Afs Wealth Management, LLC

Item 1: Cover Page Part 2A of Form ADV Firm Brochure September 11, 2026 AFS Wealth Management, LLC CRD No. 287832 22029 Farmington Rd. Farmington Hills, MI 48336 phone: 248-888-7530 email: pputney@afsfinancialgrp.com website: www.afsfinancialgrp.com This brochure provides information about the qualifications and business practices of AFS Wealth Management, LLC. If you have any questions about the contents of this brochure, please contact us at 248-888-7530. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Registration with the SEC or state regulatory authority does not imply a certain level of skill or expertise. Additional information about AFS Wealth Management, LLC is also available on the SEC’s website at www.adviserinfo.sec.gov. You can search this site by using our firm’s unique CRD number of 287832. Page 1  Item 2: Material Changes The material changes in this brochure from the last annual updating amendment of AFS on January 15, 2026, are described below. Material changes relate to AFS’s policies, practices or conflicts of interests. • AFS has successfully transitioned to registration with the United States Securities and Exchange Commission from its prior registration at the state level. • AFS has added Altruist as a custodian (Item 12) • Added language regarding Charles Schwab’s Economic Benefits (Item 14) • We no longer offer portfolio services through the use of sub-advisors. Page 2  Item 3: Table of Contents Item 1: Cover Page...................................................................................................................................................... 1 Item 2: Material Changes.......................................................................................................................................... 2 Item 3: Table of Contents ......................................................................................................................................... 3 Item 4: Advisory Business......................................................................................................................................... 4 Item 5: Fees and Compensation ............................................................................................................................ 4 Item 6: Performance-Based Fees and Side-by-Side Management........................................................... 6 Item 7: Types of Clients..............................................................................................................................................6 Item 8: Methods of Analysis, Investment Strategies, and Risk of Loss ....................................................6 Item 9: Disciplinary Information..............................................................................................................................8 Item 10: Other Financial Industry Activities and Affiliations...........................................................................9 Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading ...........................................................................................................................................................10 Item 12: Brokerage Practices ...................................................................................................................................11 Item 13: Review of Accounts ...................................................................................................................................12 Item 14: Client Referrals and Other Compensation........................................................................................12 Item 15: Custody ..........................................................................................................................................................14 Item 16: Investment Discretion...............................................................................................................................14 Item 17: Voting Client Securities............................................................................................................................15 Item 18: Financial Information ................................................................................................................................15 Page 3  Item 4: Advisory Business A. AFS Wealth Management, LLC AFS Wealth Management, LLC (“AFS” and/or “the firm”) is a Michigan limited liability company. Phillip Putney is the sole member. The firm has been providing investment services to clients since June 2017. B. Services Offered Portfolio Management Services AFS offers portfolio management services on a discretionary basis that involve assisting with the ongoing management of your investment accounts. Prior to entering into an agreement, AFS works with you to understand your investment objectives, time frame, risk tolerance and other considerations. Once AFS has this information, it creates an individualized portfolio. AFS will request discretionary authority from you to select the securities and execute transactions without your prior permission. AFS bases its recommendations on a variety of factors including, but not limited to, performance risk, fees, tax efficiency of different investment strategies, as well as your input and preferences regarding the strategies. C. Client-Tailored Services and Client-Imposed Restrictions AFS offers the same suite of services to all of our clients. Clients may impose restrictions on investing in certain securities or types of securities. All restrictions must be presented in writing. D. Wrap Fee Programs AFS does not participate in wrap fee programs. E. Client Assets Under Management As of June 1, 2026, AFS manages $112,227,651 of discretionary assets and $5,755,437 of non- discretionary assets. Item 5: Fees and Compensation A. Methods of Compensation and Fee Schedule AFS’s management fees are based on a percentage of the overall asset managed in the clients’ accounts. The annual management fee is based on the following tiered fee schedule: Custodian Reported Account Value Annual Management Fee $0 to $500,000 1.55% $500,001 to $1,000,000 1.35% Above $1,000,000 1.15% The management fee is negotiable and billed monthly in arrears. Page 4  AFS may recommend a fee-based annuity to Clients. AFS charges an annual management fee of 1.00% for this service. Asset-based fees are always subject to the investment advisory agreement between the client and AFS. Such fees are payable monthly in arrears. The fees are based on the market value of the assets in the account(s) on the average daily balance. The fees will be prorated if the investment advisory relationship commences otherwise than at the beginning of a calendar month. B. Client Payment of Fees The custodian will deduct advisory fees directly from the client’s account provided that (i) the client provides written authorization to the qualified custodian, and (ii) the qualified custodian sends the client a statement, at least quarterly, indicating all amounts disbursed from the account. The client is encouraged to review the custodian statement to verify the accuracy of the fee calculation, as the client’s custodian will not verify the calculation. The client may terminate the investment management services by providing a 30 day written notice. C. Additional Client Fees Charged The fees charged by AFS do not include fees ticket or trading charges. In the case of an exchange-traded fund or mutual fund, there are internal management fees and charges, which are disclosed in the respective fund’s prospectus. Clients are advised to read these materials carefully before investing. If a mutual fund also imposes sales charges, the client may pay an initial or deferred sales charge as further described in the mutual fund’s prospectus. A client using AFS may be precluded from using certain mutual funds because they may not be offered by the client's custodian. Please refer to the Brokerage Practices section (Item 12) for additional information regarding the firm’s brokerage practices. D. External Compensation for the Sale of Securities to Clients AFS’s advisory professionals are compensated primarily through a salary and bonus structure. AFS’s advisory professionals may receive commission-based compensation for the sale of insurance products. Please see Item 10.C. for detailed information and conflicts of interest. E. Retirement Rollover Conflicts of Interest When AFS recommends you rollover a retirement account for it to manage, this creates a financial incentive because AFS charges a fee for its services. AFS attempts to mitigate the conflict of interest by acting in your best interest and applying an impartial conduct standard to all rollovers. Please note that you are not under any obligation to roll over a retirement account to an account managed by us. Page 5  Item 6: Performance-Based Fees and Side-by-Side Management AFS does not charge performance-based fees. Item 7: Types of Clients AFS generally provides investment advice and/or management supervisory services to the following types of clients: Individuals • • High-net-worth individuals • Trusts, estates, or charitable organizations • Corporations and other businesses AFS generally requires a minimum account size of $250,000. AFS, in its sole discretion, may waive the required minimum. Item 8: Methods of Analysis, Investment Strategies, and Risk of Loss A. Methods of Analysis and Investment Strategies When AFS manages client portfolios we use a proprietary combination of the following methods of analysis and investment strategies. Asset Allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon among various asset classes. The asset classes typically include equities, fixed income, cash and cash equivalents, and alternative investments such as commodities and digital asset exposures (typically accessed through exchange-traded funds (ETFs)). The risk associated with asset allocation is that each class has different levels of risk and return, so each will behave differently over time. There is no guarantee that diversification among asset classes will grow a portfolio. Fundamental analysis is a technique that attempts to determine a security’s value by focusing on underlying factors that affect a company's actual business and its future prospects. The analysis is performed on historical and present data. On a broader scope, one can perform fundamental analysis on industries or the economy as a whole. The term refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements. The risk associated with fundamental analysis is that despite the appearance that a security is undervalued, it may not rise in value as predicted. Quantitative Analysis is a business or financial analysis technique that seeks to understand behavior by using complex mathematical and statistical modeling, measurement and research. By assigning a numerical value to variables, quantitative analysts try to replicate reality mathematically. Quantitative analysis can be done for a number of reasons such as measurement, performance evaluation or valuation of a financial instrument. It can also be used to predict real world events such as changes in a share price. In broad terms, quantitative analysis is simply a way of measuring things. Examples of quantitative analysis include everything from simple financial ratios such as earnings per share, to something as complicated as discounted cash flow, or option pricing. Although quantitative analysis is a powerful tool for evaluating investments, it Page 6  rarely tells a complete story without the help of its opposite - qualitative analysis. In financial circles, quantitative analysts are affectionately referred to as "quants", "quant jockeys" or "rocket scientists." Technical Analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value but instead use charts and other tools to identify patterns that can suggest future activity. The risk associated with technical analysis is that there is no broad consensus among technical traders on the best method of identifying future price movements. Investing in securities involves a risk of loss that you, as a client, should be prepared to bear. There is no guarantee that any specific investment or strategy will be profitable for a particular client. A.1. Material Risks of Investment Instruments We use several types of securities in your portfolios including, but not limited to, mutual funds, exchange traded funds (ETFs), stocks, bonds, options. Some of the risks associated with these securities include: • Credit Risk: This is the risk that an issuer of a bond could suffer an adverse change in financial condition that results in a payment default, security downgrade, or inability to meet a financial obligation. • Inflation Risk: This is the risk that inflation will undermine the performance of an investment and/or the future purchasing power of a client's assets. • Interest Rate Risk: The chance that bond prices overall will decline because of rising interest rates. • International Investing Risk: Investing in the securities of non-U.S. companies involves special risks not typically associated with investing in U.S. companies. Foreign securities tend to be more volatile and less liquid than investments in U.S. securities, and may lose value because of adverse political, social or economic developments overseas or due to changes in the exchange rates between foreign currencies and the U.S. dollar. In addition, foreign investments are subject to settlement practices, as well as regulatory and financial reporting standards, that differ from those of the U.S. • Commodities: Commodities are tangible assets used to manufacture and produce goods or services. Commodity prices are affected by different risk factors, such as disease, storage capacity, supply, demand, delivery constraints and weather. Because of those risk factors, even a well-diversified investment in commodities can be uncertain. • Precious Metal ETFs (e.g., Gold, Silver, or Palladium Bullion backed “electronic shares” not physical metal): Precious Metal ETFs may be negatively impacted by several unique factors, among them (1) large sales by the official sector which own a significant portion of aggregate world holdings in gold and other precious metals, (2) a significant increase in hedging activities by producers of gold or other precious metals, (3) a significant change in the attitude of speculators and investors. • Exchange Traded Funds (ETFs) Risk: ETFs are typically investment companies that are legally classified as open-end mutual funds or unit investment trusts; however, they differ from traditional investment companies because ETF shares are listed on a securities Page 7  exchange. Shares can be bought or sold through the trading day like shares of other publicly traded companies. ETF shares may trade at a discount or premium to their net asset value. This difference between the bid price and the asking price is often referred to as the “spread”. The spread varies over time based on the ETF’s trading volume and market liquidity and is generally lower if the ETF has a lot of trading volume and market liquidity and higher if the ETF has little trading volume and market liquidity. Although many ETFs are registered as investment companies under the Investment Company Act of 1940 like traditional mutual funds, some ETFs, including those that invest in commodities, are not registered as investment companies. Certain ETFs may provide exposure to digital assets such as bitcoin. These investments are subject to additional risks, including significant price volatility, evolving regulatory frameworks, and uncertainty regarding long-term adoption. Additionally, such ETFs may not perfectly track the performance of the underlying digital asset and may be impacted by factors affecting the broader digital asset market. • Manager Risk: The chance that the proportions allocated to the various securities will cause the client’s account to underperform relevant to benchmarks or other accounts with a similar investment objective. • Stock Market Risk: The chance that stock prices overall will decline. Stock markets tend to move in cycles, with periods of rising stock prices and periods of falling stock prices. • Options Risk: Like other securities – including stocks, bonds, and mutual funds – options carry no guarantees, and a person must be aware that it is possible to lose all of the principal he/she invests, and sometimes more. As an option holder, a person risks the entire amount of the premium he/she paid. But as an options writer, a person takes on a much higher level of risk. For example, if a person writes an uncovered call, he/she faces unlimited potential loss, since there is no cap on how high a stock price can rise. However, since initial options investments usually require less capital than equivalent stock positions, potential cash losses as an options investor are usually smaller than if someone bought the underlying stock or sold the stock short. The exception to this general rule occurs when an option is used to provide leverage: Percentage returns are often high, but it is important to remember that percentage losses can be high as well. B. Security-Specific Material Risks There is an inherent risk for clients who have their investment portfolios heavily weighted in one security, one industry or industry sector, one geographic location, one investment manager, one type of investment instrument (equities versus fixed income). Clients who have diversified portfolios, as a general rule, incur less volatility and therefore less fluctuation in portfolio value than those who have concentrated holdings. Concentrated holdings may offer the potential for higher gain, but also offer the potential for significant loss. Item 9: Disciplinary Information A. Criminal or Civil Actions There is nothing to report on this item. Page 8  B. Administrative Enforcement Proceedings There is nothing to report on this item. C. Self-Regulatory Organization Enforcement Proceedings There is nothing to report on this item. Item 10: Other Financial Industry Activities and Affiliations A. Broker-Dealer or Representative Registration Neither AFS nor its affiliates, employees, or independent contractors are registered broker- dealers and do not have an application to register pending. B. Futures or Commodity Registration Neither AFS nor its affiliates are registered as a commodity firm, futures commission merchant, commodity pool operator or commodity trading advisor and do not have an application to register pending. C. Material Relationships Maintained by this Advisory Business and Conflicts of Interest C.1. Advanced Financial Solutions, LLC Phillip Putney owns Advanced Financial Solutions, LLC, a management company that provides administrative services (office space, computers, phones, payroll, etc.) to AFS Wealth Management, AFS Tax Management, and AFS Insurance Management. C.2. AFS Tax Management, LLC Phillip Putney owns AFS Tax Management, through which he provides tax and certain non- securities-related financial planning services, such as cash flow planning, estate planning, insurance planning. C.3. AFS Insurance Management, LLC Phillip Putney owns AFS Insurance Management, which offers life, fixed annuity, long-term care, and Medicare supplemental insurance products. Please be advised there is a potential conflict of interest in that there is an economic incentive to recommend such insurance and other investment products. Please also be advised that Mr. Putney strives to put clients’ interests first and foremost, and clients may utilize any insurance carrier or insurance agency they desire. D. Recommendation or Selection of Other Investment Advisors and Conflicts of Interest AFS does not receive any additional remuneration from advisers, investment managers, or other service providers that it recommends to clients. Page 9  Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading A. Code of Ethics Description In accordance with the Advisers Act, AFS has adopted policies and procedures designed to detect and prevent insider trading. In addition, AFS has adopted a Code of Ethics (the “Code”). Among other things, the Code includes written procedures governing the conduct of AFS's advisory and access persons. The Code also imposes certain reporting obligations on persons subject to the Code. The Code and applicable securities transactions are monitored by the chief compliance officer of AFS. AFS will send clients a copy of its Code of Ethics upon written request. AFS has policies and procedures in place to ensure that the interests of its clients are given preference over those of AFS, its affiliates and its employees. For example, there are policies in place to prevent the misappropriation of material non-public information, and such other policies and procedures reasonably designed to comply with federal and state securities laws. B. Investment Recommendations Involving a Material Financial Interest and Conflicts of Interest AFS does not engage in principal trading (i.e., the practice of selling stock to advisory clients from a firm’s inventory or buying stocks from advisory clients into a firm’s inventory). In addition, AFS does not recommend any securities to advisory clients in which it has some proprietary or ownership interest. C. Advisory Firm Purchase of Same Securities Recommended to Clients and Conflicts of Interest AFS, its affiliates, employees and their families, trusts, estates, charitable organizations and retirement plans established by it may purchase the same securities as are purchased for clients in accordance with its Code of Ethics policies and procedures. The personal securities transactions by advisory representatives and employees may raise potential conflicts of interest when they trade in a security that is: • owned by the client, or • considered for purchase or sale for the client. Such conflict generally refers to the practice of front-running (trading ahead of the client), which AFS specifically prohibits. AFS has adopted policies and procedures that are intended to address these conflicts of interest. These policies and procedures: require our advisory representatives and employees to act in the client’s best interest • • prohibit fraudulent conduct in connection with the trading of securities in a client account • prohibit employees from personally benefitting by causing a client to act, or fail to act in making investment decisions Page 10  • prohibit the firm or its employees from profiting or causing others to profit on knowledge of completed or contemplated client transactions • allocate investment opportunities in a fair and equitable manner • provide for the review of transactions to discover and correct any trades that result in an advisory representative or employee benefitting at the expense of a client. Advisory representatives and employees must follow AFS’s procedures when purchasing or selling the same securities purchased or sold for the client. D. Client Securities Recommendations or Trades and Concurrent Advisory Firm Securities Transactions and Conflicts of Interest AFS, its affiliates, employees and their families, trusts, estates, charitable organizations, and retirement plans established by it may effect securities transactions for their own accounts that differ from those recommended or effected for other AFS clients. AFS will make a reasonable attempt to trade securities in client accounts at or prior to trading the securities in its affiliate, corporate, employee or employee-related accounts. Trades executed on the same day will likely be subject to an average pricing calculation. It is the policy of AFS to place the clients’ interests above those of AFS and its employees. Item 12: Brokerage Practices A. Factors Used to Select Broker-Dealers for Client Transactions A.1. Custodian Recommendations AFS participates in the institutional advisory program (“the Program”) offered by Charles Schwab & Co., Inc.,, member FINRA/SIPC (“Schwab”), an unaffiliated SEC-registered broker-dealer. Schwab offers independent investment advisers which include custody of securities, trade execution, clearance and settlement of transactions. AFS receives some benefits from Schwab through its participation in the Program, which are disclosed in Item 14. AFS also recommends Altruist, LLC as a custodian. A.2. Soft Dollar Arrangements AFS does not utilize soft dollar arrangements. AFS does not direct brokerage transactions to execute brokers for research and brokerage services. A.3. Brokerage for Client Referrals AFS does not engage in the practice of directing brokerage commissions in exchange for the referral of advisory clients. B. Aggregating Securities Transactions for Client Accounts Transactions for each client account generally will be traded independently, unless AFS decides to purchase or sell the same securities for several clients at approximately the same time. AFS may, but is not obligated to, combine or “batch” such orders to obtain best execution or to allocate Page 11  equitably among AFS’s client’s differences in prices and commissions or other transaction costs that might have been obtained had such orders been placed independently. Under this procedure, transactions will be averaged as to price and will be allocated among clients’ accounts in proportion to the purchase and sale orders placed for each account on any given day. To the extent that AFS determines to aggregate client orders for the purchase or sale of securities, including securities in which the firm’s principal(s) and/or associated person(s) may invest, AFS shall generally do so in accordance with the parameters set forth in SEC No-Action Letter, SMC Capital, Inc. AFS shall not receive any additional compensation or remuneration as a result of the aggregation. Item 13: Review of Accounts A. Schedule for Periodic Review of Client Accounts or Financial Plans and Advisory Persons Involved Accounts are reviewed by AFS’s Manager, Phillip Putney. The frequency of reviews is determined based on the client’s investment objectives, but reviews are conducted no less frequently than annually. More frequent reviews may also be triggered by a change in the client’s investment objectives, tax considerations, large deposits or withdrawals, large purchases or sales, loss of confidence in the underlying investment, or changes in macro-economic climate. B. Review of Client Accounts on Non-Periodic Basis AFS may perform ad hoc reviews on an as-needed basis if there have been material changes in the client’s investment objectives or risk tolerance, or a material change in how AFS formulates investment advice. C. Content of Client-Provided Reports and Frequency AFS does not provide any performance or other reports to third-party investment advisers or any subscribing sub-adviser firm. To the extent AFS may manage an individual client account, the client will receive no less frequently than quarterly a statement from the custodian indicating holdings, transactions, and cash balance. The custodian is the official record of the client’s account. Item 14: Client Referrals and Other Compensation A. Economic Benefits Provided to the Advisory Firm from External Sources and Conflicts of Interest AFS may receive economic benefits from Schwab in the form of support products and services they make available to us and other independent advisers whose clients maintain their accounts at Schwab. The availability to us of Schwab’s products and services is not based on us giving particular investment advice, such as buying particular securities for clients. Charles Schwab & Co., Inc. Advisor Services provides AFS Wealth Management, LLC with access to Charles Schwab & Co., Inc. Advisor Services’ institutional trading and custody services, which Page 12  are typically not available to Charles Schwab & Co., Inc. Advisor Services retail investors. These services generally are available to independent investment advisers on an unsolicited basis, at no charge to them so long as a total of at least $10 million of the adviser’s clients’ assets are maintained in accounts at Charles Schwab & Co., Inc. Advisor Services. Charles Schwab & Co., Inc. Advisor Services includes brokerage services that are related to the execution of securities transactions, custody, research, including that in the form of advice, analyses and reports, and access to mutual funds and other investments that are otherwise generally available only to institutional investors or would require a significantly higher minimum initial investment. For AFS Wealth Management, LLC client accounts maintained in its custody, Charles Schwab & Co., Inc. Advisor Services generally does not charge separately for custody services but is compensated by account holders through commissions or other transaction-related or asset-based fees for securities trades that are executed through Charles Schwab & Co., Inc. Advisor Services or that settle into Charles Schwab & Co., Inc. Advisor Services accounts. Charles Schwab & Co., Inc. Advisor Services also makes available to AFS Wealth Management, LLC other products and services that benefit AFS Wealth Management, LLC but may not benefit its clients’ accounts. These benefits may include national, regional or AFS Wealth Management, LLC specific educational events organized and/or sponsored by Charles Schwab & Co., Inc. Advisor Services. Other potential benefits may include occasional business entertainment of personnel of AFS Wealth Management, LLC by Charles Schwab & Co., Inc. Advisor Services personnel, including meals, invitations to sporting events, including golf tournaments, and other forms of entertainment, some of which may accompany educational opportunities. Other of these products and services assist AFS Wealth Management, LLC in managing and administering clients’ accounts. These include software and other technology (and related technological training) that provide access to client account data (such as trade confirmations and account statements), facilitate trade execution (and allocation of aggregated trade orders for multiple client accounts, if applicable), provide research, pricing information and other market data, facilitate payment of AFS Wealth Management, LLC’s fees from its clients’ accounts (if applicable), and assist with back-office training and support functions, recordkeeping and client reporting. Many of these services generally may be used to service all or some substantial number of AFS Wealth Management, LLC’s accounts. Charles Schwab & Co., Inc. Advisor Services also makes available to AFS Wealth Management, LLC other services intended to help AFS Wealth Management, LLC manage and further develop its business enterprise. These services may include professional compliance, legal and business consulting, publications and conferences on practice management, information technology, business succession, regulatory compliance, employee benefits providers, and human capital consultants, insurance and marketing. In addition, Charles Schwab & Co., Inc. Advisor Services may make available, arrange and/or pay vendors for these types of services rendered to AFS Wealth Management, LLC by independent third parties. Charles Schwab & Co., Inc. Advisor Services may discount or waive fees it would otherwise charge for some of these services or pay all or a part of the fees of a third-party providing these services to AFS Wealth Management, LLC. AFS Wealth Management, LLC is independently owned and operated and not affiliated with Charles Schwab & Co., Inc. Advisor Services. B. Advisory Firm Payments for Client Referrals AFS does not pay for client referrals. Page 13  Item 15: Custody Clients will receive at least quarterly account statements directly from their custodian containing a description of all activity, cash balances and portfolio holdings in the client’s account. Any discrepancies should be brought to the firm’s attention. The custodian’s statement is the official record of the account. Please refer to the applicable investment manager’s disclosure brochure for detailed information on custody. Additionally, The SEC issued a no‐action letter (“Letter”) with respect to the Rule 206(4)‐2 (“Custody Rule”) under the Investment Advisers Act of 1940 (“Advisers Act”). The letter provided guidance on the Custody Rule as well as clarified that an adviser who has the power to disburse client funds to a third party under a standing letter of instruction (“SLOA”) is deemed to have custody. As such, our firm has adopted the following safeguards in conjunction with our custodian, Charles Schwab: • The client provides an instruction to the qualified custodian, in writing, that includes the client’s signature, the third party’s name, and either the third party’s address or the third party’s account number at a custodian to which the transfer should be directed. • The client authorizes the investment adviser, in writing, either on the qualified custodian’s form or separately, to direct transfers to the third party either on a specified schedule or from time to time. • The client’s qualified custodian performs appropriate verification of the instruction, such as a signature review or other method to verify the client’s authorization, and provides a transfer of funds notice to the client promptly after each transfer. • The client has the ability to terminate or change the instruction to the client’s qualified custodian. • The investment adviser has no authority or ability to designate or change the identity of the third party, the address, or any other information about the third party contained in the client’s instruction. • The investment adviser maintains records showing that the third party is not a related party of the investment adviser or located at the same address as the investment adviser. • The client’s qualified custodian sends the client, in writing, an initial notice confirming the instruction and an annual notice reconfirming the instruction. Item 16: Investment Discretion When AFS manages client portfolios it is done on a discretionary basis. AFS’s discretionary authority is obtained when a client signs an investment management agreement and also a limited power of attorney. The agreement and power of attorney allows AFS to buy and/or sell securities it has selected, within the tolerance agreed to by the client, and in the amounts the firm deems suited to the agreed upon portfolio structure. It allows AFS to place each such trade without the client’s prior approval. In all cases, however, such discretion is to be exercised in a manner consistent with the stated investment objectives for the client account, and any other investment policies, limitation or restrictions. Page 14  Item 17: Voting Client Securities AFS does not take discretion with respect to voting proxies on behalf of its clients. AFS will endeavor to make recommendations to clients on voting proxies regarding shareholder vote, consent, election or similar actions solicited by, or with respect to, issuers of securities beneficially held as part of AFS supervised and/or managed assets. In no event will AFS take discretion with respect to voting proxies on behalf of its clients. Except as required by applicable law, AFS will not be obligated to render advice or take any action on behalf of clients with respect to assets presently or formerly held in their accounts that become the subject of any legal proceedings, including bankruptcies. From time to time, securities held in the accounts of clients will be the subject of class action lawsuits. AFS has no obligation to determine if securities held by the client are subject to a pending or resolved class action lawsuit. AFS also has no duty to evaluate a client’s eligibility or to submit a claim to participate in the proceeds of a securities class action settlement or verdict. Furthermore, AFS has no obligation or responsibility to initiate litigation to recover damages on behalf of clients who may have been injured as a result of actions, misconduct, or negligence by corporate management of issuers whose securities are held by clients. Where AFS receives written or electronic notice of a class action lawsuit, settlement, or verdict affecting securities owned by a client, it will forward all notices, proof of claim forms, and other materials to the client. Electronic mail is acceptable where appropriate and where the client has authorized contact in this manner. Item 18: Financial Information A. Balance Sheet AFS does not require the prepayment of fees of $1,200 or more, six months or more in advance, and as such is not required to file a balance sheet B. Financial Conditions Reasonably Likely to Impair Advisory Firm’s Ability to Meet Commitments to Clients AFS does not have any financial issues that would impair its ability to provide services to clients. C. Bankruptcy Petitions During the Past Ten Years There is nothing to report on this item. Page 15