Hornor, Townsend & Kent, LLC is both a registered investment advisor and broker-dealer. Commonly called HTK, the firm serves as the home office to more than 800 independent advisors, according to its website. So as a retail client, you’d likely not have communications directly with the firm, except for an occasional notice required by law or information verification request. Instead, your communications would be with your investment advisor representative (IAR) and the holder (or custodian) of your assets.
Based in Horsham, Pennsylvania, the firm has more than $1.75 billion in assets under management (AUM), most of which is on a non-discretionary basis. All IARs are also registered broker-dealer representatives and licensed insurance agents.
Hornor, Townsend & Kent Background
HTK has been registered with the Securities and Exchange Commission (SEC) as an investment advisor since 1999. It is also registered with the Financial Industry Regulatory Authority (FINRA) and a member of the Securities Investors Protection Corporation (SIPC).
The firm is is a wholly owned subsidiary of The Penn Mutual Life Insurance Company. Being part of such a large company, HTK has many affiliations. They include: HTK Insurance Agency, Inc.; Penn Mutual Asset Management, LLC; Penn Series Fund, Inc.; The Penn Insurance & Annuity Company; PIA Reinsurance Company of Delaware; Advisory Resource Group, LLC; Janney Capital Management LLC; Janney Montgomery Scott LLC; Longevity Insurance Company; Pillar Wealth Advisors, LLC; Vantis Life Insurance Company of New York; Vantis Life Insurance Company and Wealth Development Strategies Investment Advisory, Inc.
Hornor, Townsend & Kent Client Types and Minimum Account Sizes
As noted earlier, HTK doesn’t serve clients directly. It provides services to IARs, who in turn work with individuals, pension and profit-sharing plans, trusts, estates, charitable organizations, corporations and other business entities. The vast majority of clients do not have a high net worth (they number 5,167 compared to 1,205 who do have a high net worth).
The minimum investment for portfolio management services is $50,000, though this amount may be waived.
Services Offered by Hornor, Townsend & Kent
IARs offer financial planning services that include either a full financial analysis or an analysis of a specific area. Clients are then free to implement the recommendations or not. They are also free to continue working with the IAR or not.
IARs also offer portfolio monitoring services, consulting services, wealth management services and retirement planning consulting services. They do not manage investments, but will recommend third-party money managers based on client needs and goals, under HTK’s third-party asset manager (TPAM) programs. The firm has a wrap fee program sponsored by Betterment, called HTK Smart Journey Program.
Additionally, as a broker-dealer, HTK offers mutual funds, exchange-traded funds (ETFs), real estate investment trusts (REITS), business development companies (BDCs) and other general securities. As an insurance agent, it offers fixed indexed annuities, variable annuities and variable life insurance products.
Hornor, Townsend & Kent Investing Philosophy
IARs use various methods of analysis to determine investing strategies for clients. These strategies then inform the recommendation of a TPAM program. Generally, IARs may use technical and fundamental analyses, asset allocation strategies and investment strategies concentrated on a specific sector or industry.
Fees Under Hornor, Townsend & Kent
The fee for financial planning is negotiable and can be a flat fee or on an hourly basis. If it’s on an hourly basis, the fee cannot exceed $5,000 per hour.
The fee for portfolio monitoring is also negotiable. It’s generally based on assets under management (AUM) and follows this tiered schedule:
|AUM||Maximum Annual Fee|
|$100,000 to $500,000||1.0%|
|Assets in excess of $5,000,000||0.30%|
The fee for consulting services is hourly and will not exceed $500/hour.
For HTK’s wrap fee program, the HTK’s fee is up to 1% of AUM (Betterment has its own fee schedule). For clients in the TPAM program, HTK’s fee is negotiable and may be up to 1.5% of AUM (in addition to the money manager’s fees and other fees).
What to Watch Out For
HTK’s many affiliations can present potential conflicts of interest. Similarly, IARs who have multiple roles (brokers and insurance agents) may have conflicts of interest. When receiving recommendations from your IAR, be sure to ask what they are based on and whether and how the advisor and firm may benefit from your following them. As a fiduciary, your advisor is obligated to tell you.
In its most recent SEC filings, HTK reported nine legal or disciplinary actions that occurred or were resolved in the last 10 years. Five involved individual associates and four involved HTK. Of the latter four, the firm paid fines that ranged from $1,750 to $275,000. In the most recently resolved action, the firm entered into a letter of acceptance, waiver and consent with FINRA regarding the allegation of failing to “reasonably supervise representatives’ sale of multi-share class variable annuities and [providing] training to its representatives and principals on the sale and supervision of multi-share class variable annuities” It was alleged that HTK also “failed to adequately supervise the private securities transactions of representatives who were dually registered as investment advisors with third-party advisory firms.”
All information was accurate as of the writing of this article.
Tips for Finding the Right Financial Advisor
- Want an advisor who will manage your portfolio - and not refer you to a third-party advisor and charge you to monitor the other advisor? We can help you find an investment advisor. Just answer some questions and SmartAsset’s free matching tool will connect you with up to three advisors who meet your preferences.
- Ask prospective advisors how many times in a year they will go over your finances with you. The correct answer depends on your needs and expectations. But once or twice a year should be the minimum.