to mitigate or eliminate some conflicts such as sales contests, etc.).
- Compliance (maintain and apply procedures; address remediation of noncompliance, training, and internal testing).
Components of Our Care Obligation
Reg. BI requires that the Frontier exercise reasonable diligence, care, and skill when making a recommendation to a retail customer. This means understanding the risks, rewards, and costs associated with the recommendation; considering those factors in light of the customer’s investment profile; and having a reasonable basis to believe that the recommendation, or a series of recommendations, is in the customer’s best interest.
There are three components of the Care Obligation
- Reasonable-basis: Understand the recommended security or investment strategy, as well as the potential risks, rewards, and costs associated with the recommendation and have a reasonable basis to believe that the recommendation could be in the best interest of at least some retail customers.
- Customer-specific: Based on the understanding of the recommended security or investment strategy and retail customer’s investment profile, have a reasonable basis to believe that the recommendation is in the best interest of a particular retail customer and does not place the Firm’s interest ahead of the retail customer’s interest.
- Quantitative suitability: Ensure a series of recommendations, even if viewed as in the customer’s best interest when viewed in isolation, should also be viewed in the aggregate as not excessive and made in the best interest of the customer
Conflicts of Interest
Reg. BI requires the Frontier to meet the Conflict of Interest Obligation. Representatives are expected to fully cooperate to facilitate these important analyses and actions. Frontier seeks to identify and disclose, mitigate or eliminate conflicts of interest associated with recommendations, when one is made that places Frontier’s interests ahead of yours. Below are some examples of the more common types of conflict of interest to help a retail customer understand what this means:
Transaction Fees and Expense Allowances from Third Parties: The more securities you purchase, the more we will be paid by the issuer or fund manager in private placement fees and expense allowances. Insurance products that pay trails provide ongoing fees to us and we have an incentive to recommend them. The amount of trail income received varies from product to product; this creates an incentive to recommend a product that pays a higher trail. You always have the right to decide whether to purchase securities from us based on these conflicts of interest. In advance of your purchase, we will always tell you what fees we will be paid.
Revenue Sharing: We may receive fees equal to a percentage of the management and incentive fees received by the fund manager. Since those fees are based on the amount you maintain in the fund, we have an incentive to encourage you to invest greater amounts of money and to maintain your investment for longer periods time.
Outside Business Activities: Representatives may participate in business activities, pre-approved only, separate from the services provided through Frontier. A fund manager or private placement issuer may employ a Representative as a salaried employee or contractor. The compensation and time demanded on a Representative may raise conflicts with your investment needs and the brokerage services we provide. For details on a Representative’s outside business activities, visit: FINRA Broker Check at https://brokercheck.finra.org.
Personal Benefit: There may be cases in which one or more personnel associated with our firm also holds personal investments in the issuer or fund manager. The Representative may have incentive to recommend investments where they also invested.
For additional information about our services, or for a current copy of our Form CRS disclosure, please call us at 804-918-2368 or go to http://www.frontiersolutionsllc.com/.