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ADV 2A DISCLOSURE BROCHURE 4.15.2026
Childress Capital Advisors, LLC (CRD 310277), brochure dated April 28, 2026. Text extracted from the firm's SEC Form ADV Part 2 brochure.
View firm on SEC ↗ · Current Form ADV (PDF) ↗
Form ADV
Disclosure Brochure
April 15, 2026
Office Location:
952 Echo Lane, Suite 365
Houston, TX 77024
(832) 404-2104
www.childressca.com
This Brochure provides information about the qualifications and business practices of Childress
Capital Advisors, LLC (“Childress Capital Advisors” or “the Firm”). If you have any questions about
the contents of this brochure, please contact us at the telephone number listed above. For
compliance specific requests, please call 971-371-3450. The information in this Brochure has not
been approved or verified by the United States Securities and Exchange Commission (“SEC”) or by
any state securities authority.
Additional information about the Firm is available on the SEC’s website at www.adviserinfo.sec.gov.
The Firm has filed to become an SEC registered investment adviser. Registration does not imply any
level of skill or training.
ITEM 2 - MATERIAL CHANGES
In this Item, Childress Capital Advisors, LLC (hereby known as “Childress Capital Advisors,” “CCA” or the “Firm”)
is required to discuss any material changes that have been made to the Brochure since the last annual
amendment. The business practices of the Firm are substantially the same as represented in the Firm’s
previous and current years’ annual updated Brochures.
Material changes since the last annual update of this brochure include:
The Firm intends to manage a private investment fund. The Firm and its personnel have an
incentive to recommend this fund. Please refer to Items 4 & 10 for further information.
We will ensure that all current clients receive a Summary of Material Changes and updated Brochure within
120 days of the close of our business’ fiscal year. A Summary of Material Changes is also included with our
Brochure on the SEC’s website at www.adviserinfo.sec.gov. The searchable IARD/CRD number for Childress
Capital Advisors is # 310277. We may further provide other ongoing disclosure information about material
changes as necessary and will further provide you with a new Brochure as necessary based on changes or
new information, at any time, without charge.
Currently, our Brochure may be requested by contacting Daniel Roberts, Chief Compliance Officer at (402)
990-2768 or droberts@pattentraining.com.
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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 ................................................................................................................... 5
ITEM 6 - PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT ...................................................... 7
ITEM 7 - TYPES OF CLIENTS .................................................................................................................................. 7
ITEM 8 - METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS ............................................. 7
ITEM 9 - DISCIPLINARY INFORMATION .............................................................................................................. 12
ITEM 10 - OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS ......................................................... 12
ITEM 11 - CODE OF ETHICS ................................................................................................................................... 13
ITEM 12 - BROKERAGE PRACTICES ..................................................................................................................... 14
ITEM 13 - REVIEW OF ACCOUNTS ...................................................................................................................... 16
ITEM 14 - CLIENT REFERRALS AND OTHER COMPENSATION ............................................................................ 17
ITEM 15 - CUSTODY ............................................................................................................................................ 18
ITEM 16 - INVESTMENT DISCRETION ...................................................................................................................... 19
ITEM 17 - VOTING CLIENT SECURITIES............................................................................................................... 19
ITEM 18 - FINANCIAL INFORMATION ...................................................................................................................... 20
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ITEM 4 - ADVISORY BUSINESS
Description of Advisory Firm
Childress Capital Advisors, LLC (“Childress Capital Advisors,” “we, ” “our,” or “us”) is a privately owned
limited liability company headquartered in Houston, TX.
Childress Capital Advisors is registered as an investment adviser with the U.S. Securities and Exchange
Commission. The Firm was formed in 2020 and is owned by Don Childress, II, CFA, CPA®.
While this brochure generally describes the business of the Firm, certain sections also discuss the activities
of its Supervised Persons, which refer to the Firm’s officers, partners, directors (or other persons
occupying a similar status or performing similar functions), employees, or any other person who provides
investment advice on the Firm’s behalf and is subject to the Firm’s supervision or control. The Firm does
not offer a wrap program.
Advisory Services Offered
The Firm offers discretionary investment management and investment advisory services as well as financial
planning and consulting. Prior to the Firm rendering any of the foregoing advisory services, clients are
required to enter into one or more written agreements with the Firm setting forth the relevant terms and
conditions of the advisory relationship (the “Advisory Agreement”).
Investment Management Services
Childress Capital Advisors offers continuous and regular investment supervisory services on a discretionary
basis as well as financial planning and consulting. We work with clients and have the ongoing responsibility
to select and/or make recommendations based upon the objectives of the client, as to specific securities
or other investments that he/she recommends or purchases/sells in clients’ accounts. We utilize a
variety of investment types when making investment recommendations/purchases in client accounts
which include, but are not limited to equity securities, fixed-income securities, alternatives, mutual funds,
and independent investment managers. The investments recommended/purchased are based on the
client’s individual needs, goals, and objectives. The Firm offers investment advice on any investment held
by the client at the start of the advisory relationship. We describe the material investment risks under
Item 8 – Methods of Analysis, Investment Strategies, and Risk of Loss. Financial Planning may be provided
to clients as a part of the Investment Management Services. When being provided as a separate service it
is described in this section under Financial Consulting Services below.
We discuss our discretionary authority below under Item 16 – Investment Discretion. For more
information about the restrictions clients can put on their accounts, see Tailored Services and Client
Imposed Restrictions in this item below. We describe the fees charged for investment management
services below under Item 5 – Fees and Compensation.
Financial Planning, Consulting, and Performance Reporting Fees
Childress Capital Advisors provides a variety of consulting services to individuals, families, and other
c lients regarding their financial resources based upon an analysis of the client’s current situation, goals,
and objectives. Consulting encompasses one or more of the following areas: additional Financial Planning,
Performance Reporting, Investment Planning, Retirement Planning, Education Planning, and Business and
Personal Financial Planning.
Services provided under an ongoing consultation agreement are conducted on a regular basis, but no
less than annually with the client. The client is under no obligation to act upon the investment adviser’s
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If the client elects to act on our recommendations, the client is under no obligation to
recommendation.
effect the transaction through us.
We describe fees charged for Consultation Services below under Item 5 - Fees and Compensation.
Use of Independent Managers and Sub-Advisors
The Firm may select certain Independent Managers and/or Sub-Advisors to actively manage a portion of
its clients’ assets. The specific terms and conditions under which a client engages an Independent
Manager and/or Sub-Advisor may be set forth in a separate written agreement with the designated
Independent Managers engaged to manage their assets.
The Firm evaluates a variety of information about Independent Managers and/or Sub-Advisors, which may
include the Independent Managers’ and/or Sub-Advisors’ public disclosure documents, materials supplied
by the Independent Managers themselves, and other third-party analyses it believes are reputable. To the
extent possible, the Firm seeks to assess the Independent Manager’s and/or Sub-Advisor’s investment
strategies, past performance, and risk results in relation to its clients’ individual portfolio allocations and
risk exposure. The Firm also takes into consideration each Independent Manager’s and/or Sub-Advisor’s
management style, returns, reputation, financial strength, reporting, pricing, and research capabilities,
among other factors.
The Firm continues to provide services relative to the discretionary selection of the Independent
Managers and/or Sub-Advisor. On an ongoing basis, the Firm monitors the performance of those accounts
being managed by Independent Managers. The Firm seeks to ensure the Independent Managers and/or
Sub-Advisor strategies and target allocations remain aligned with its client’s investment objectives and
overall best interests.
Private Fund Offering
The Firm intends to manage a private investment fund. This fund may be offered to advisory clients where
appropriate based on their investment objectives and eligibility requirements.
ITEM 5 - FEES AND COMPENSATION
Fee Schedule & Billing Method
Childress Capital Advisors offers services on a fee basis, which may include fixed fees, as well as fees based
upon assets under management or advisement
Investment Management Services
The annual management fee for our Investment Management Services, including Financial Planning, is
based on the total dollar asset value of the assets maintained in your account. The fee assessed and/or
charged is based on what is stipulated in the Investment Advisory Agreement signed by each client. This
may include a minimum quarterly fee. The Firm offers services on a fee basis, which may include fixed
fees, as well as fees based on assets under management or advisement.
Our annual fee ranges up to 1.0% annually and is assessed and/or charged quarterly in arrears, based on
the daily average balance value. Inflows and outflows of cash are considered on a prorated basis in this
calculation. Fees can be structured in one of the following ways: a fixed flat percentage fee on total assets
in the account, a tiered fee schedule whereby the fee is calculated by applying different rates to different
levels of assets, a fixed dollar amount, or a linear fee schedule where a breakpoint percentage fee is
assessed to total assets in the account .
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We discuss our discretionary authority below under Item 16 – Investment Discretion.
Financial Planning, Consulting, and Performance Reporting Fees
In addition to the advisory fees paid, the Adviser may provide financial planning, consulting, and
performance reporting services to the Client regarding the management of the Client’s financial
resources, which is based upon an analysis of the Client’s current personal and financial situations, goals,
and objectives. The fee assessed and/or charged is based on what is stipulated in the Investment Advisory
Agreement signed by each client. This may include a minimum quarterly fee. The Firm offers services on
a fee basis, which may include fixed fees, as well as fees based on assets under management or
advisement.
Private Fund Offering
Clients who invest in the private fund managed by the Firm may pay additional fees at the fund level,
including carried interest / incentive fee, or other additional expenses. This creates an incentive for the
Firm to recommend such an investment. Other Fees and Expenses
In addition to the advisory fees paid to Childress Capital Advisors, clients may incur certain charges imposed
by other third parties, such as broker-dealers, custodians, trust companies, platform service providers,
banks, and other financial institutions (collectively “Financial Institutions”). These additional charges may
include securities brokerage commissions, transaction fees, custodial fees, fees attributable to alternative
assets, reporting charges, margin costs, charges imposed directly by a mutual fund or ETF in a client’s
account, as disclosed in the fund’s prospectus (e.g., fund management fees and other fund expenses),
deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and
other fees and taxes on brokerage accounts and securities transactions. In addition, fees charged by the
Independent Managers/Sub-Advisors are charged to the clients separately. In most relationships with
third-party and/or Sub-Advisors, these fees would be in addition to the fees charged by CCA, paid directly
to the third-party and/or Sub-Advisor, and CCA will not receive any portion of those fees or share in those
fees. In certain relationships with third-party and/or Sub-Advisors, CCA may share in the standard
management fees paid directly to the third-party and/or Sub-Advisor however, this does not represent a
conflict as CCA will not share in any performance fees. The Firm’s brokerage practices are described at
length in Item 12, below.
Direct Fee Debit
Clients generally provide Childress Capital Advisors and/or the Independent Managers with the authority to
directly debit their accounts for payment of the investment advisory fees. The Financial Institutions that
act as the qualified custodian for client accounts, from which the Firm retains the authority to directly
deduct fees, have agreed to send statements to clients not less than quarterly detailing account
transactions, including any amounts paid to the Firm.
Account Additions and Withdrawals
As stated above, clients may make additions to and withdrawals from their account at any time, subject
to Childress Capital Advisors right to terminate an account. Additions may be in cash or securities provided
that the Firm reserves the’ right to liquidate any transferred securities or declines to accept particular
securities into a client’s account. Clients may withdraw account assets on notice to the Firm, subject to
the usual and customary securities settlement procedures. However, the Firm generally designs its
portfolios as long-term investments, and the withdrawal of assets may impair the achievement of a
client’s investment objectives. The Firm may consult with its clients about the options and implications of
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transferring securities. Clients are advised that when transferred securities are liquidated, they may be
subject to transaction fees, short-term redemption fees, fees assessed at the mutual fund level (e.g.,
contingent deferred sales charges), and/or tax ramifications.
Termination
Either party may terminate the advisory agreement at any time by providing written notice to the other
party. The client may terminate the agreement at any time by writing or phoning Childress Capital Advisors
at our office. Childress Capital Advisors will refund any prepaid, unearned advisory fees.
Terminations will not affect liabilities or obligations from transactions initiated in client accounts prior to
termination. In the event the client terminates the investment advisory agreement. The Firm will not
liquidate any securities in the account unless instructed by the client to do so. In the event of the Client’s
death or disability, the Firm will continue management of the account until we are notified of the Client’s
death or disability and given alternative instructions by an authorized party.
ITEM 6 - PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT
Childress Capital Advisors does not charge performance-based fees or other fees based on a share of
capital gains on or capital appreciation of the assets of a client. The Firm may manage a private fund. This
creates potential conflicts in allocating investment opportunities, which are addressed through the
Firm’s allocation policies.
ITEM 7 - TYPES OF CLIENTS
Childress Capital Advisors provides asset management, financial consulting, retirement planning and
consulting, investment advisory consultation, and selection of third-party money managers and/or Sub-
Advisor. Our services are provided on a discretionary basis to a variety of clients, such as institutional
investors, individuals, high-net-worth individuals, trusts and estates, qualified purchasers, and individual
participants of retirement plans. In addition, we may also provide advisory services to entities such as
pension and profit-sharing plans, businesses, and other investment advisers.
Account Requirements
The Firm does not impose a stated minimum fee or minimum portfolio value for starting and maintaining an
investment management relationship. Certain Independent Managers may, however, impose more
restrictive account requirements and billing practices from the Firm. In these instances, the Firm may alter its
corresponding account requirements and/or billing practices to accommodate those of the Managers.
ITEM 8 - METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF
LOSS
Methods of Analysis and Investment Strategies
We will typically use fundamental, cyclical, charting, and/or technical analysis in the selection of
individual securities. Childress Capital Advisors selects categories of investments based on the client's
attitudes about risk and their need for capital appreciation or income. Different instruments involve
different levels of risk exposure. We seek to select individual securities with characteristics that are most
consistent with the client’s objectives. Since Childress Capital Advisors treats each client account uniquely,
client portfolios with similar investment objectives and asset allocation goals may own different
securities.
General Investment Strategies
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Childress Capital Advisors generally uses diversification in an effort to minimize risk and optimize the
potential return of a portfolio. More specifically, we utilize multiple asset classes, investment styles, market
capitalizations, sectors, and regions to provide diversification. Each portfolio composition is determined in
accordance with the Client’s investment objectives, risk tolerance, and time horizon. We utilize both
passive and active investment management strategies in an effort to optimize portfolios.
Our general investment strategy is to seek real capital growth proportionate to the level of risk the client
is willing to take. Based on the client’s investment objectives, time horizon, risk tolerance, tax
considerations, target asset allocation, and any special considerations and/or restrictions the client
chooses to place on the management of the account. The Firm will then recommend investments that we
feel are consistent with the Client Profile.
After defining client needs, Childress Capital Advisors develops and implements plans for the client’s
account. Then, we monitor the results and make adjustments as needed. As the initial assumptions
change, the plans themselves may need to be adapted. Continuous portfolio management is important in
an effort to keep the client’s portfolio consistent with the client’s objectives.
Methods of Analysis for Selecting Securities
Childress Capital Advisors Investment Advisor Representatives (“IARs”) may use, among others, technical,
fundamental, and/or charting analysis in the selection of individual equity securities. Additionally, our IARs
may use specific strategies or resources in the method of analysis and selection of mutual funds.
Technical Analysis
The effectiveness of technical analysis depends upon the accurate forecasting of major price moves or
trends in the securities traded by the IAR. However, there is no assurance of accurate forecasts or that
trends will develop in the markets we follow. In the past, there have been periods without discernable
trends and similar periods will presumably occur in the future. Even where major trends develop, outside
factors like government intervention could potentially shorten them.
Furthermore, one limitation of technical analysis is that it requires price movement data, which can
translate into price trends sufficient to dictate a market entry or exit decision. In a trendless or erratic
market, a technical method may fail to identify trends requiring action. In addition, technical methods may
overreact to minor price movements, establishing positions contrary to overall price trends, which may
result in losses. Finally, a technical trading method may underperform other trading methods when
fundamental factors dominate price moves within a given market.
The calculations that underline our system, methods, and strategies involve many variables, including
determinants from information generated by computers and/or charts. The use of a computer in collating
information or in developing and operating a trading method does not assure the success of the method
because a computer is merely an aid in compiling and organizing trade information.
Accordingly, no assurance is given that the decisions based on computer-generated information will
produce profits for a client’s account.
Relative Strength Analysis
Relative strength measures one stock versus another or a group of stocks versus an index, such as the S&P
500. Through relative strength analysis, we can rank areas of the market that are outperforming or
underperforming the broad market, whether the Russell 3000 or S&P 500. For our purposes, we use the
S&P 500. We then add the highest relative strength sectors and macro areas (i.e. small cap vs. large cap)
to our investment model, using primarily ETFs. The general premise is that those areas of the market with
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the highest relative strength outperform over the long term. Additionally, as a risk override, we run a
moving average analysis to identify when markets are most vulnerable, and from time to time lighten
market exposure.
Fundamental Analysis
Fundamental analysis assesses the financial health and management effectiveness of a business by
analyzing a company’s financial reports, key financial ratios, industry developments, economic data,
competitive landscape, and management. The objective of fundamental analysis is to use historical and
current financial data to assess the stock valuation of a company, evaluate company profitability, credit
risk, and forecast future performance of the company and its share price. Fundamental analysis
assumptions and calculations are based on historical data and forecasts; therefore, the quality of
information and assumptions used are critical. Differences can exist between market fundamentals and
how you analyze them.
Charting Analysis
Charting analysis involves the use of patterns in performance charts. Our IARs use this charting technique
to search for patterns in an effort to predict favorable conditions for buying and/or selling a security.
Mutual Funds
In analyzing mutual funds, our IARs use various sources of information. We review key characteristics such
as historical performance, consistency of returns, risk level, and size of fund. Expense ratio and other costs
are also significant factors in fund selection. We also subscribe to/access additional information from
other sources that inform our general macroeconomic view.
Options
IARs may use options as an investment strategy. An option is a contract that gives the buyer the right,
but not the obligation, to buy or sell an asset (such as a share of stock) at a specific price on or before a
certain date. An option, just like a stock or bond, is a security. An option is also a derivative because it
derives its value from an underlying asset. The two types of options are calls and puts. A call gives the
holder the right to buy an asset at a certain price within a specific period. A call may be purchased
if the expectation is that the stock will increase substantially in value before the option expires. It may
also be sold as a hedge to protect gains or principal of an existing holding (covered calls). A put gives the
holder the right to sell an asset at a certain price within a specific period. A put may be purchased if the
expectation is that the stock will decrease substantially in value before the option expires. They are
typically purchased as a hedge to protect gains or principal of a portfolio. There are various options
strategies that our IARs may deploy in a strategy, as appropriate for a client’s needs. These include but
may not be limited to covered options (selling a call or put for a premium payment while retaining the
cash or securities required to facilitate the underlying purchase or sale of securities if an option is
exercised) or spreads/straddles (buying or selling call or put options on the same or opposite side of the
market to benefit from the bid/ask “spread” or to straddle the market based on value or time variances).
Alternative Investments
IARs may use Alternative Investments as a way to diversify a portfolio. Alternative Investments are
considered to be “non-correlated” assets, meaning that they do not tend to run up or down (track) with
the market like standard securities typically do. The main goal of alternatives is to provide access to other
return sources, with the potential benefit of reducing the risk of a client’s portfolio, improving returns, or
both.
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Specific Investment Strategies for Managing Portfolios
IARs may use Modern Portfolio Theory tactical asset allocation, cash as a strategic asset, long-term
holding, trend, dollar-cost-averaging, and defensive portfolio strategies in the construction and
management of client portfolios. There is no guarantee that any of the following strategies will be
successful , and we make no promises or warranties as to the accuracy of our market analysis.
Modern Portfolio Theory (MPT)
IARs use the Modern Portfolio Theory, which has a basic concept of using diversification in an effort to
help minimize risk and optimize the potential return of a portfolio.
Tactical Asset Allocation
IARs may use a tactical asset allocation strategy in the shorter term to deviate from a client’s long-term
strategic asset allocation target in an effort to take advantage of what we perceive as market pricing
anomalies or strong market sectors or to avoid perceived weak sectors. Once they achieve the desired
short-term opportunities or perceive those opportunities have passed, we generally return a client’s
portfolio to the original strategic asset mix.
Cash as a Strategic Asset
IARs may use cash as a strategic asset and at times move or keep the client’s assets in cash or cash
equivalents. While high cash levels can help protect a client’s assets during periods of market decline, there
is a risk that our timing in moving to cash is less than optimal upon either exit or reentry into the market,
potentially resulting in missed opportunities during positive market moves.
Long-term Holding
IARs do not generally purchase securities for clients with the intent to sell the securities within 30 days of
purchase, as we do not generally use short-term trading as an investment strategy. However, there may be
times when we will sell a security for a client when the client has held the position for less than 30 days.
IARs do not attempt to time short-term market swings. Short-term buying and selling of securities are
typically limited to those cases where a purchase has resulted in an unanticipated gain or loss in which we
believe that a subsequent sale is in the best interest of the client.
Trend
IARs may manage client assets using a trend-following methodology based on the 200-day average and
grounded in a strong sell discipline for all positions within the portfolio.
Dollar-Cost-Averaging
Dollar-cost averaging involves investing money in multiple installments over time to take advantage of
price fluctuations in an attempt to get a lower average cost per share.
Defensive Strategies
If our IAR anticipates poor near-term prospects for equity markets, we may adopt a defensive strategy
for clients’ accounts by investing substantially in fixed-income securities and/or money market
instruments. We may also utilize low, non, or negatively correlated investments through mutual funds and
EFT’s. There can be no guarantee that the use of defensive techniques will be successful in avoiding losses.
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Margin
Some clients of Childress Capital Advisors maintain margin accounts to facilitate short-term borrowing
needs, which are unrelated to our investment strategy (ies). For some high-net-worth (HNW) clients that
are seeking a more aggressive strategy for their portfolio, our IARs may work with those clients on an
individual basis to develop a leveraged strategy utilizing margin to increase market participation portfolio
as part of a customized investment strategy. Clients are responsible for any brokerage or margin charges
in addition to advisory fees. Risks of using margin include “margin calls” (also called "fed calls" or
"maintenance calls.") Margin calls occur when account values decrease below minimum maintenance
margin levels established by the broker-dealer that holds the securities in the client’s account, requiring
the investor to deposit additional money or securities into their margin account.
While the use of margin borrowing can increase returns, it can also magnify losses. Clients must specifically
request to establish a margin account.
Additional Strategies
Clients interested in learning more about any of the above strategies should contact us for more
information and/or refer to the prospectus of any mutual fund. We may also consider additional strategies
by specific client request.
Investing Involves Risk
General Risks of Owning Securities
Investing in securities involves risk of loss that clients should be prepared to bear. While the stock market
may increase and your account(s) could enjoy a gain, it is also possible that the stock market may
decrease, and your account(s) could suffer a loss. It is important that you understand the risks associated
with investing in the stock market, are appropriately diversified in your investments, and ask us any
questions you may have.
Risk of Loss
Diversification does not guarantee a profit or guarantee to protect you against loss, and there is no
guarantee that your investment objectives will be achieved. The Firm strategies and recommendations
may lose value. All investments have certain risks involved including, but not limited to the following:
Stock Market Risk: The value of securities in the portfolio will fluctuate and, as a result, the value
may decline suddenly or over a sustained period of time.
Managed Portfolio Risk: The manager’s investment strategies or choice of specific securities may
be unsuccessful and may cause the portfolio to incur losses.
Industry Risk: The portfolio’s investments could be concentrated within one industry or group of
industries. Any factors detrimental to the performance of such industries will disproportionately
impact your portfolio. Investments focused on a particular industry are subject to greater risk
and are more greatly impacted by market volatility than less concentrated investments.
Non-U.S. Securities Risk: Non-U.S. securities are subject to the risks of foreign currency
fluctuations, generally higher volatility, lower liquidity than U.S. securities, less developed
securities markets and economic systems, and political-economic instability.
Emerging Markets Risk: To the extent that your portfolio invests in issuers located in emerging
markets, the risk may be heightened by political changes and changes in taxation or currency
controls that could adversely affect the values of these investments. Emerging markets have been
more volatile than the markets of developed countries with more mature economies.
Currency Risk: The value of your portfolio’s investments may fall as a result of changes in exchange
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rates.
Credit Risk: Most fixed-income instruments are dependent on the underlying credit of the issuer.
If we are wrong about the underlying financial strength of an issuer, we may purchase securities
where the issuer is unable to meet its obligations. If this happens, your portfolio could sustain
an unrealized or realized loss.
Inflation Risk: Most fixed-income instruments will sustain losses if inflation increases, or the
market anticipates increases in inflation. If we enter a period of moderate or heavy inflation,
the value of your fixed-income securities could go down.
Interest Rate Risk: Fluctuations in interest rates may cause investment prices to fluctuate.
Margin Risk: The use of margin is not suitable for all investors since it increases leverage in your
Account and therefore risk.
ETF and Mutual Fund Risk: When we invest in an ETF or mutual fund fora client, the client will
bear additional expenses based on its pro rata share of the ETFs or mutual fund’s operation
expenses, including the potential duplication of management fees. The risk of owning an ETF or
mutual fund greatly reflects the risks of owning the underlying securities the ETF or mutual fund
holds. Clients may also incur brokerage costs when purchasing ETFs.
Independent Manager Risk: As stated above, the Firm may select certain Independent Managers
to manage a portion of its clients’ assets. In these situations, the Firm continues to conduct
ongoing due diligence of such managers, but such recommendations rely to a great extent on the
Independent Mangers’ ability to successfully implement their investment strategies. In addition,
the Firm generally may not have the ability to supervise the Independent Mangers on a day-to-
day basis.
Derivative Risk: Derivatives are securities, such as futures contracts or options, whose value is
derived from that of other securities or indices. Derivatives can be used for hedging (attempting
to reduce risk by offsetting one investment position with another) or non-hedging purposes.
Hedging with derivatives may increase expenses, and there is no guarantee that a hedging strategy
will achieve the desired results. Utilizing derivatives can cause greater than ordinary investment
risk, which could result in losses.
Alternative Investment Risk: Alternative Investments involve a high degree of risk, often engage
in leveraging and other speculative investment practices that may increase the risk of investment
loss, can be highly illiquid, are not always required to provide periodic pricing or valuation
information to
investors, may involve complex tax structures and delays in distributing important
tax information, are not subject to the same regulatory requirements as mutual funds, often
charge high fees which may offset any trading profits, and in many cases the underlying
investments are not transparent and are known only to the investment manager. Alternative
investment performance can be volatile. An investor could lose all or a substantial amount of his
or her investment.
Management Risk: Your investment with us varies with the success and failure of our investment
investment
strategies, research, analysis, and determination of portfolio securities. If our
strategies do not produce the expected returns, the value of the investment may decrease.
ITEM 9 - DISCIPLINARY INFORMATION
Childress Capital Advisors and our personnel seek to maintain the highest level of business professionalism,
integrity, and ethics. We are required to disclose the facts of any legal or disciplinary events that are
material to a client’s evaluation of our business or the integrity of our management. We do not have any
required disclosures to this Item.
ITEM 10 - OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS
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Childress Capital Advisors is required to disclose any relationship or arrangement that is material to its
advisory business or its clients with certain related persons.
Licensed Insurance Agents
Certain of the Firm’s Supervised Persons are licensed insurance agents and may offer certain insurance
products on a fully disclosed commissionable basis. A conflict of interest exists to the extent that the
Firm recommends the purchase of insurance products where its Supervised Persons may be entitled
to insurance commissions or other additional compensation. The Firm seeks to ensure that all
recommendations are made in its clients’ best interest regardless of any such affiliations.
Retirement Plan Accounts
The Firm may from time to time recommend the rollover to an IRA from an employer-sponsored
retirement plan. This product will be recommended when it is deemed by the Firm to be in the best
interest of the client. It is understood that the Investment Advisor Representative will receive a
management fee paid by me as indicated by the client agreement that will be signed when the account is
opened.
When we provide investment advice to you regarding your retirement plan account or individual
retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement Income
Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement
accounts. The way we make money creates some conflicts with your interests, so we operate under a
special rule that requires us to act in your best interest and not put our interest ahead of yours.
Under this special rule’s provisions, we must:
Meet a professional standard of care when making investment recommendations (give prudent
advice).
Never put our financial interests ahead of yours when making recommendations (give loyal
advice).
Avoid misleading statements about conflicts of interest, fees, and investments.
Follow policies and procedures designed to ensure that we give advice that is in your best interest.
Charge no more than is reasonable for our services.
Give you basic information about conflicts of interest.
When recommending the rollover to an IRA from an employer sponsored retirement plan, you will be
provided with disclosure on the reasons why the transaction is in your best interested, it will be required
to be signed by both you and the advisor and will be maintained in your file.
Affiliated RIA Private Fund
The Firm has an incentive to recommend the proprietary private fund because it may receive additional
compensation or economic benefits.
ITEM 11 - CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT
TRANSACTIONS AND PERSONAL TRADING
Code of Ethics
Childress Capital Advisors believes that we owe clients the highest level of trust and fair dealing. As part of
our fiduciary duty, we place the interests of our clients ahead of the interests of the firm and our
personnel. We have adopted a Code of Ethics that emphasizes the high standards of conduct that Childress
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Capital Advisors seeks to observe. Our personnel are required to conduct themselves with integrity at all
times and follow the principles and policies detailed in our Code of Ethics.
Childress Capital Advisors’ Code of Ethics attempts to address specific conflicts of interest that either we
have identified or that could likely arise. Childress Capital Advisors’ personnel are required to follow clear
guidelines from the Code of Ethics in areas such as gifts and entertainment, other business activities,
prohibitions of
insider trading, and adherence to applicable federal securities laws. Additionally,
individuals who formulate investment advice for clients, or who have access to nonpublic information
regarding any clients’ purchase or sale of securities, are subject to personal trading policies governed by
the Code of Ethics (see below).
Childress Capital Advisors will provide a complete copy of the Code of Ethics to any client or prospective
client upon request.
Personal Trading Practices
Childress Capital Advisors and our personnel may purchase or sell securities for themselves, regardless
of whether the transaction would be appropriate for a client’s account. Childress Capital Advisors and our
personnel may purchase or sell securities for themselves that we also recommend/utilize for clients. This
includes related securities (e.g., warrants, options, or other derivatives). This presents a potential
conflict of interest, as we have an incentive to take investment opportunities from clients for our own
benefit,
favor our personal trades over client transactions when allocating trades, or use the
information about the transactions we intend to make for clients to our personal benefit by trading ahead
of clients.
Our policies to address these conflicts include the following:
1. The client receives the opportunity to act on investment decisions/recommendations prior to
and in preference to accounts of your investment advisor representative (“IAR”).
2. The Firm prohibits trading in a manner that takes personal advantage of price movements caused
3.
by client transactions.
If your IAR wishes to purchase or sell the same security as he/she recommends or takes action to
purchase or sell fora client, he/she will not do so until the custodian fills the client’s order if the
order cannot be aggregated with the client order. As a result of this policy, it
is possible that
clients may receive a better or worse price than IAR for transactions in the same security on the
same day as a client.
4. The Firm requires our IARs to report personal securities transactions on at least a quarterly basis.
5. Conflicts of interest also may arise when Firm IARs become aware of limited offerings or IPOs,
including private placements or offerings of interests in limited partnerships or any thinly traded
securities, whether public or private. Given the inherent potential for conflict, limited offerings
and IPOs demand extreme care. IARs are required to obtain pre-approval from the Chief
Compliance Officer before trading in limited offerings and are prohibited from transacting in IPOs
for personal accounts.
6. Under certain limited circumstances, we make exceptions to the policies stated above. The Firm
will maintain records of these trades, including the reasons for any exceptions.
ITEM 12 - BROKERAGE PRACTICES
Childress Capital Advisors requires accounts that are not managed by third-party investment managers
and/or Sub-Advisor to be established with Fidelity Investments, member FINRA/SIPC. Childress Capital
Advisors engages the custodians to clear transactions and custody assets. The custodians provide The Firm
with services that assist us in managing and administering clients' accounts which include software and
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other technology that (i) provide access to client account data (such as trade confirmations and account
statements); (ii) facilitate trade execution and allocate aggregated trade orders for multiple client
accounts; (iii) provide research, pricing and other market data; (iv) facilitate payment of fees from its
clients' accounts; and (v) assist with certain back-office functions, recordkeeping and client reporting.
As part of the arrangement described above, the custodians also make certain research and brokerage
services available at no additional cost to our firm. These services include certain research and brokerage
services, including research services obtained by the custodians directly from independent research
companies, as selected by our Firm (within specific parameters). Research products and services provided
by the custodians to our firm may include research reports on recommendations or other information
about, particular companies or industries; economic surveys, data and analyses; financial publications;
portfolio evaluation services; financial database software services; computerized news and pricing services;
quotation equipment for use in running software used in investment decision-making; and other products
or services that provide lawful and appropriate assistance by the custodians to our firm in the
investment decision-making responsibilities. The aforementioned research and
performance of our
brokerage services are used by our firm to manage accounts. Without this arrangement, our firm might
be compelled to purchase the same or similar services at our own expense.
As a result of receiving the services discussed above, we have an incentive to continue to use or expand
the use of the custodians’ services. Our firm examined this conflict of interest when we chose to enter into
the relationship with the custodians and we have determined that the relationship is in the best interest of
our firm’s clients and satisfies our client obligations, including our duty to seek best execution.
The custodians charge brokerage commissions and transaction fees for effecting certain securities
transactions (i.e., transaction fees are charged for certain no-load mutual funds, and commissions are
charged for individual equity and debt securities transactions).
The custodians generally do not charge clients separately for custody services but are compensated by
account holders through commissions and other transaction-related or asset-based fees for securities
trades that are executed through the custodians or that settle into accounts at the custodians. The
custodians charge brokerage commissions and transaction fees for effecting certain securities
transactions (i.e., transaction fees are charged for certain no-load mutual funds, commissions are charged
for individual equity and debt securities transactions). The custodians enable us to obtain many no-load
mutual funds without transaction charges and other no-load funds at nominal transaction charges. The
custodians’ commission rates are generally discounted from customary retail commission rates. However,
the commission and transaction fees charged by the custodians may be higher or lower than those
charged by other custodians and broker-dealers.
We may aggregate (combine) trades for ourselves or our associated persons with your trades, providing
that the following conditions are met:
1. Our policy for the aggregation of transactions shall be fully disclosed separately to our existing
clients (if any) and the broker-dealer(s) through which such transactions will be placed.
2. We will not aggregate transactions unless we believe that aggregation is consistent with our duty
to seek the best execution (which includes the duty to seek best price) for you and is consistent
with the terms of our investment advisory agreement with you for which trades are being
aggregated.
3. No advisory client will be favored over any other client; each client that participates in an
aggregated order will participate at the average share price for all our transactions in a given
security on a given business day, with transaction costs based on each client’s participation in the
transaction.
4. We will prepare a procedure specifying how to allocate the order among those clients.
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5.
If the aggregated order is filled in its entirety, it will be allocated among clients in accordance
with the allocation statement; if the order is partially filled, it will be allocated pro -rata based on
the allocation statement.
6. Our books and records will separately reflect, for each client account, the orders of which
aggregated, the securities held by, and bought for that account.
7. We will receive no additional compensation or remuneration of any kind as a result of the
proposed aggregation.
Individual advice and treatment will be accorded to each advisory client.
8.
As a matter of policy and practice, we do not utilize research, research-related products and other
services obtained from broker-dealers, or third parties, on a soft dollar commission basis other than
what is described above.
Factors Considered in Recommending Custodians
We consider several factors in recommending custodians to a client. Factors that we consider when
recommending custodians may include financial strength, reputation, execution, pricing, reporting,
research, and service. We will also take into consideration the availability of the products and services
received or offered (detailed above) by the custodians.
Directed Brokerage Transactions
Childress Capital Advisors does not allow clients to direct brokerage to a specific broker-dealer. For an
individual third-party money manager’s and/or Sub-Advisor’s policy on directed brokerage transactions,
you must refer to Item 12 – Brokerage Practices of that managers form ADV 2A brochure.
Special Considerations for ERISA Clients
A retirement or ERISA plan client may direct all or part of portfolio transactions for its account through a
specific broker or dealer in order to obtain goods or services on behalf of the plan. Such direction is
permitted provided that the goods and services provided are reasonable expenses of the plan incurred
in the ordinary course of its business for which it otherwise would be obligated and empowered to pay.
ERISA prohibits directed brokerage arrangements when the goods or services purchased are not for the
exclusive benefit of the plan. Consequently, we will request that plan sponsors who direct plan brokerage
provide us with a letter documenting that this arrangement will be for the exclusive benefit of the plan.
Trade Errors
We have implemented procedures designed to prevent trade errors; however, trade errors in client
accounts cannot always be avoided. Consistent with our fiduciary duty, it is our policy to correct trade
errors in a manner that is in the best interest of the client. In cases where the client causes the trade
error, the client will be responsible for any loss resulting from the correction. Depending on the specific
circumstances of the trade error, the client may not be able to receive any gains generated as a result of
the error correction. In all situations where the client does not cause the trade error, the client will be
made whole, and we will absorb any loss resulting from the trade error if the error was caused by the
Firm. If the error is caused by the Custodian, the Custodian will be responsible for covering all trade
error costs. If an investment gain results from the correcting trade, the gain will be donated to charity. We
will never benefit or profit from trade errors.
ITEM 13 - REVIEW OF ACCOUNTS
Account Reviews & Reporting
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Managed Accounts Reviews
Childress Capital Advisors manages portfolios on a continuous basis and generally reviews all positions in
client accounts on a regular basis, but no less than annually. We generally offer account reviews to clients
annually. Clients may choose to receive reviews in person, by telephone, or via e-mail. Firm IARs conduct
reviews based on a variety of factors. These factors include, but are not limited to, stated investment
objectives, economic environment, outlook for the securities markets, and the merits of the securities in
the accounts.
In addition, we may conduct a special review of an account based on, but not limited to, the following:
1. A change in the client’s investment objectives, guidelines, and/or financial situation.
2. Changes in diversification.
3. Tax considerations.
4. Material cash deposits or withdrawals.
Third Party and/or Sub-Advisor Accounts
Investment Adviser Representatives periodically review third-party money managers and/or Sub-Advisor’s
reports provided to the client, but no less often than on a semi-annual basis. Our Investment Adviser
Representatives contact clients from time to time, as agreed to with the client, in order to review their
financial situation and objectives; communicate information to third-party money managers and/or Sub-
Advisors as warranted; and assist the client in understanding and evaluating the services provided by the
third-party money manager and/or Sub-Advisor. The client is expected to notify us of any changes in
his/her financial situation, investment objectives, or account restrictions that could affect their account.
The client may also directly contact the third-party money manager and/or Sub-Advisor managing the
account or sponsoring the program. Clients who utilize third-party money managers and/or Sub-Advisors
should review the third-party money managers and/or Sub-Advisor’s Form ADV Part 2 Item 13 – Review of
Accounts regarding account reviews, types of written reports provided, and frequency of such reports.
Consulting Service
Consultation clients do not receive reviews of their written plans unless they take action to schedule a
financial consultation with us separately contract with us for a post-financial plan meeting or update their
initial written financial plan. The type of reporting is agreed upon by Childress Capital Advisors and the client
on a case-by-case basis. We do not provide ongoing services to financial consultation clients but are willing
to meet with such clients upon their request to discuss updates to their plans or changes in their
circumstances. The Client’s IAR provides financial consultation services to the client. In cases when we
have been contracted to conduct ongoing financial consultation services, the Investment Adviser
Representatives will conduct reviews as agreed upon with the client.
ITEM 14 - CLIENT REFERRALS AND OTHER COMPENSATION
Brokerage Support Products and Services
We receive an economic benefit from the brokers used for transactions in client accounts in the form of
the support products and services they make available to us and other independent firms whose clients
maintain their accounts at the broker. These products and services, how they benefit us, and the related
conflicts of interest are described above (see Item 12 – Brokerage Practices). We do not base particular
investment advice, such as buying particular securities for our clients, on the availability of the brokers’
products and services to us.
Outside Compensation
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Childress Capital Advisors does not pay referral fees (non-commission-based) to independent solicitors for
the referral of their clients to our firm.
Firm IARs may refer clients to unaffiliated professionals for specific needs, such as mortgage brokerage,
real estate sales, estate planning, legal, and/or tax/accounting. In turn, these professionals may refer
clients to our IARs for investment management needs. We do not have any arrangements with individuals
or companies that we refer clients to, and we do not receive any compensation for these referrals.
However, it could be concluded that our IARs are receiving an indirect economic benefit from this practice,
as the relationships are mutually beneficial. For example, there could be an incentive for us to
recommend services of firms who refer clients to the Firm.
Our IARs only refer clients to professionals we believe are competent and qualified in their field, but it is
ultimately the client’s responsibility to evaluate the provider, and it is solely the client’s decision whether
to engage a recommended firm. Clients are under no obligation to purchase any products or services
through these professionals, and our IARs have no control over the services provided by another firm.
Clients who choose to engage these professionals will sign a separate agreement with the other firm. Fees
charged by the other firm are separate from and in addition to fees charged by the Firm.
If the client desires, our IARs will work with these professionals or the client’s other advisers (such as an
accountant, attorney, or other investment adviser) to help ensure that the provider understands the
client’s investments and coordinates services for the client. We do not share information with an
unaffiliated professional unless first authorized by the client.
Third Party Money Manager and/or Sub-Advisor
Our IARs may work with third-party money managers or Sub-Advisors to service client accounts. They may
receive ongoing compensation in relation to these arrangements, of which details are fully disclosed to the
clients at the time of account opening. See also Item 5 - Third Party Accounts and/or Sub-Advisor and
Item 10 – Third Party Managers and/or Sub-Advisor. Other Financial Institutions
Childress Capital Advisors has established agreements to provide consulting services to other financial
institutions regarding business development or investment advisory se rvices provided to clients. If the
consultation being provided is specific to services provided to the client account, the specifics of this
arrangement, including the compensation paid to the Firm will be fully disclosed to clients in their signed
agreements.
ITEM 15 - CUSTODY
Childress Capital Advisors and/or the Independent Managers have limited custody of some of our clients’
funds or securities when the clients authorize us to deduct our management fees directly from the
client’s account. A qualified custodian (generally a broker-dealer, bank, trust company, or other financial
institution) holds clients’ funds and securities. Clients will receive statements directly from their qualified
custodian at least quarterly. The statements will reflect the client’s funds and securities held with the
qualified custodian as well as any transactions that occurred in the account, including the deduction of our
fee.
Clients should carefully review the account statements they receive from the qualified custodian. When
clients receive statements from Childress Capital Advisors as well as from the qualified custodian, they
should compare these two reports carefully. Clients with any questions about their statements should
contact us at the address or phone number on the cover of this brochure. Clients who do not receive a
statement from their qualified custodian at least quarterly should also notify us.
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Third-Party Standing Letters of Authorization (“SLOA”)
Our firm is deemed to have custody of Client’s funds or securities when clients have standing
authorizations with their custodian to move money from a client’s account to a third party (“SLOA”) and,
under that SLOA, it authorizes us to designate the amount or timing of transfers with the custodian.
The SEC has set forth a set of standards intended to protect client assets in such situations, which we
follow.
By working with the qualified custodian, the Firm has in place seven provisions set forth by the SEC to assist
in mitigating risk. The below must be followed for clients with third-party SLOAs:
1.
2.
3.
4.
5.
6.
7.
The client provides an instruction to the qualified custodian, in writing, which 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 Firm, 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 can terminate or change the instruction to the client’s qualified custodian.
The Firm 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 Firm maintains records showing that the third party is not a related party of the Firm or
located at the same address as the Firm.
The client’s qualified custodian sends the client, in writing, an initial notice confirming the
instruction and an annual notice reconfirming the instruction.
As stated earlier in this section, account statements reflecting all activity on the account(s), are delivered
directly from the qualified custodian to each client or the client’s independent representative, at least
quarterly. You should carefully review those statements and are urged to compare the statements against
reports received from us. When you have questions about your account statements, you should contact us,
your Advisor, or the qualified custodian preparing the statement.
ITEM 16 - INVESTMENT DISCRETION
Childress Capital Advisors accepts discretionary authority over client accounts. If an IAR is acting in a
discretionary capacity, the IAR may place trades within a client account without pre-approval from the
client.
When working with third-party managers and/or Sub-Advisors, we may recommend certain third-party
money managers and/or Sub-Advisors to clients and then it is up to the client to approve our
recommendations. The third-party investment adviser chosen by the client is responsible for all
investment decisions made in the client’s account(s). Generally, clients who utilize a third-party money
manager and/or Sub-Advisor will sign agreements directly with the third-party manager and/or Sub-
Advisor. It is important to note that we do not offer advice on any specific securities or other
investments in connection with this service. Clients can find more information about the discretionary
authority granted to third-party managers in Item 16 – Investment Discretion of each manager’s Form
ADV disclosure brochure.
ITEM 17 - VOTING CLIENT SECURITIES
Voting of Proxies
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In regard to SEC Rule 206(4)-6 under the Advisers Act, the Advisor will not vote proxies relating to equity
securities in client accounts. You are responsible for: (1) directing the manner in which proxies solicited
by issuers of securities beneficially owned in your Account are voted and voting or causing such proxies
to be so voted and (2) making all elections relative to any mergers, acquisitions, tender offers, bankruptcy
proceedings or other similar type events pertaining to your Assets. Please contact us if you would like to
receive a copy of our Proxy Voting Policy.
Class Action Lawsuits
As a matter of company policy, Advisor does not file proofs of claim relating to class action lawsuits
affecting individual client accounts but outsources this service to Institutional Shareholder Services (“ISS”),
an unaffiliated third party, through their securities class action services (“SCAS”).
Mutual Funds
The investment adviser that manages the assets of a registered investment company (i.e., mutual fund)
generally votes proxies issued on securities held by the mutual fund.
ITEM 18 - FINANCIAL INFORMATION
Registered investment advisers are required in this item to provide clients with certain financial
information or disclosures about the firm’s financial condition. Childress Capital Advisors does not require
the prepayment of more than $1,200 in fees per client, six months or more in advance, does not have or
foresee any financial condition that is reasonably likely to impair our ability to meet contractual
commitments to clients and has not been the subject of a bankruptcy proceeding.
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