Legal disclosures
General information
This website is for informational purposes only. See important Terms of Use and Privacy Policy Notice.
Covestor Limited doing business as Interactive Advisors is an investment advisor registered with the Securities and Exchange Commission (“SEC”) under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training. Additional information about our firm can be found in the Informational Brochure (Part 2 of our Form ADV filing with the SEC), our other documents and disclosures on the Forms and agreements page of our website, and on the SEC’s website at Advisor Information
Interactive Advisors offers an online investment platform through which its clients can invest in two types of portfolios: (1) trading strategies managed by third-party unaffiliated portfolio managers, and (2) proprietary investment portfolios designed and managed by Interactive Advisors itself based on internal or third-party licensed data. Interactive Advisors allows clients to invest in these strategies by simultaneously mirroring or replicating the trading activity in a manager- or Interactive Advisors-owned and managed account underlying the specific portfolio into the investing clients’ accounts.
Based on a risk scoring methodology, clients select one or more portfolios to invest in. Interactive Advisors analyzes each strategy on the platform and assigns a risk score between one (least risky) and five (most risky) to each portfolio, in order to ensure that the portfolio risk is in line with client expectations and meets Interactive Advisors’ fiduciary obligation to recommend suitable investments for clients. To ensure that Interactive Advisors clients have access only to portfolios that are suitable for their ability to take on risk and risk tolerance, Interactive Advisors profiles clients using a risk questionnaire to ascertain their risk tolerance, using the same scale from one to five. Clients may only invest in portfolios with a risk score equal to or lower than their personal risk score. Clients can update their responses to the risk questionnaire on the Interactive Advisors website at any time to reflect changes in their personal circumstances. Changes to the risk questionnaire responses could result in a change in a client’s risk score and thus the portfolios that a client is able to invest in.
Interactive Advisors advisory services are only provided to investors who become clients pursuant to a written Investment Management Agreement (available on the Forms and agreements page), which both potential and existing clients are urged to read carefully and consider in determining whether such an agreement is suitable for their particular circumstances. Current and prospective clients are also urged to review Interactive Advisors Informational Brochure (Parts 2A and 2B of Interactive Advisors Form ADV Filing), also available on the Forms and agreements page. Clients may invest in portfolios directly or through their existing wealth manager or investment advisor.
IInteractive Advisors is part of the Interactive Brokers Group, and all brokerage transactions in Interactive Advisors client accounts are made through Interactive Brokers LLC, an Interactive Advisors affiliate, which is a conflict of interest.
Interactive Advisors does not provide personalized financial planning to clients, such as estate, tax or retirement planning. While Interactive Advisors does provide investment advice to its clients, the information on the Interactive Advisors website and this web page is provided as general and impersonalized investment information and is not a recommendation, offer or solicitation to buy or sell any security. Interactive Advisors does not guarantee or certify the quality, accuracy, completeness, or timeliness of any content contained on the Interactive Advisors website.
Clients interested in using Interactive Advisors services should be aware of the fact that Interactive Advisors provides its investment services primarily online, although it does make client support staff available for consultation as needed by clients on servicing and investment management issues. Clients should be able and willing to conduct most of their interactions with Interactive Advisors using electronic methods. In the Investment Management Agreement they execute with Interactive Advisors, Clients agree to receive all documents, notices and updates electronically by email or through their access to the Interactive Advisors website accompanied by an email notice.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. FURTHERMORE, PAST RETURNS MAY REFLECT THE PERFORMANCE OF ASSETS FOR A FINITE TIME, OR DURING A PERIOD OF EXTREME MARKET ACTIVITY. ALL INVESTMENTS INVOLVE RISK AND MAY LOSE MONEY, INCLUDING LOSS OF PRINCIPAL AND A REDUCTION IN EARNINGS. INVESTORS MAY LOSE ALL OR PART OF THEIR INVESTMENTS IN ANY INTERACTIVE ADVISORS PORTFOLIOS.
Interactive Advisors uses its best judgment and good faith efforts in rendering services to clients, but it cannot warrant or guarantee any particular level of account performance, or that any account will be profitable over time. Not every investment decision or recommendation made by Interactive Advisors will be profitable. Interactive Advisors clients assume all market risk involved in the investment of account assets under the Investment Management Agreement and understand that investment decisions made by Interactive Advisors in their accounts are subject to various market, currency, economic, political and business risks. There can be no assurance that an investment in one or more Interactive Advisors portfolios or any actual performance shown on the Interactive Advisors website will lead to the same results in the future or perform in any predictable manner. It should not be assumed that investors will experience returns in the future, if any, comparable to those shown or that all of Interactive Advisors clients experienced such returns.
System response and account access times may vary due to a variety of factors, including trading volumes, market conditions, system performance, and others.
Clients and investments and Interactive Advisors’ reliance on suitability information provided by clients
Portfolios available for investment on the Interactive Advisors platform may not be suitable for all investors. Interactive Advisors only allows you to invest in a portfolio it offers if it deems that portfolio suitable for you in light of your financial situation and investment objectives that you have described to Interactive Advisors in response to our risk questionnaire. Therefore, the investment advice Interactive Advisors provides to clients is highly dependent on the accuracy of the information provided to Interactive Advisors by its clients. If a client provides inaccurate information or fails to update outdated information, the quality and relevance of Interactive Advisors investment advice could be materially affected. Clients should keep Interactive Advisors informed of any changes in their financial situation or investment objectives and should periodically review and update their answers to the Interactive Advisors risk questionnaire as well as the list of securities they specified should not be traded in their Interactive Advisors account. Interactive Advisors will periodically prompt clients to review both, the answers to its risk questionnaire and the list of securities they specified should not be traded in their Interactive Advisors account.
Interactive Advisors investment advice is based on the risk questionnaire it asks clients through its website and the answers and information clients provide to Interactive Advisors. There may be additional information or financial circumstances not asked about in the Interactive Advisors risk questionnaire that could be valuable but is not taken into account or reflected in the investment advice provided by Interactive Advisors. Clients may choose to contact another financial advisor to discuss any such additional information or other financial circumstances that clients may think could be relevant to the investment advice provided by Interactive Advisors.
Portfolios and portfolio managers
All Portfolio Manager information published on the portfolio manager’s website pages, including personal data, profiles, strategies, fact sheets, monthly investment reports, and any historical results outside of Interactive Advisors, has been provided by the Portfolio Managers. Interactive Advisors makes no representation or warranty as to its accuracy, completeness or relevance. This information does not represent the opinions of Interactive Advisors. Interactive Advisors has not confirmed the accuracy of this information and is providing it solely as background information about the strategy for clients’ review and consideration.
Performance returns
Past performance is no guarantee of future results.
Periodic and since inception performance returns for managers and portfolios are calculated daily and presented net of fees, i.e., net of actual or simulated advisory fees and actual brokerage commissions (when commissions are charged).
For client accounts, periodic and since inception performance returns are updated continuously throughout the day, with up to a 15-minute delay on pricing. Performance of client accounts is calculated by Interactive Advisors daily on a time-weighted basis including cash, dividends paid, earnings distributions, and reflects the deduction of Interactive Advisors advisory fees, brokerage and other commissions and expenses actually paid by clients.
The performance charts are provided for informational purposes only, and should not be used as the basis for making an investment decision. We rely on mathematical formulas, computer programs, and pricing information from third-party vendors to provide these returns. Neither Interactive Advisors nor any of its data or content providers shall be liable for any errors in this information or any actions taken by you in reliance upon this information.
Portfolio manager account performance
Performance of the Portfolio Manager’s account displayed on each portfolio page is calculated by Interactive Advisors on a daily time-weighted basis, including cash, dividends and earnings distributions and reflects the deduction of brokerage commissions (when commissions were charged). Interactive Advisors’ advisory fees are simulated and applied retroactively to present the portfolio return net-of-fees.
None of the performance information displayed on the Interactive Advisors public website is based on the actual performance of any client account investing in any portfolio. The performance in a client account invested in any portfolio may differ (i.e., be lower or higher) from the performance of the Portfolio Manager’s account displayed on the public website based on any trading restrictions imposed by the client (resulting in different account holdings), time of initial investment, amount of investment, frequency and size of cash flows in and out of the client account, applicable brokerage commissions, and different corporate actions. Also, Portfolio Manager returns include trades and positions that fail Interactive Advisors trading rules, and as a result, actual client returns will also differ for this reason. Clients investing in a portfolio may view the actual performance of their investment in any portfolio by logging into their Interactive Advisors account and reviewing their dashboard.
Benchmark returns
Comparisons to benchmarks on the individual portfolio pages on our website are provided for illustrative purposes only. Benchmarks relevant to each portfolio are assigned by Interactive Advisors based on overall strategy, portfolio trade history, and/or other criteria. Interactive Advisors believes that comparing the relative performance of the portfolios against the performance of an appropriate benchmark can provide insight into the reasons for a portfolio’s performance and may assist clients in making investment decisions. There are no universal criteria for choosing an appropriate portfolio benchmark. But clients should be mindful of the limitations of using benchmark comparisons in making investment decisions.
At this time Interactive Advisors uses investable exchange-traded funds (“ETFs”) as benchmarks. Unlike index returns, investable ETF returns reflect the deduction (i.e., are net of) management fees, transaction costs and expenses and are thus more comparable to Interactive Advisors portfolio returns. Benchmark returns displayed on the individual portfolio pages have been calculated by Interactive Advisors using daily-adjusted close prices.
For some of the portfolios, Interactive Advisors has selected the S&P 500 ETF as a benchmark. Broadly-based benchmarks like the S&P 500 ETF may be shown only as an indication of the general performance of the financial markets during the periods indicated, for comparison to general equity market behavior only and may not be suitable for comparison to individual portfolios with specific objectives, such as industry or security types. Generally, Interactive Advisors chooses the S&P 500 ETF as a benchmark for a portfolio when that portfolio is not constrained to particular industries or types of securities, which might make a benchmark with a narrower scope or market segment more appropriate. While portfolios for which the S&P 500 ETF is used as a benchmark may invest from time to time in certain market segments in which there may be a more appropriate benchmark, Interactive Advisors believes that over time the appropriate benchmark for those portfolios is a broader market benchmark such as the S&P 500 ETF. For other portfolios, Interactive Advisors has chosen narrower benchmarks based on portfolio construction rules and/or consultation with any relevant data providers (as applicable) and similarly believes that those benchmarks are a reasonably accurate representation of the segment of the total market where the portfolio is managed.
There can be no assurance that a benchmark will remain appropriate over time and Interactive Advisors will periodically review the benchmark’s appropriateness and decide to use other benchmarks as appropriate.
Interactive Advisors managed portfolios
In addition to Portfolio Manager strategies, Interactive Advisors allows its clients to invest in portfolios (referred to as the Interactive Advisors Portfolios) that Interactive Advisors itself manages. Because Interactive Advisors staff have constructed and manage the Interactive Advisors Portfolios without any involvement on the part of third-party Portfolio Managers, Interactive Advisors retains the entire annual management fee charged to its clients for investments in these portfolios and does not pay any portion of this fee to any Portfolio Managers. Some of the Interactive Advisors Portfolios are constructed based on data or model portfolios licensed from third parties, and for some of these portfolios Interactive Advisors remits some of the management fee revenue collected from investing clients to the third parties licensing the data or model portfolios to it.
These portfolios are proprietary investment portfolios designed and managed by Interactive Advisors itself, and not by third-party Portfolio Managers. To manage these portfolios, Interactive Advisors trades some of its own capital in separate proprietary brokerage accounts associated with each Interactive Advisors portfolio and then mirrors this trading in the accounts of clients investing in that specific portfolio. Subsequently, any rebalancing trades placed by Interactive Advisors in these portfolios are proportionally replicated in client accounts investing in one or more of these portfolios via Interactive Advisors’ co-trading technology.
Please note that, due to the potentially large number of positions included in some of the Interactive Advisors Portfolios (e.g., Smart Beta and Index Tracker Portfolios), the initial and any recurring investment and the periodic rebalancings will result in numerous transactions in an investing client’s account. This portfolio turnover will lead to transaction costs, such as commissions payable to Interactive Brokers LLC (Interactive Advisors affiliated broker-dealer) whenever Interactive Advisors buys and sells securities in the Interactive Advisors Portfolios, which is a conflict of interest. The higher turnover associated with quarterly rebalancing trades could also result in bid-ask spread expenses and dividends being disqualified from qualified dividend treatment.
You will need to report some (or all) of these trades on your tax forms. Interactive Advisors cannot provide tax advice or prepare tax documents for you. Please consult an accountant or tax attorney to determine the tax-related obligations associated with investing in the Interactive Advisors Portfolios. Please note that Interactive Brokers LLC provides certain tools to assist you with your tax filings, but these tools may only be able to support a limited number of trades.
Information about the investment strategy underlying each Interactive Advisors Portfolio may be found on the individual portfolio pages.
The Interactive Advisors Portfolios mainly invest in stocks and ETFs and may not be suitable for all investors. You may lose all or part of investments in these portfolios. Past performance is no guarantee of future results.
You may find additional information on the risks, conflicts of interest, applicable fees and brokerage commissions, brokerage arrangements, fractional shares, and limitations on investments and divestments associated with each line of Interactive Advisors Portfolios (along with Interactive Advisors’ Form ADV Part 2 Informational Brochure) in the portfolio-line-specific risk disclosure documents on the Forms and agreements page, which clients must acknowledge before investing in each portfolio line.
Trade replication and adjustment trades
Interactive Advisors manages client accounts by replicating portfolio trades in the accounts of clients investing in each portfolio. Clients choose the specific portfolios and may block specific investments from being made in their accounts, but Interactive Advisors is responsible for all trading in client accounts. While Interactive Advisors aims to replicate portfolio trading activity as closely as possible in client accounts, it cannot guarantee it will succeed in doing so or that it will achieve the same performance as the underlying portfolio. This is due to a number of factors, including but not limited to:
- The timing of the client’s initial investment and any subsequent additions and withdrawals to the account,
- Restrictions clients place on the trading in their account,
- Any delay in the receipt of portfolio trading data,
- Rounding differences resulting from differing levels of assets in clients’ accounts invested in a portfolio and the account underlying the portfolio,
- Interactive Advisors’ discretionary decisions stemming from trade replication rules,
- Any changes Interactive Advisors may make to the way it replicates portfolio trades in client accounts, and
- Any corporate actions affecting the stocks the specific portfolio invests in.
To ensure that Interactive Advisors is able to better track the trading activity in the portfolios, clients authorize Interactive Advisors to make adjustment trades in their accounts. These adjustments may require small buy or sell trades in client accounts for which clients will incur additional commissions.
Advisory fees
Fees may vary for each client based on the portfolios selected for investment. Advisory fees are calculated based upon the amount of assets being managed by Interactive Advisors (as detailed in Interactive Advisors Informational Brochure, Form ADV Part 2, and the Investment Management Agreement).
The fees applicable to investments in each portfolio are set forth on each portfolio page at https://interactiveadvisors.com. Interactive Advisors does not charge clients fees on assets not invested in a portfolio and does not charge clients for closing their account.
Interactive Advisors fees only cover its investment advisory services and do not include brokerage commissions, custodial fees, transaction fees, exchange fees or other related costs and expenses incurred for the investment of client assets through Interactive Advisors. All fees paid to Interactive Advisors for its investment advisory services are separate, distinct and in addition to any fees and expenses charged by mutual funds or in conjunction with internal expenses associated with ETFs. Clients will be solely responsible, directly or indirectly, for these additional expenses. Interactive Advisors does not receive any portion of these commissions, fees, or costs.
Many of the portfolios on the Interactive Advisors platform invest in ETFs. For these portfolios, in addition to the annual management fees (Interactive Advisors charges you) and the commissions (Interactive Advisors affiliated broker-dealer Interactive Brokers LLC charges you), the issuer or sponsor of the ETF will also charge you fees and costs (i.e., expense ratio). This embedded expense ratio includes management fees, legal and custodian fees and could reduce the net assets of the ETF, affect its performance and indirectly affect your investment in that ETF on the Interactive Advisors platform. You will thus pay more when investing in ETFs through us if you purchased the ETF directly because you will need to pay Interactive Advisors an annual management fee. Neither we nor our affiliated broker-dealer benefit from the fees charged by the ETF issuer, but for the Interactive Advisors Portfolios where Interactive Advisors controls the specific ETFs included (e.g., Asset Allocation Portfolio) we try to select and invest in ETFs with lower fees. Information on ETF fees are disclosed in the prospectus for each ETF, and the ETF issuer may change these embedded fees at its own discretion.
Investment minimum
The investment minimum is the minimum dollar amount required to invest in a particular portfolio. The minimum amount is determined by Interactive Advisors, based on the characteristics of the underlying portfolio. Interactive Advisors investment minimums start at $100 for Interactive Advisors Portfolios and $500 for portfolios managed by third-party Portfolio Managers. Investment minimums should not be considered specific investment advice for your investment situation.
Optional tax loss harvesting functionality
Interactive Advisors offers clients invested in the taxable Asset Allocation Portfolio the option to use tax loss harvesting (“TLH”) as a value-added strategy. Tax loss harvesting is a strategy of selling securities in your portfolio that have decreased in value, to generate capital losses to potentially decrease your taxes while using the proceeds from the sales to purchase similar (but not identical) securities, to maintain the expected risk and return characteristics of the portfolio. Capital losses may be used to offset capital gains and/or up to $3,000 per year on income. Tax loss harvesting rules pertain to individual investors who are US taxpayers or US persons. They may or may not apply to other types of investors. Clients may opt in or out of TLH at any time on their client dashboard. There is no additional fee for activating the TLH functionality. Clients remain responsible for the annual account management fees associated with their Asset Allocation Portfolio investments.
Clients who are not invested in our Asset Allocation Portfolio cannot use our TLH functionality. Interested clients should carefully review the disclosure document presented to them before they turn on this functionality (also available here: https://cdn.interactiveadvisors.com/22110402/documents/clients/tax-loss-harvesting-disclosure-07-sep-2022.pdf ) and consider their personal circumstances (e.g., tax situation) before activating TLH in their IA account(s). For additional details on the operation of TLH, including our list of replacement ETFs, you should read our white paper at: https://interactiveadvisors.com/learn-more/tax-loss-harvesting. Clients are solely responsible for determining whether to activate TLH and whether it is suitable in their circumstances.
Interactive Advisors does not represent that investing in the Asset Allocation Portfolio or using the TLH functionality will achieve any particular investment or tax result. TLH does not constitute tax advice and Interactive Advisors assumes no responsibility for the tax consequences of any TLH-related transaction, to any client. Clients should consult their personal tax advisors regarding the tax consequences of investing in the Asset Allocation Portfolio, the effects of using TLH, whether the transactions in non-Interactive Advisors accounts trigger wash sale restrictions, and the requirements for making appropriate reports and filings with the IRS or any other taxation authority. The tax consequences of using a tax loss harvesting strategy generally and TLH specifically are complex and uncertain and may be challenged by the IRS or any other tax authority. In case of an inquiry or proceeding by the IRS or any other tax authority, Interactive Advisors will not become a party to that inquiry or proceeding on your behalf. The information with regard to TLH was not prepared to be used, and cannot be used, by any investor to avoid penalties or interest. For additional information on claiming tax losses on your tax filings, review the IRS instructions on Schedule D (Form 1040) Capital Gains and Losses or IRS Publication 550 . Tax loss information associated with your use of TLH can be located on your logged-in client dashboard. Our affiliated broker Interactive Brokers LLC will provide you with a Form 1099 to be filed with your tax return.
TLH is generally valuable for investors with taxable accounts (as tax-advantaged accounts like traditional or Roth IRA accounts are already tax-free or tax-deferred) who have a long-term investment horizon (as it works through tax deferral not tax avoidance and thus it is less beneficial over a short investment horizon). Often TLH is most effective for investors who harvest losses for use against high-rate income (i.e., short term capital gains) and convert future realized gains to long-term capital gains subject to the preferentially lower rate. The benefits of TLH and the net investment losses available for harvesting will depend on each client’s particular circumstances, including but not limited to: income, state of residence, purchases and sales of assets in the client and spouse’s accounts outside of Interactive Advisors, type of account and holding periods. Tax loss harvesting generally and the use of our TLH functionality may not be appropriate or beneficial for all investors. Investors: (a) without taxable accounts; (b) in relatively low income tax brackets; (c) expecting higher future tax rates; (d) planning to withdraw a large portion of their investments within a year; and/or (e) trading any of the ETFs in their Asset Allocation Portfolio investments in non-Interactive Advisors accounts, including joint accounts, likely to trigger the wash sale rule, will generally benefit the least from using TLH.
Interactive Advisors does not monitor transactions in clients’ non-Interactive Advisors accounts, whether held at Interactive Brokers LLC or elsewhere. Clients are thus responsible for ensuring they identify and properly handle wash sales resulting from trading in their (and their spouse’s) non-Interactive Advisors accounts. For more information on the wash sale rule and other tax-loss harvesting-related issues, please review IRS Publication 550 and the Interactive Brokers website .
TLH results in increased trading in the accounts of clients who activate the functionality. Such increased trading could result in increased trading expenses, executions at less favorable prices, less favorable tax treatment of some dividends, portfolio drift, and increased risk of trading errors. All Clients receive this disclosure document (which contains the above discussion of risks) at the time they decide to turn on this functionality for their Asset Allocation Portfolio investments: https://cdn.interactiveadvisors.com/22110402/documents/clients/tax-loss-harvesting-disclosure-07-sep-2022.pdf .
Brokerage arrangement, IBKR-LITE fee model, and associated conflicts of interests
Pursuant to the Investment Management Agreement between Interactive Advisors and its clients, all brokerage transactions in client accounts occur through Interactive Brokers LLC, an affiliate of Interactive Advisors. Interactive Advisors does not offer services through any other broker-dealer. The use of an affiliate for brokerage services represents a conflict of interest. Interactive Advisors clients acknowledge this conflict of interest and authorize Interactive Advisors to execute transactions through Interactive Brokers LLC when they open an Interactive Advisors account. Clients should consider the commissions and other expenses, execution, clearance, and settlement capabilities of Interactive Brokers LLC as a factor in their decision to invest in an Interactive Advisors Portfolio. Interactive Advisors believes it can meet its best execution obligation by trading its clients’ trades through Interactive Brokers LLC. While there can be no assurance that it will in fact achieve best execution, Interactive Advisors does periodically monitor the execution quality of transactions to ensure that clients receive the best overall trade execution pursuant to regulatory requirements.
In May 2021, Interactive Advisors elected to have all of its clients’ brokerage accounts at Interactive Brokers LLC operate under the zero-commission “IBKR-LITE” fee model. IBKR-LITE clients are charged zero commission for US exchange-listed stock and ETF trades. IBKR-LITE orders for NMS stocks are generally routed to select over-the-counter market-makers (“Market Makers”) for handling. Interactive Brokers LLC’s agreements with the Market Makers provide Interactive Brokers LLC with payment for order flow (“PFOF”) from each Market Maker for trades executed with that Market Maker. Interactive Brokers LLC may also route IBKR-LITE orders to another broker, ATS, or exchange (each an “Away Route”), in which case it may collect PFOF for trades executed at or through that Away Route. Although Interactive Brokers LLC’s receipt of PFOF may reduce the amount of price improvement that client accounts obtain on their stock and ETF trades (as compared to the price improvement available under IBKR’s IBKR-PRO fee model), Interactive Advisors believes that the amount that clients save by avoiding commissions (as compared to IBKR-PRO) generally more than compensates for any loss of price improvement.
IBKR-LITE clients are charged no brokerage account activity fees and no market data fees for US exchange-traded stocks and ETFs, but they may incur non-commission related fees such as market data fees for other products, service fees such as wire transfer fees, and fees to cover regulatory fees incurred by IB LLC when clients sell stocks. These fees are not intended to be a direct pass-through of exchange and third-party fees. Costs passed on to IBKR-LITE clients may be greater than the costs paid by IBKR to the relevant exchange, regulator, clearinghouse or third party. For products not entitled to zero-commission trading under IBKR-LITE, the same commission structure will apply to both IBKR-LITE and IBKR-PRO. Where applicable, a “Fixed” commission model will apply to IBKR-LITE clients for such products. For more information, see ibkr.com/commissions . OnClose, OnOpen, and outside regular trading hours (“Outside-RTH”), US listed stock orders are free for IBKR-LITE clients so long as the total monthly volume of shares executed in the Open, Close auction or Outside-RTH does not exceed 10% of an account’s monthly US stock trading volume, otherwise the account will be charged USD 0.005 per share. Market orders placed prior to regular trading hours will be treated as Market OnOpen orders and count towards the client threshold. https://www.interactivebrokers.com/en/pricing/commissions-stocks.php
For more information, see IBKR’s Commissions page. For more information on the differences between IBKR’s IBKR-LITE and IBKR-PRO offerings, please see IBKR’s Order Routing and Payment for Order Flow disclosure and IBKR’s website.
Interactive Advisors’ election of the IBKR-LITE service for its client accounts constitutes a conflict of interest for Interactive Advisors in light of the corporate affiliation between Interactive Advisors and Interactive Brokers LLC and the fact that the payments Interactive Brokers LLC will receive from Market Makers and Away Routes on Client Account orders will benefit the parent company of both entities (IBG LLC) and thus Interactive Advisors indirectly, and the fact that IBKR-LITE executions may (but are not expected to) bring clients higher total cost of execution than IBKR-PRO executions (even after accounting for the commissions savings, as a result of missed opportunity for greater price improvement). This conflict of interest is disclosed to and acknowledged by Interactive Advisors clients at account opening. This conflict is mitigated by Interactive Advisors periodically reviewing Interactive Brokers’ execution quality statistics to confirm that IBKR-LITE’s total cost of execution (calculated as commissions and fees paid minus price improvement obtained) is generally equal to or better than IBKR-PRO’s total cost of execution after accounting for the commissions savings from IBKR-LITE. Interactive Advisors believes the benefits clients will receive from the IBKR-LITE commission structure outweigh the conflict of interest.
Clients opening an account with Interactive Advisors receive a separate disclosure entitled “Interactive Brokers LLC and Interactive Advisors’ Disclosure Regarding IBKR-LITE Commission Structure for All Interactive Advisors Clients” discussing the implications and conflict of interest associated with the IBKR-LITE zero-commission fee model as part of the “Interactive Advisors Account Opening Agreements and Disclosures”, also available on the Forms and agreements page of this website.
No self-directed trading
Interactive Advisors offers a discretionary investment advisory program and not a self-directed brokerage service. Interactive Advisors clients do not enter individual buy and sell orders for specific securities to be executed at particular times. Interactive Advisors places buy and sell orders for specific securities consistent with the Portfolio Manager or Interactive Advisors Portfolio strategy selected by clients, in accordance with the discretionary authority granted to Interactive Advisors by clients. Investors wishing to control the specific time and securities to be bought and sold, should execute trades in a non-Interactive Advisors-managed Interactive Brokers LLC brokerage account or another brokerage account.
Interactive Advisors clients may restrict the stocks traded in their account at any time and Interactive Advisors will honor these restrictions when mirroring the trading in the portfolios clients choose to invest in. Clients should understand that imposing restrictions on future investments and selling any existing holdings in a portfolio may negatively affect the performance of a client account and lead to that account performing better or worse than the portfolio it follows.
Compensation of portfolio managers
Portfolio Managers are compensated for licensing their investment data to Interactive Advisors. Interactive Advisors compensates Portfolio Managers with a portion of the management fee it charges clients (equivalent to a percentage of the gross market value of client assets managed in that portfolio) investing in their portfolio.
Reliance on third-party data
Interactive Advisors’ investment advice relies on data and information from third-party sources. While Interactive Advisors believes that the data it uses in its investment management processes is obtained from reliable sources, it does not audit or validate this data, which may contain errors.
Reliance on technology
Interactive Advisors’ investment activities depend on various computer and telecommunications technologies, some provided by or dependent upon third parties, such as data feed, data center, telecommunications or utility providers. Interactive Advisors’ services to its clients could be severely compromised by system and/or telecommunications failures, power loss, unauthorized system access or use, computer viruses, fire or water damage, human errors in using certain systems, or other events or circumstances. Events that may interrupt computer or telecommunications systems could have a material adverse effect on Interactive Advisors clients, including by preventing Interactive Advisors from trading, liquidating or monitoring its clients’ investments. Interactive Advisors maintains back-up electronic books and records at a third-party disaster recovery site. In case of interruption of its computer and/or telecommunications systems, Interactive Advisors will strive to resume service to its clients promptly, barring any circumstances outside of its control.
Tax disclosures
Interactive Advisors does not provide tax advice and does not represent in any manner that investments in an Interactive Advisors portfolio will result in any particular tax consequences. Clients should confer with their personal tax advisors regarding the tax consequences of investing in an Interactive Advisors portfolio, based on their particular circumstances. Clients and their personal tax advisors are responsible for how the transactions conducted in an account are reported to the IRS or any other taxing authority on the client’s personal tax returns. Interactive Advisors assumes no responsibility for the tax consequences of any transaction on any client.
Some of the Interactive Advisors Portfolios (e.g., Smart Beta and Index Tracker Portfolios) invest in a large number of stocks and there will be trades in many of these stocks whenever Interactive Advisors rebalances the portfolios or clients add to their investment. Clients may need to report some (or all) of these trades on their tax forms. Interactive Advisors cannot provide tax advice or prepare tax documents for clients. Clients should consult their accountant or tax attorney to determine the tax-related obligations associated with investments in these portfolios. Please note that Interactive Brokers LLC provides certain tools to assist its brokerage clients, including Interactive Advisors clients, with their tax filings, but these tools may only be able to support a limited number of trades.
No marketing outside of the United States
This is an offer of investment services to US residents only. We also accept residents of Switzerland and India as clients, without active solicitation, subject to local regulatory restrictions. The content of this website is NOT intended to be a solicitation or advertisement in any jurisdiction other than the United States. This website has been published in the United States exclusively in English and is intended to provide information in compliance with applicable United States laws and regulations.
Interactive Advisors blog disclosures
Covestor Ltd doing business as Interactive Advisors is an investment advisor registered with the U.S. Securities and Exchange Commission (“SEC”). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.
The content of the Interactive Advisors Blog includes commentaries written by third-party portfolio managers, freelance writers and Interactive Advisors employees and does not necessarily represent the opinions of Interactive Advisors or any of its officers, directors, employees or staff.
The content, whether or not provided by Interactive Advisors, is offered for informational purposes only, does not constitute investment advice, and is not an offer to buy or sell any security. The content of this blog is not a substitute for obtaining professional financial advice from a qualified person or firm. For additional information or questions about this blog, please contact editorial@interactiveadvisors.com.
Any investments discussed in this blog that are not identified as being held in a portfolio or portfolios are for illustrative purposes only. There is no assurance that Interactive Advisors will make any investments with the same or similar characteristics as any investments presented. The investments are presented for discussion purposes only and are not a reliable indicator of the performance or investment profile of any composite or client account. Further, the reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions made by Interactive Advisors or portfolio managers on its platform in the future will be profitable. Interactive Advisors blog commentaries may contain forward-looking statements, information and opinions, including descriptions of anticipated market changes and expectations of future activity. Interactive Advisors portfolio managers and other blog contributors believe that such statements, information, and opinions are based upon reasonable estimates and assumptions. However, forward-looking statements, information and opinions are inherently uncertain and actual events or results may differ materially from those reflected in the forward-looking statements. Therefore, undue reliance should not be placed on such forward-looking statements, information and opinions.
Any external links provided are offered as a matter of convenience and are not the property or responsibility of Interactive Advisors. Although Interactive Advisors has a reasonable belief that the information is factual and up to date, it cannot guarantee the accuracy of the information at these links.
Past performance is no guarantee of future results, nor is it indicative of future performance.
All investments in financial markets involve risk, including the risk of loss, such as a loss of principal and reduction in earnings. Performance of the manager accounts associated with each portfolio has been calculated by Interactive Advisors on a daily time-weighted basis, including cash, reinvested dividends and earnings, and reflects the deduction of simulated Interactive Advisors advisory fees and broker commissions (where commissions were charged) to present returns net of fees.
Blog discussions may contain references to portfolio performance. The performance figures stated are net of advisory fees, and include reinvestment of dividends or other earnings. Blog discussions may also contain references or comparisons to indexes or benchmarks.
For additional information regarding the performance of portfolios offered by Interactive Advisors, index or benchmark comparisons and other information regarding our platform, see the individual portfolio profile pages at https://interactiveadvisors.com as well as our Legal Disclosures page and our Informational Brochure.
No redistribution
This content is provided by Interactive Advisors for use by users of its website (https://interactiveadvisors.com) in compliance with the Terms of Use of this website. No content may be reprinted, sold, or redistributed without the expressed written consent of Interactive Advisors.