GRADIENT CAPITAL ADVISORS, LLC

Item 1: Cover Page Form ADV Part 2A Appendix 1 – Wrap Fee Program Brochure March 2025 Gradient Capital Wrap Program Sponsored By: 2125 Poinsettia Drive San Diego, CA 92107 www.gradientcapital.com Firm Contact: Timothy A. Sagawa Chief Compliance Officer This brochure provides information about the qualifications and business practices of Gradient Capital Advisors, LLC. If you have any questions about the contents of this brochure, please contact us by telephone at (619) 255-0700 or email tsagawa@gradientcapital.com. 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. Additional information about Gradient Capital Advisors, LLC also is available on the SEC’s website at www.adviserinfo.sec.gov by searching CRD #168912. Please note that the use of the term “registered investment adviser” and description of Gradient Capital Advisors, LLC and/or our associates as “registered” does not imply a certain level of skill or training. You are encouraged to review this Brochure and Brochure Supplements for our firm’s associates who advise you for more information on the qualifications of our firm and our employees.  Item 2: Material Changes Gradient Capital Advisors, LLC is required to advise you of any material changes to our Wrap Fee Program Brochure (“Wrap Brochure”) from our last annual update. Since the last annual amendment filed on 02/16/2024, our firm has the following material changes to disclose: Please note that William Cole Taylor has been added as an IAR in December 2024. If you would like more information on Mr. Taylor, including receiving his brochure supplement, please contact us by telephone at (619) 255-0700 or email tsagawa@gradientcapital.com. ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 2 Gradient Capital Advisors, LLC  Item 3: Table of Contents Section: Page(s): Item 1: Cover Page ...................................................................................................................... 1 Form ADV Part 2A Appendix 1 – Wrap Fee Program Brochure ................................................................ 1 Item 2: Material Changes .............................................................................................................. 2 Item 3: Table of Contents .............................................................................................................. 3 Item 4: Services, Fees & Compensation ............................................................................................. 4 Item 5: Account Requirements & Types of Clients ............................................................................... 6 Item 6: Portfolio Manager Selection & Evaluation ............................................................................... 7 Item 7: Client Information Provided to Portfolio Manager(s) ............................................................... 10 Item 8: Client Contact with Portfolio Manager(s) .............................................................................. 10 Item 9: Additional Information .................................................................................................... 10 ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 3 Gradient Capital Advisors, LLC  Item 4: Services, Fees & Compensation We offer wrap fee programs as described in this Wrap Fee Program Brochure. Our wrap fee accounts are managed on an individualized basis according to the client’s investment objectives, financial goals, risk tolerance, etc. A wrap fee program allows our clients to pay a specified fee for investment advisory services and the execution of transactions. The advisory services may include portfolio management, and the fee is not based directly upon transactions in your account. Your fee is bundled with our costs for executing transactions in your account(s). This results in a higher advisory fee to you. We do not charge our clients higher advisory fees based on their trading activity, but you should be aware that we may have an incentive to limit our trading activities in your account(s) because we are charged for executed trades. By participating in a wrap fee program, you may end up paying more or less than you would through a non-wrap fee program where a lower advisory fee is charged, but trade execution costs are passed directly through to you by the executing broker. Our recommended custodian, Charles Schwab & Co., Inc. (“Schwab”), does not charge transaction fees for U.S. listed equities and exchange traded funds. Since we pay the transaction fees charged by the custodian to clients participating in our wrap fee program, this presents a conflict of interest because we are incentivized to recommend equities and exchange traded funds over other types of securities in order to reduce our costs. Our Wrap Advisory Services Wrap Comprehensive Portfolio Management: Our comprehensive portfolio management service encompasses asset management as well as providing financial planning/financial consulting to clients. It is designed to assist clients in meeting their financial goals through the use of financial investments. We conduct at least one, but sometimes more than one meeting (in person if possible, otherwise via telephone conference) with clients in order to understand their current financial situation, existing resources, financial goals, and tolerance for risk. Based on what we learn, we propose an investment approach to the client. We may propose an investment portfolio, consisting of exchange traded funds, mutual funds, individual stocks or bonds, or other securities. Upon the client’s agreement to the proposed investment plan, we work with the client to establish or transfer investment accounts so that we can manage the client’s portfolio. Once the relevant accounts are under our management, we review such accounts on a regular basis and at least quarterly. We may periodically rebalance or adjust client accounts under our management. Adjustments will be made for deposits and withdrawals during the quarter. Our firm bills on cash unless otherwise noted in writing. If the client experiences any significant changes to his/her financial or personal circumstances, the client must notify us so that we can consider such information in managing the client’s investments. Our firm reimburses clients for charges relating to errors on deposits or withdrawals, stop payment orders, unexpected wire transfers and other nominal fees deducted from their accounts. Clients with alternative investments are billed an additional fee of $250 per year by Schwab; our firm reimburses client accounts for any fees deducted for holding alternative investments. ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 4 Gradient Capital Advisors, LLC  (Continued on Next Page) Fee Schedule: The maximum fee that may be charged for assets under management is 1.50%. The ultimate fee is based on the scope of the engagement and the complexity of the client’s circumstance. The asset management fees will be listed on Schedule A of the client agreement. Our firm’s fees are billed on a pro-rata annualized basis quarterly in arrears based on the time-weighted daily average value of your account during the previous quarter. Our fees are generally negotiable and will be deducted from client account(s). In rare cases, our firm will agree to directly invoice. As part of this process, you understand and acknowledge the following: a) b) c) The client’s independent custodian sends statements at least quarterly showing the market values for each security included in the Assets and all account disbursements, including the amount of the advisory fees paid to our firm; Clients will provide authorization permitting our firm to be directly paid by these terms. Our firm will send an invoice directly to the custodian; and If our firm sends a copy of our invoice to the client, legend urging the comparison of information provided in our statement with those from the qualified custodian will be included. Wrap Asset Management: As part of our Wrap Asset Management service, we conduct at least one, but sometimes more than one meeting (in person if possible, otherwise via telephone conference) with clients in order to understand their current financial situation, existing resources, financial goals, and tolerance for risk. Based on what we learn, we propose an investment approach to the client. We may propose an investment portfolio, consisting of exchange traded funds, mutual funds, individual stocks or bonds, or other securities. Upon the client’s agreement to the proposed investment plan, we work with the client to establish or transfer investment accounts so that we can manage the client’s portfolio. Once the relevant accounts are under our management, we review such accounts on a regular basis and at least quarterly. We may periodically rebalance or adjust client accounts under our management. Adjustments will be made for deposits and withdrawals during the quarter. Our firm bills on cash unless otherwise noted in writing. If the client experiences any significant changes to his/her financial or personal circumstances, the client must notify us so that we can consider such information in managing the client’s investments. Our firm reimburses clients for charges relating to errors on deposits or withdrawals, stop payment orders, unexpected wire transfers and other nominal fees deducted from their accounts. Clients with alternative investments are billed an additional fee of $250 per year by Schwab; our firm reimburses client accounts for any fees deducted for holding alternative investments. Fee Schedule The maximum fee that may be charged for assets under management is 1.40%. The ultimate fee is based on the scope of the engagement and the complexity of the client’s circumstance. The asset management fees will be listed on Schedule A of the client agreement. Our firm’s fees are billed on a pro-rata annualized basis quarterly in arrears based on the time-weighted daily average value of your account during the previous quarter. Our fees are generally negotiable and will be deducted from client account(s). In rare cases, our firm will agree to directly invoice. As part of this process, you understand and acknowledge the following: ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 5 Gradient Capital Advisors, LLC  a) b) c) The client’s independent custodian sends statements at least quarterly showing the market values for each security included in the Assets and all account disbursements, including the amount of the advisory fees paid to our firm; Clients will provide authorization permitting our firm to be directly paid by these terms. Our firm will send an invoice directly to the custodian; and If our firm sends a copy of our invoice to the client, legend urging the comparison of information provided in our statement with those from the qualified custodian will be included. Termination and Refunds: Either party may terminate the advisory agreement signed with our firm for Wrap Asset Management or Wrap Comprehensive Portfolio Management services in writing at any time. Upon notice of termination pro-rata advisory fees for services rendered to the point of termination will be charged. If advisory fees cannot be deducted, our firm will send an invoice for due advisory fees to the client. Other Types of Fees & Expenses: You may pay custodial fees, charges imposed directly by a mutual fund, index fund, or exchange traded fund which shall be disclosed in the fund’s prospectus (i.e., fund management fees and other fund expenses), mark-ups and mark-downs, spreads paid to market makers, wire transfer fees and other fees and taxes on brokerage accounts and securities transactions. These fees are not included within the wrap-fee you are charged by our firm. Wrap Fee Program Recommendations: We do not recommend or offer the wrap program services of other providers. Our investment advisory representatives receive a portion of the advisory fee that you pay us, either directly as a percentage of your overall fee or as their salary from our firm. In cases where our investment advisory representatives are paid a percentage of your overall advisory fee, this may create an incentive to recommend that you participate in a wrap fee program rather than a non-wrap fee program (where you would pay for trade execution costs) or brokerage account where commissions are charged. This is because, in some cases, we may stand to earn more compensation from advisory fees paid to us through a wrap fee program arrangement if your account is not actively traded. Item 5: Account Requirements & Types of Clients Our Comprehensive Portfolio Management service is only made available to family and friends. However, there are no requirements for opening and maintaining accounts or otherwise engaging us for any of our other services. While our firm does not have minimum or maximum account balance requirements for our Wrap Asset Management or Financial Planning & Consulting services, clients will generally not pay in excess of 1.5% of assets under management for combined services. If a client’s fee for combined services exceeds 1.5%, prior approval by the firm’s CCO is required. Types of clients we typically manage wrap fee accounts on behalf of, include: • • • Individuals and High Net-Worth Individuals; Trusts, Estates or Charitable Organizations; Pension & Profit Sharing Plans ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 6 Gradient Capital Advisors, LLC  • Corporations, Limited Liability Companies and/or Other Business Types. Item 6: Portfolio Manager Selection & Evaluation Selection of Portfolio Managers Our firm’s investment adviser representatives (“IAR”s) act as portfolio manager(s) for this wrap fee program. A conflict arises in that other investment advisory firms may charge the same or lower fees than our firm for similar services. Our IARs are subject to individual licensing requirements as imposed by state securities boards. Our firm is required to confirm or update each IAR’s Form U4 on an annual basis. IAR supervision is conducted by our Chief Compliance Officer or management personnel. Advisory Business: Information about our wrap fee services can be found in Item 4 of this brochure. We offer individualized investment advice to clients utilizing our Wrap Asset Management or Wrap Comprehensive Portfolio Management service. Each client has the opportunity to place reasonable restrictions on the types of investments to be held in the portfolio. Restrictions on investments in certain securities or types of securities may not be possible due to the level of difficulty this would entail in managing the account. Restrictions would be limited to our Wrap Asset Management or Wrap Comprehensive Portfolio Management services. Participation in Wrap Fee Programs: Our wrap fee and non-wrap fee accounts are managed on an individualized basis according to the client’s investment objectives, financial goals, risk tolerance, etc. We do not manage wrap fee accounts in a different fashion than non-wrap fee accounts. Performance-Based Fees & Side-By-Side Management: We do not charge performance fees to our clients. Methods of Analysis: We use the following methods of analysis in formulating our investment advice and/or managing client assets: Charting: In this type of technical analysis, we review charts of market and security activity in an attempt to identify when the market is moving up or down and to predict when how long the trend may last and when that trend might reverse. Cyclical Analysis: In this type of technical analysis, we measure the movements of a particular stock against the overall market in an attempt to predict the price movement of the security. Fundamental Analysis: We attempt to measure the intrinsic value of a security by looking at economic and financial factors (including the overall economy, industry conditions, and the financial condition and management of the company itself) to determine if the company is underpriced (indicating it may be a good time to buy) or overpriced (indicating it may be time to sell). Fundamental analysis does not ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 7 Gradient Capital Advisors, LLC  attempt to anticipate market movements. This presents a potential risk, as the price of a security can move up or down along with the overall market regardless of the economic and financial factors considered in evaluating the stock. Technical Analysis: We analyze past market movements and apply that analysis to the present in an attempt to recognize recurring patterns of investor behavior and potentially predict future price movement. Technical analysis does not consider the underlying financial condition of a company. This presents a risk in that a poorly-managed or financially unsound company may underperform regardless of market movement Investment Strategies We Use: We use the following strategies in managing client accounts, provided that such strategies are appropriate to the needs of the client and consistent with the client's investment objectives, risk tolerance, and time horizons, among other considerations: Long-Term Purchases: When utilizing this strategy, we may purchase securities with the idea of holding them for a relatively long time (typically held for at least a year). A risk in a long-term purchase strategy is that by holding the security for this length of time, we may not take advantages of short-term gains that could be profitable to a client. Moreover, if our predictions are incorrect, a security may decline sharply in value before we make the decision to sell. Typically, we employ this sub-strategy when we believe the securities to be undervalued; and/or we want exposure to a particular asset class over time, regardless of the current projection for this class. The potential risks associated with this investment strategy involve a lower than expected return, for many years in a row. Lower-than-expected returns that last for a long time and/or that are severe in nature would have the impact of dramatically lowering the ending value of your portfolio, and thus could significantly threaten your ability to meet financial goals. Short-Term Purchases: When utilizing this strategy, we may also purchase securities with the idea of selling them within a relatively short time (typically a year or less). We do this in an attempt to take advantage of conditions that we believe will soon result in a price swing in the securities we purchase. The potential risk associated with this investment strategy is associated with the currency or exchange rate. Currency or exchange rate risk is a form of risk that arises from the change in price of one currency against another. The constant fluctuations in the foreign currency in which an investment is denominated vis-à-vis one's home currency may add risk to the value of a security. Currency risk is greater for shorter term investments, which do not have time to level off like longer term foreign investments. Trading: We purchase securities with the idea of selling them very quickly (typically within 30 days or less). We do this in an attempt to take advantage of our predictions of brief price swings. Trading involves risk that may not be suitable for every investor, and may involve a high volume of trading activity. Each trade generates a commission and the total daily commission on such a high volume of trading can be considerable. Active trading accounts should be considered speculative in nature with the objective being to generate short-term profits. This activity may result in the loss of more than 100% of an investment. Short Sales: We borrow shares of a stock for your portfolio from someone who owns the stock on a promise to replace the shares on a future date at a certain price. Those borrowed shares are then sold. On the agreed-upon future date, we buy the same stock and return the shares to the original owner. We engage in short selling based on our determination that the stock will go down in price after we have ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 8 Gradient Capital Advisors, LLC  borrowed the shares. If we are correct and the stock price has gone down since the shares were purchased from the original owner, the client account realizes the profit. The two primary perceived risks of short selling are that the in the long term, markets trend upward and short selling can expose investors to potentially unlimited risk. Due to the “upside gap”, sellers risk not being able to react until after a significant loss has already been incurred. Margin Transactions: We will purchase stocks for your portfolio with money borrowed from your brokerage account. This allows you to purchase more stock than you would be able to with your available cash, and allows us to purchase stock without selling other holdings. Margin accounts and transactions are risky and not necessarily for every client. The potential risks associated with these transactions are (1) You can lose more funds than are deposited into the margin account; (2) the force sale of securities or other assets in your account; (3) the sale of securities or other assets without contacting you; and (4) you may not be entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call. Option Writing: We 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 us the right to buy an asset at a certain price within a specific period of time. We will buy a call if we have determined that the stock will increase substantially before the option expires. A put gives us the holder the right to sell an asset at a certain price within a specific period of time. We will buy a put if we have determined that the price of the stock will fall before the option expires. We will use options to "hedge" a purchase of the underlying security; in other words, we will use an option purchase to limit the potential upside and downside of a security we have purchased for your portfolio. We use "covered calls", in which we sell an option on security you own. In this strategy, you receive a fee for making the option available, and the person purchasing the option has the right to buy the security from you at an agreed-upon price. We use a "spreading strategy", in which we purchase two or more option contracts (for example, a call option that you buy and a call option that you sell) for the same underlying security. This effectively puts you on both sides of the market, but with the ability to vary price, time and other factors. The potential risks associated with these transactions are that (1) all options expire. The closer the option gets to expiration, the quicker the premium in the option deteriorates; and (2) Prices can move very quickly. Depending on factors such as time until expiration and the relationship of the stock price to the option’s strike price, small movements in a stock can translate into big movements in the underlying options. Risk of Loss: 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. Alternative Investments: the absence of a public market, lack of liquidity and an For clients who own alternative investments, expected investment time horizon may include risks that you should consider: • You may experience the risk that your investment or assets within your investment may not be able to be liquidated quickly, thus, extending the period of time by which you may receive ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 9 Gradient Capital Advisors, LLC  • • • the proceeds from your investment. Liquidity risk can also result in unfavorable pricing when exiting (i.e. not being able to quickly get out of an investment before the price drops significantly) a particular investment and therefore, can have a negative impact on investment returns. No guarantee that investors will receive a distribution. Distributions may be derived from the proceeds of the offering, from borrowings, or from the sale of assets, and we have no limits on the amounts we may pay from such other sources. Payments of distributions from sources other than cash flow from operations may decrease or diminish an investor's interest; Economic factors affecting the real estate markets generally, including changes in the economy, tenant turnover, interest rates, availability of mortgage funds, operating expenses, cost of insurance and tenants' ability to continue to pay rent; No connection between the share price of the REIT and the net asset value of the REIT until such time as the assets are valued. Voting Client Securities: We do not and will not accept the proxy authority to vote client securities. Clients will receive proxies or other solicitations directly from their custodian or a transfer agent. In the event that proxies are sent to our firm, we will forward them on to you and ask the party who sent them to mail them directly to you in the future. Clients may call, write or email us to discuss questions they may have about particular proxy votes or other solicitations. Item 7: Client Information Provided to Portfolio Manager(s) We are required to describe the information about you that we communicate to your portfolio manager(s), and how often or under what circumstances we provide updated information. Our firm communicates with your portfolio manager(s) on a regular basis as needed (daily, weekly, monthly, etc.) to ensure your most current investment goals and objectives are understood by your portfolio manager(s). In most cases, we will communicate such information as part of our regular investment management duties. Nevertheless, we will also communicate information to your portfolio manager(s) when you ask us to, when market or economic conditions make it prudent to do so, etc. Item 8: Client Contact with Portfolio Manager(s) Clients are always free to directly contact their portfolio manager(s) with any questions or concerns they have about their portfolios or other matters. Item 9: Additional Information Disciplinary Information We have determined that our firm and management have no disciplinary information to disclose. Financial Industry Activities & Affiliations Our firm and its supervised persons do not have any additional industry activities or affiliations to disclose. ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 10 Gradient Capital Advisors, LLC  (Continued on Next Page) Code of Ethics, Participation or Interest in Client Transactions & Personal Trading As a fiduciary, it is an investment adviser’s responsibility to provide fair and full disclosure of all material facts and to act solely in the best interest of each of our clients at all times. Our fiduciary duty is the underlying principle for our firm’s Code of Ethics, which includes procedures for personal securities transaction and insider trading. Our firm requires all representatives to conduct business with the highest level of ethical standards and to comply with all federal and state securities laws at all times. Upon employment with our firm, and at least annually thereafter, all representatives of our firm will acknowledge receipt, understanding and compliance with our firm’s Code of Ethics. Our firm and representatives must conduct business in an honest, ethical, and fair manner and avoid all circumstances that might negatively affect or appear to affect our duty of complete loyalty to all clients. This disclosure is provided to give all clients a summary of our Code of Ethics. If a client or a potential client wishes to review our Code of Ethics in its entirety, a copy will be provided promptly upon request. Our firm recognizes that the personal investment transactions of our representatives demands the application of a Code of Ethics with high standards and requires that all such transactions be carried out in a way that does not endanger the interest of any client. At the same time, our firm also believes that if investment goals are similar for clients and for our representatives, it is logical, and even desirable, that there be common ownership of some securities. 1 In order to prevent conflicts of interest, our firm has established procedures for transactions effected by . In order to monitor compliance with our personal trading our representatives for their personal accounts policy, our firm has pre-clearance requirements and a quarterly securities transaction reporting system for all of our representatives. Neither our firm nor a related person recommends, buys or sells for client accounts, securities in which our firm or a related person has a material financial interest without prior disclosure to the client. Related persons of our firm may buy or sell securities and other investments that are also recommended to clients. In order to minimize this conflict of interest, our related persons will place client interests ahead of their own interests and adhere to our firm’s Code of Ethics, a copy of which is available upon request. Likewise, related persons of our firm buy or sell securities for themselves at or about the same time they buy or sell the same securities for client accounts. In order to minimize this conflict of interest, our related persons will place client interests ahead of their own interests and adhere to our firm’s Code of Ethics, a copy of which is available upon request. Further, our related persons will refrain from buying or selling the same securities prior to buying or selling for our clients in the same day unless included in a block trade. Review of Accounts We review accounts on at least a quarterly basis for our clients subscribing to our Wrap Asset Management or Wrap Comprehensive Portfolio Management service. The nature of these reviews is to learn whether clients’ accounts are in line with their investment objectives, appropriately positioned 1 For purposes of the policy, our associate’s personal account generally includes any account (a) in the name of our associate, his/her spouse, his/her minor children or other dependents residing in the same household, (b) for which our associate is a trustee or executor, or (c) which our associate controls, including our client accounts which our associate controls and/or a member of his/her household has a direct or indirect beneficial interest in. ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 11 Gradient Capital Advisors, LLC  based on market conditions, and investment policies, if applicable. Only our Financial Advisors or Portfolio Managers will conduct reviews. We may review client accounts more frequently than described above. Among the factors which may trigger an off-cycle review are major market or economic events, the client’s life events, requests by the client, etc. We do not provide written reports to clients, unless asked to do so. Verbal reports to clients take place on at least an annual basis when we meet with clients who subscribe to our Wrap Asset Management or Wrap Comprehensive Portfolio Management service. Other Compensation (see Item 12 – Brokerage Practices) We receive an economic benefit from Schwab in the form of the support products and services it makes available to us and other independent investment advisors that have their clients maintain accounts at Schwab. These products and services, how they benefit us, and the related conflicts of interest are described in Form ADV Part 2A . 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 our clients. Client Referrals In accordance with Rule 206 (4)-1 of the Investment Advisers Act of 1940, our firm does not provide cash or non-cash compensation directly or indirectly to unaffiliated persons for testimonials or endorsements (which include client referrals). Financial Information We are not required to provide financial information in this Brochure because: • • • • Our firm does not require the prepayment of more than $1,200 in fees when services cannot be rendered within 6 months; We do not take custody of client funds or securities; We do not have a financial condition or commitment that impairs our ability to meet contractual and fiduciary obligations to clients; and We have never been the subject of a bankruptcy proceeding. ADV Part 2A, Appendix 1 – Wrap Fee Brochure Page 12 Gradient Capital Advisors, LLC 

Item 1: Cover Page Form ADV Part 2A: Firm Brochure March 2025 2125 Poinsettia Drive San Diego, CA 92107 www.gradientcapital.com Firm Contact: Timothy A. Sagawa Chief Compliance Officer This brochure provides information about the qualifications and business practices of Gradient Capital Advisors, LLC. If you have any questions about the contents of this brochure, please contact us by telephone at (619) 255-0700 or email tsagawa@gradientcapital.com. 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. Additional information about Gradient Capital Advisors, LLC also is available on the SEC’s website at www.adviserinfo.sec.gov by searching CRD #168912. Please note that the use of the term “registered investment adviser” and description of Gradient Capital Advisors, LLC and/or our associates as “registered” does not imply a certain level of skill or training. You are encouraged to review this Brochure and Brochure Supplements for our firm’s associates who advise you for more information on the qualifications of our firm and our employees.  Item 2: Material Changes Gradient Capital Advisors, LLC is required to advise you of any material changes to our Firm Brochure (“Brochure”) from our last annual update. Since the last annual amendment filed on 02/16/2024, our firm has the following material changes to disclose: Please note that William Cole Taylor has been added as an IAR in December 2024. If you would like more information on Mr. Taylor, including receiving his brochure supplement, please contact us by telephone at (619) 255-0700 or email tsagawa@gradientcapital.com. ADV Part 2A – Firm Brochure Page 2 Gradient Capital Advisors, LLC  Item 3: Table of Contents Section Page(s): 1 2 4 6 7 7 8 10 11 11 12 15 16 16 17 17 17 Item 1: Cover Page Item 2: Material Changes Item 4: Advisory Business Item 5: Fees & Compensation Item 6: Performance-Based Fees & Side-By-Side Management Item 7: Types of Clients & Account Requirements Item 8: Methods of Analysis, Investment Strategies & Risk of Loss Item 9: Disciplinary Information Item 10: Other Financial Industry Activities & Affiliations Item 11: Code of Ethics, Participation or Interest in Client Transactions & Personal Trading Item 12: Brokerage Practices Item 13: Review of Accounts or Financial Plans Item 14: Client Referrals & Other Compensation Item 15: Custody Item 16: Investment Discretion Item 17: Voting Client Securities Item 18: Financial Information ADV Part 2A – Firm Brochure Page 3 Gradient Capital Advisors, LLC  Item 4: Advisory Business We specialize in the following types of services: Comprehensive Portfolio Management and Financial Planning & Consulting. We are dedicated to providing individuals and other types of clients with a wide array of investment formed in the State of California. Our firm advisory services. Our firm is a limited liability company has been in business as an investment adviser since 2014 and is owned as follows: • • • Types of Advisory Services Offered Timothy A. Sagawa – 17.5% Owner Eric E. Simms – 26.2% Owner Rodney A. Simms – 56.3% Owner Comprehensive Portfolio Management: Our Comprehensive Portfolio Management service encompasses asset management as well as providing financial planning/financial consulting to clients. It is designed to assist clients in meeting their financial goals through the use of financial investments. We conduct at least one, but sometimes more than one meeting (in person if possible, otherwise via telephone conference) with clients in order to understand their current financial situation, existing resources, financial goals, and tolerance for risk. Based on what we learn, we propose an investment approach to the client. We may propose an investment portfolio, consisting of exchange traded funds (“ETFs”), mutual funds, individual stocks or bonds, or other securities including alternative investments. Upon the client’s agreement to the proposed investment plan, we work with the client to establish or transfer investment accounts so that we can manage the client’s portfolio. Once the relevant accounts are under our management, we review such accounts on a regular basis and at least quarterly. We may periodically rebalance or adjust client accounts under our management. If the client experiences any significant changes to his/her financial or personal circumstances, the client must notify us so that Financial Planning & Consulting: we can consider such information in managing the client’s investments. We provide a variety of financial planning and consulting services to individuals, families and other clients regarding the management of their financial resources based upon an analysis of the client’s current situation, goals, and objectives. Generally, such financial planning services will involve preparing a financial plan or rendering a financial consultation for clients based on the client’s financial goals and objectives. This planning or consulting may encompass one or more of the following areas: Investment Planning, Retirement Planning, Estate Planning, Charitable Planning, Education Planning, Corporate and Personal Tax Planning, Cost Segregation Study, Corporate Structure, Real Estate Analysis, Mortgage/Debt Analysis, Insurance Analysis, Lines of Credit Evaluation, Business and Personal Financial Planning. Our written financial plans or financial consultations rendered to clients usually include general recommendations for a course of activity or specific actions to be taken by the clients. For example, recommendations may be made that the clients begin or revise investment programs, create or revise wills or trusts, obtain or revise insurance coverage, commence or alter retirement savings, or establish education or charitable giving programs. It should also be noted that we refer clients to an accountant, attorney or other specialist, as necessary for non-advisory related services. For written financial planning engagements, we provide our clients with a written summary of their financial ADV Part 2A – Firm Brochure Page 4 Gradient Capital Advisors, LLC  situation, observations, and recommendations. For financial consulting engagements, we usually do not provide our clients with a written summary of our observations and recommendations as the process is less formal than our planning service. Plans or consultations are typically completed within six (6) months of the client signing a contract with us, assuming that all the information and documents we request from the client are provided to us promptly. Implementation of the Retirement Plan Consulting: recommendations will be at the discretion of the client. Our firm provides retirement plan consulting services to employer plan sponsors on an ongoing basis. Generally, such consulting services consist of assisting employer plan sponsors in establishing, monitoring and reviewing their company's participant-directed retirement plan. As the needs of the plan sponsor dictate, areas of advising may include: i. ii. iii. iv. v. Establishing an Investment Policy Statement – Our firm will assist in the development of a statement that summarizes the investment goals and objectives along with the broad strategies to be employed to meet the objectives. Investment Options – Our firm will work with the Plan Sponsor to evaluate existing investment options and make recommendations for appropriate changes. Asset Allocation and Portfolio Construction – Our firm will develop strategic asset allocation models to aid Participants in developing strategies to meet their investment objectives, time horizon, financial situation and tolerance for risk. Investment Monitoring – Our firm will monitor the performance of the investments and notify the client in the event of over/underperformance and in times of market volatility. Participant Education – Our firm will provide opportunities to educate plan participants about their retirement plan offerings, different investment options, and general guidance on allocation strategies. In providing services for retirement plan consulting, our firm does not provide any advisory services with respect to the following types of assets: employer securities, real estate (excluding real estate funds and publicly traded REITS), participant loans, non-publicly traded securities or assets, other illiquid investments, or brokerage window programs (collectively, “Excluded Assets”). All retirement plan consulting services shall be in compliance with the applicable state laws regulating retirement consulting services. This applies to client accounts that are retirement or other employee benefit plans (“Plan”) governed by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). If the client accounts are part of a Plan, and our firm accepts appointment to provide services to such accounts, our firm acknowledges its fiduciary standard within the meaning of Section 3(21) or 3(38) of ERISA as designated by the Retirement Plan Consulting Agreement with respect to Tailoring of Advisory Services the provision of services described therein. We offer individualized investment advice to clients utilizing our Comprehensive Portfolio Management service. Additionally, we offer general investment advice to clients utilizing our Retirement Plan Consulting, and Financial Planning & Consulting services. Each client has the opportunity to place reasonable restrictions on the types of investments to be held in the portfolio. Restrictions on investments in certain securities or types of securities may not be possible due to the level of difficulty this would entail in managing the account. Restrictions would be limited to our Comprehensive Portfolio Management service. We do not manage assets through our other services. ADV Part 2A – Firm Brochure Page 5 Gradient Capital Advisors, LLC  Participation in Wrap Fee Programs We offer wrap fee programs as further described in Part 2A, Appendix 1 (the “Wrap Fee Program Brochure”) of our Brochure. Our wrap fee and non-wrap fee accounts are managed on an individualized basis according to the client’s investment objectives, financial goals, risk tolerance, etc. We do not manage wrap fee accounts in a different fashion than non-wrap fee accounts. As further described in our Wrap Fee Program Brochure, we receive a portion of the wrap fee for our services. We primarily offer portfolio management services under wrapped accounts; non wrapped accounts are only offered under rare circumstances. Prior to entering any agreement we conduct an initial suitability test to ensure our wrapped services are appropriate for the client. Fees for our wrapped Regulatory Assets Under Management services do not exceed 1.50%. As of December 31, 2024, we manage $637,516,873 of which $546,487,019 is managed on a discretionary basis and $91,029,854 on a non-discretionary basis. Item 5: Fees & Compensation Compensation for Our Advisory Services Comprehensive Portfolio Management: Our firm does not assess a fee for this advisory service. It is an accommodation to family and friends’ managed accounts. The managed accounts will be listed on Schedule A of the client agreement, and the client’s independent custodian will send statements at least quarterly showing the market values Financial Planning & Consulting: for each security included in the Assets and all account disbursements. We charge on an hourly or flat fee basis for financial planning and consulting services. The total estimated fee, as well as the ultimate fee that we charge you, is based on the scope and complexity of our engagement with you. Our hourly fees range from $100 to $350 and our flat fees generally range from $500 to $10,000. We do not require a retainer of the total financial planning and consulting fee. The financial planning and consulting fee will be due upon completion of the project or as otherwise indicated in the Retirement Plan Consulting: Financial Planning and Consulting Agreement. Our Retirement Plan Consulting services are billed on a fee based on the percentage of Plan assets under management. The total estimated fee, as well as the ultimate fee charged, is based on the scope and complexity of our engagement with the client. Fees based on a percentage of managed Plan assets will not exceed 1.00%. The fee-paying arrangements will be determined on a case-by-case basis and will be detailed in the signed consulting agreement. (Continued on Next Page) ADV Part 2A – Firm Brochure Page 6 Gradient Capital Advisors, LLC  Other Types of Fees & Expenses Non-Wrap Clients will incur transaction fees for trades executed by their chosen custodian. These transaction fees are separate from our firm’s advisory fees and will be disclosed by the chosen custodian. Charles Schwab & Co., Inc. (“Schwab”), does not charge transaction fees for U.S. listed equities and exchange traded funds. Clients may also pay holdings charges imposed by the chosen custodian for certain investments, charges imposed directly by a mutual fund, index fund, or exchange traded fund, which shall be disclosed in the fund’s prospectus (i.e., fund management fees, initial or deferred sales charges, mutual fund sales loads, 12b-1 fees, surrender charges, variable annuity fees, IRA and qualified retirement plan fees, and other fund expenses), mark-ups and mark-downs, spreads paid to market makers, fees for trades executed away from custodian, wire transfer fees and other fees and taxes on brokerage accounts and securities transactions. Our firm does not receive a portion of these fees. Wrap clients will not incur transaction costs for trades by their chosen custodian. More information Termination & Refunds about this can be found in our separate Wrap Fee Program Brochure. We charge our advisory fees quarterly in arrears. If you wish to terminate our services, you need to contact us in writing and state that you wish to cancel the advisory agreement. Upon receipt of your letter of termination, we will proceed to close out your account and charge you a pro-rata advisory fee(s) for services rendered up to the point of termination. Either party to a Retirement Plan Consulting Agreement may terminate at any time by providing written notice to the other party. Full refunds will only be made in cases where cancellation occurs within 5 business days of signing an agreement. After 5 business days from initial signing, either party must provide the other party 30 days written notice to terminate billing. Billing will terminate 30 days after receipt of termination notice. Clients will be charged on a pro-rata basis, which takes into account work completed by our firm on behalf of the client. Clients will incur charges for bona fide advisory services rendered up to the point of termination (determined as 30 days from receipt Commissionable Securities Sales of said written notice) and such fees will be due and payable We do not sell securities for a commission in our advisory accounts. Item 6: Performance-Based Fees & Side-By-Side Management Our firm does not charge performance-based fees. Item 7: Types of Clients & Account Requirements We have the following types of clients: • • • • Individuals and High Net Worth Individuals; Trusts, Estates or Charitable Organizations; Pension & Profit Sharing Plans Corporations, Limited Liability Companies and/or Other Business Types ADV Part 2A – Firm Brochure Page 7 Gradient Capital Advisors, LLC  While our firm does not have minimum or maximum account balance requirements for our Wrap Asset Management or Financial Planning & Consulting services, clients will generally not pay in excess of 1.5% of assets under management for combined services. If a client’s fee for combined services exceeds 1.5%, prior approval by the firm’s CCO is required. Our Comprehensive Portfolio Management service is only made available to family and friends. However, there are no requirements for opening and maintaining accounts or otherwise engaging us for any of our other services. Item 8: Methods of Analysis, Investment Strategies & Risk of Loss Methods of Analysis We use the following methods of analysis in formulating our investment advice and/or managing Charting: client assets: In this type of technical analysis, we review charts of market and security activity in an attempt to identify when the market is moving up or down and to predict when how long the trend Cyclical Analysis: may last and when that trend might reverse. In this type of technical analysis, we measure the movements of a particular stock Fundamental Analysis: against the overall market in an attempt to predict the price movement of the security. We attempt to measure the intrinsic value of a security by looking at economic and financial factors (including the overall economy, industry conditions, and the financial condition and management of the company itself) to determine if the company is underpriced (indicating it may be a good time to buy) or overpriced (indicating it may be time to sell). Fundamental analysis does not attempt to anticipate market movements. This presents a potential risk, as the price of a security can move up or down along with the overall market regardless of the Technical Analysis: economic and financial factors considered in evaluating the stock. We analyze past market movements and apply that analysis to the present in an attempt to recognize recurring patterns of investor behavior and potentially predict future price movement. Technical analysis does not consider the underlying financial condition of a company. This presents a risk in that a poorly-managed or financially unsound company may underperform Investment Strategies We Use regardless of market movement We use the following strategies in managing client accounts, provided that such strategies are appropriate to the needs of the client and consistent with the client's investment objectives, risk Long-Term Purchases: tolerance, and time horizons, among other considerations: When utilizing this strategy, we may purchase securities with the idea of holding them for a relatively long time (typically held for at least a year). A risk in a long-term purchase strategy is that by holding the security for this length of time, we may not take advantages of short-term gains that could be profitable to a client. Moreover, if our predictions are incorrect, a security may decline sharply in value before we make the decision to sell. Typically, we employ this sub-strategy when we believe the securities to be undervalued; and/or we want exposure to a particular asset class over time, regardless of the current projection for this class. The potential risks associated with this investment strategy involve a lower than expected return, for many years in a ADV Part 2A – Firm Brochure Page 8 Gradient Capital Advisors, LLC  row. Lower-than-expected returns that last for a long time and/or that are severe in nature would have the impact of dramatically lowering the ending value of your portfolio, and thus could Short-Term Purchases: significantly threaten your ability to meet financial goals. When utilizing this strategy, we may also purchase securities with the idea of selling them within a relatively short time (typically a year or less). We do this in an attempt to take advantage of conditions that we believe will soon result in a price swing in the securities we purchase. The potential risk associated with this investment strategy is associated with the currency or exchange rate. Currency or exchange rate risk is a form of risk that arises from the change in price of one currency against another. The constant fluctuations in the foreign currency in which an investment is denominated vis-à-vis one's home currency may add risk to the value of a security. Currency risk is greater for shorter term investments, which do not have time to level off like longer Trading: term foreign investments. We purchase securities with the idea of selling them very quickly (typically within 30 days or less). We do this in an attempt to take advantage of our predictions of brief price swings. Trading involves risk that may not be suitable for every investor, and may involve a high volume of trading activity. Each trade generates a commission and the total daily commission on such a high volume of trading can be considerable. Active trading accounts should be considered speculative in nature with the objective being to generate short-term profits. This activity may result in the loss of more than Short Sales: 100% of an investment. We borrow shares of a stock for your portfolio from someone who owns the stock on a promise to replace the shares on a future date at a certain price. Those borrowed shares are then sold. On the agreed-upon future date, we buy the same stock and return the shares to the original owner. We engage in short selling based on our determination that the stock will go down in price after we have borrowed the shares. If we are correct and the stock price has gone down since the shares were purchased from the original owner, the client account realizes the profit. The two primary perceived risks of short selling are that the in the long term, markets trend upward and short selling can expose investors to potentially unlimited risk. Due to the “upside gap”, sellers risk not Margin Transactions: being able to react until after a significant loss has already been incurred. We will purchase stocks for your portfolio with money borrowed from your brokerage account. This allows you to purchase more stock than you would be able to with your available cash, and allows us to purchase stock without selling other holdings. Margin accounts and transactions are risky and not necessarily for every client. The potential risks associated with these transactions are (1) You can lose more funds than are deposited into the margin account; (2) the force sale of securities or other assets in your account; (3) the sale of securities or other assets without contacting you; and (4) you may not be entitled to choose which securities or other assets in Option Writing: your account(s) are liquidated or sold to meet a margin call. We 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 us the right to buy an asset at a certain price within a specific period of time. We will buy a call if we have determined that the stock will increase substantially before the option expires. A put gives us the holder the right to sell an asset at a certain price within a specific period of time. We will buy a put if we have determined that the price of the stock will fall before the option expires. We will use options to "hedge" a purchase of the underlying security; in other words, we will use an option purchase to limit the potential upside and downside of a security we have purchased ADV Part 2A – Firm Brochure Page 9 Gradient Capital Advisors, LLC  for your portfolio. We use "covered calls", in which we sell an option on security you own. In this strategy, you receive a fee for making the option available, and the person purchasing the option has the right to buy the security from you at an agreed-upon price. We use a "spreading strategy", in which we purchase two or more option contracts (for example, a call option that you buy and a call option that you sell) for the same underlying security. This effectively puts you on both sides of the market, but with the ability to vary price, time and other factors. The potential risks associated with these transactions are that (1) all options expire. The closer the option gets to expiration, the quicker the premium in the option deteriorates; and (2) Prices can move very quickly. Depending on factors such as time until expiration and the relationship of the stock price to the option’s strike price, small Risk of Loss movements in a stock can translate into big movements in the underlying options. 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 Alternative Investments: ask us any questions you may have. the absence of a public market, lack of liquidity and For clients who own alternative investments, an expected investment time horizon may include risks that you should consider: • • You may experience the risk that your investment or assets within your investment may not be able to be liquidated quickly, thus, extending the period of time by which you may receive the proceeds from your investment. Liquidity risk can also result in unfavorable pricing when exiting (i.e. not being able to quickly get out of an investment before the price drops significantly) a particular investment and therefore, can have a negative impact on investment returns. • • No guarantee that investors will receive a distribution. Distributions may be derived from the proceeds of the offering, from borrowings, or from the sale of assets, and we have no limits on the amounts we may pay from such other sources. Payments of distributions from sources other than cash flow from operations may decrease or diminish an investor's interest; Economic factors affecting the real estate markets generally, including changes in the economy, tenant turnover, interest rates, availability of mortgage funds, operating expenses, cost of insurance and tenants' ability to continue to pay rent; No connection between the share price of the REIT and the net asset value of the REIT until such time as the assets are valued. Item 9: Disciplinary Information We have determined that our firm and management have nothing to disclose under the aforementioned standard. ADV Part 2A – Firm Brochure Page 10 Gradient Capital Advisors, LLC  Item 10: Other Financial Industry Activities & Affiliations Our firm and its supervised persons do not have any additional industry activities or affiliations to disclose. Item 11: Code of Ethics, Participation or Interest in Client Transactions & Personal Trading As a fiduciary, it is an investment adviser’s responsibility to provide fair and full disclosure of all material facts and to act solely in the best interest of each of our clients at all times. Our fiduciary duty is the underlying principle for our firm’s Code of Ethics, which includes procedures for personal securities transaction and insider trading. Our firm requires all representatives to conduct business with the highest level of ethical standards and to comply with all federal and state securities laws at all times. Upon employment with our firm, and at least annually thereafter, all representatives of our firm will acknowledge receipt, understanding and compliance with our firm’s Code of Ethics. Our firm and representatives must conduct business in an honest, ethical, and fair manner and avoid all circumstances that might negatively affect or appear to affect our duty of complete loyalty to all clients. This disclosure is provided to give all clients a summary of our Code of Ethics. If a client or a potential client wishes to review our Code of Ethics in its entirety, a copy will be provided promptly upon request. Our firm recognizes that the personal investment transactions of our representatives demands the application of a Code of Ethics with high standards and requires that all such transactions be carried out in a way that does not endanger the interest of any client. At the same time, our firm also believes that if investment goals are similar for clients and for our representatives, it is logical, and even desirable, that there be common ownership of some securities. 1 In order to prevent conflicts of interest, our firm has established procedures for transactions effected by . In order to monitor compliance with our personal our representatives for their personal accounts trading policy, our firm has pre-clearance requirements and a quarterly securities transaction reporting system for all of our representatives. Neither our firm nor a related person recommends, buys or sells for client accounts, securities in which our firm or a related person has a material financial interest without prior disclosure to the client. Related persons of our firm may buy or sell securities and other investments that are also recommended to clients. In order to minimize this conflict of interest, our related persons will place client interests ahead of their own interests and adhere to our firm’s Code of Ethics, a copy of which is available upon request. Likewise, related persons of our firm buy or sell securities for themselves at or about the same time they buy or sell the same securities for client accounts. In order to minimize this conflict of interest, our related persons will place client interests ahead of their own interests and adhere to our firm’s Code of Ethics, a copy of which is available upon request. Further, our related persons will refrain from buying or selling the same securities prior to buying or selling for our clients in the same day unless included in a block trade. 1 For purposes of the policy, our associate’s personal account generally includes any account (a) in the name of our associate, his/her spouse, his/her minor children or other dependents residing in the same household, (b) for which our associate is a trustee or executor, or (c) which our associate controls, including our client accounts which our associate controls and/or a member of his/her household has a direct or indirect beneficial interest in. ADV Part 2A – Firm Brochure Page 11 Gradient Capital Advisors, LLC  Item 12: Brokerage Practices Item 15 Our firm does not maintain custody of client assets (although our firm may be deemed to have Custody custody of client assets if given the authority to withdraw assets from client accounts. (See , below.) Client assets must be maintained in an account at a “qualified custodian,” generally a broker-dealer or bank. Our firm recommends clients use Charles Schwab & Co., Inc. (“Schwab”), a FINRA-registered broker-dealer, member SIPC, as the qualified custodian. Our firm is independently owned and operated, and not affiliated with Schwab. Schwab will hold client assets in a brokerage account and buy and sell securities when instructed. While our firm recommends clients use Schwab as custodian/broker, clients will decide whether to do so and open an account with Schwab by entering into an account agreement directly with them. Our firm does not open the account. Even though the account is maintained at Schwab, our firm can still use other brokers to execute trades, as How Brokers/Custodians are Selected described in the next paragraph. • Our firm seeks to recommend a custodian/broker who will hold client assets and execute transactions on terms that are overall most advantageous when compared to other available providers and their services. A wide range of factors are considered, including, but not limited to: • • • • • • • • Custody & Brokerage Costs combination of transaction execution services along with asset custody services (generally without a separate fee for custody); capability to execute, clear and settle trades (buy and sell securities for client accounts); capability to facilitate transfers and payments to and from accounts (wire transfers, check requests, bill payment, etc.); breadth of investment products made available (stocks, bonds, mutual funds, exchange traded funds (ETFs), etc.); availability of investment research and tools that assist in making investment decisions quality of services; competitiveness of the price of those services (commission rates, margin interest rates, other fees, etc.) and willingness to negotiate them; reputation, financial strength and stability of the provider; prior service to our firm and our other clients; and/or Products & Services Available from Schwab availability of other products and services that benefit our firm, as discussed below. (See “ ”.) Schwab generally does not charge a separate fee for custody services but is compensated by charging commissions or other fees to clients on trades that are executed or that settle into the Schwab account. For some accounts, Schwab may charge your account a percentage of the dollar amount of assets in the account in lieu of commissions. Schwab’s commission rates and/or asset-based fees applicable to client accounts were negotiated based on our firm’s commitment to maintain a minimum threshold of assets statement equity in accounts at Schwab. This commitment benefits clients because the overall commission rates and/or asset-based fees paid are lower than they would be if our firm had not made the commitment. In addition to commissions or asset-based fees Schwab charges a flat dollar amount as a “prime broker” or “trade away” fee for each trade our firm has executed by a different broker-dealer but where the securities bought or the funds from the securities sold are deposited (settled) into a Schwab account. These fees are in addition to the commissions or ADV Part 2A – Firm Brochure Page 12 Gradient Capital Advisors, LLC  other compensation paid to the executing broker-dealer. Because of this, and to minimize client Products & Services Available from Schwab trading costs, our firm has Schwab execute most trades for the accounts. Schwab Advisor Services (formerly called Schwab Institutional) is Schwab’s business serving independent investment advisory firms like our firm. They provide our firm and clients with access to its institutional brokerage – trading, custody, reporting and related services – many of which are not typically available to Schwab retail customers. Schwab also makes available various support services. Some of those services help manage or administer our client accounts while others help manage and grow our business. Schwab’s support services are generally available on an unsolicited basis (our firm does not have to request them) and at no charge as long as our firm keeps a minimum total of $10 million of client assets in accounts at Schwab. If our firm has less than $10 million in client assets at Schwab, our firm may be charged quarterly service fees. A more detailed description of Services that Benefit Clients. Schwab’s support services follows: Schwab’s institutional brokerage services include access to a broad range of investment products, execution of securities transactions, and custody of client assets. Schwab may also aid in the payment of fees associated with the custodial transfer. The investment products available through Schwab include some to which our firm might not otherwise have access to or that would require a significantly higher minimum initial investment by firm clients. Schwab’s Services that May Not Directly Benefit Clients. services described in this paragraph generally benefit clients and their accounts. • Schwab also makes available other products and services benefiting our firm but may not directly benefit clients or their accounts. These products and services assist in managing and administering our client accounts. They include investment research, both Schwab’s and that of third parties. This research may be used to service all or some substantial number of client accounts, including accounts not maintained at Schwab. In addition to investment research, Schwab also makes available software and other technology that: • • • • Services that Generally Benefit Only Our Firm. provides access to client account data (such as duplicate trade confirmations and account statements); facilitates trade execution and allocate aggregated trade orders for multiple client accounts; provides pricing and other market data; facilitates payment of our fees from our clients’ accounts; and assists with back-office functions, recordkeeping and client reporting. Schwab also offers other services intended to help manage and further develop our business enterprise. These services include: • • • • marketing, educational conferences and events; technology, compliance, legal, and business consulting; publications and conferences on practice management and business succession; and access to employee benefits providers, human capital consultants, and insurance providers. Schwab may provide some of these services itself. In other cases Schwab, will arrange for third-party vendors to provide the services to our firm. Schwab may also discount or waive fees for some of these services or pay all or a part of a third party’s fees. Irrespective of direct or indirect benefits to our client through Schwab, our firm strives to enhance the client experience, help clients reach their goals, and put client interests before that of our firm or associated persons. ADV Part 2A – Firm Brochure Page 13 Gradient Capital Advisors, LLC  Our Interest in Schwab’s Services How Brokers/Custodians Are Selected The availability of these services from Schwab benefits our firm because our firm does not have to produce or purchase them. Our firm does not have to pay for Schwab’s services so long as a total of at least $10 million of client assets in accounts are kept at Schwab. Beyond that, these services are not contingent upon our firm committing any specific amount of business to Schwab in trading commissions or assets in custody. The $10 million minimum may serve as an incentive to recommend clients maintain their account with Schwab based on our interest in receiving Schwab’s services benefiting our business rather than based on the client’s interest in receiving the best value in custody services and the most favorable execution of transactions. This is a potential conflict of interest. Our firm believes, however, that the selection of Schwab as custodian and broker is in the best interests of our clients. It is primarily supported by the scope, quality and price of Schwab’s .) and not services based on the factors discussed above (See Schwab’s services that benefit only our firm. Our firm does not believe that maintaining at least $10 million in assets at Schwab to avoid paying Schwab quarterly service fees presents a material conflict Soft Dollars of interest. Our firm does not receive soft dollars in excess of what is allowed by Section 28(e) of the Securities Exchange Act of 1934. The safe harbor research products and services obtained by our firm will Client Brokerage Commissions generally be used to service all of our clients but not necessarily all at any one particular time. Our non-wrap fee program clients may pay a commission to Schwab that is higher than another qualified broker dealer might charge to effect the same transaction where we determine in good faith that the commission is reasonable in relation to the value of the brokerage and research services received. In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represents the best qualitative execution, taking into consideration the full range of a broker-dealer’s services, including the value of research provided, execution capability, commission rates, and responsiveness. Accordingly, although we will seek competitive rates, to the benefit of all clients, we may not necessarily obtain the lowest possible commission rates for specific Client Transactions in Return for Soft Dollars client account transactions. Brokerage for Client Referrals We do not direct client transactions to a particular broker-dealer in return for soft dollar benefits. Directed Brokerage Our firm does not receive brokerage for client referrals. Neither we nor any of our firm’s related persons have discretionary authority in making the determination of the brokers with whom orders for the purchase or sale of securities are placed for execution, and the commission rates at which such securities transactions are effected. ADV Part 2A – Firm Brochure Page 14 Gradient Capital Advisors, LLC  We allow clients to direct brokerage. However, we may be unable to achieve the most favorable execution of client transactions. Client directed brokerage may cost clients more money. For example, in a directed brokerage account, you may pay higher brokerage commissions because we may not be Special Considerations for ERISA Clients able to aggregate orders to reduce transaction costs, or you may receive less favorable prices. 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, our firm will request that plan sponsors who direct plan brokerage provide us with a letter documenting that this arrangement will Aggregation of Purchase or Sale be for the exclusive benefit of the plan. We perform investment management services for various clients. There are occasions on which portfolio transactions may be executed as part of concurrent authorizations to purchase or sell the same security for numerous accounts served by our firm, which involve accounts with similar investment objectives. Although such concurrent authorizations potentially could be either advantageous or disadvantageous to any one or more particular accounts, they are affected only when we believe that to do so will be in the best interest of the effected accounts. When such concurrent authorizations occur, the objective is to allocate the executions in a manner which is deemed equitable to the accounts involved. In any given situation, we attempt to allocate trade executions in the most equitable manner possible, taking into consideration client objectives, current asset allocation and availability of funds using price averaging, proration and consistently non-arbitrary methods of allocation. Item 13: Review of Accounts or Financial Plans We review accounts on at least a quarterly basis for our clients subscribing to our Comprehensive Portfolio Management service. The nature of these reviews is to learn whether clients’ accounts are in line with their investment objectives, appropriately positioned based on market conditions, and investment policies, if applicable. Only our Financial Advisors or Portfolio Managers will conduct reviews. We do not provide written reports to clients, unless asked to do so. Verbal reports to clients take place on at least an annual basis when we contact clients who subscribe to our Comprehensive Portfolio Management service. Financial Planning clients do not receive reviews of their written plans unless they take action to schedule a financial consultation with us. We do not provide ongoing services to financial planning clients, but are willing to meet with such clients upon their request to discuss updates to their plans, changes in their circumstances, etc. Retirement Plan Consulting clients receive reviews of their retirement plans for the duration of the service. Our firm also provides ongoing services where clients are met with upon their request to discuss updates to their plans, changes in their circumstances, etc. Retirement Plan Consulting clients do not receive written or verbal updated reports regarding their plans unless they choose to engage our firm for ongoing services. ADV Part 2A – Firm Brochure Page 15 Gradient Capital Advisors, LLC  We may review client accounts more frequently than described above. Among the factors which may trigger an off-cycle review are major market or economic events, the client’s life events, requests by the client, etc. Item 14: Client Referrals & Other Compensation Charles Schwab & Co. Inc. (see Item 12 – Brokerage Practices) We receive an economic benefit from Schwab in the form of the support products and services it makes available to us and other independent investment advisors that have their clients maintain accounts at Schwab. These products and services, how they benefit us, and the related conflicts of interest are described above . The availability to us of Schwab’s products and services is not based on us giving particular investment advice, such as buying Referral Fees particular securities for our clients. In accordance with Rule 206 (4)-1 of the Investment Advisers Act of 1940, our firm does not provide cash or non-cash compensation directly or indirectly to unaffiliated persons for testimonials or endorsements (which include client referrals). Item 15: Custody While our firm does not maintain physical custody of client assets (which are maintained by a qualified custodian, as discussed above), we are deemed to have custody of certain client assets if given the authority to withdraw assets from client accounts, as further described below under “Third Party Money Movement.” All of our clients receive at least quarterly account statements directly from their custodians. Upon opening an account with a qualified custodian on a client's behalf, we promptly notify the client in writing of the qualified custodian's contact information. If we decide to also send account statements to clients, such notice and account statements include a legend that recommends that the client compare the account statements received from the qualified custodian with those received from our firm. 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 the account custodian: • • • 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. ADV Part 2A – Firm Brochure Page 16 Gradient Capital Advisors, LLC  • • • • 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. We encourage our clients to raise any questions with us about the custody, safety or security of their assets. The custodians we do business with will send you independent account statements listing your account balance(s), transaction history and any fee debits or other fees taken out of your account. Item 16: Investment Discretion Clients have the option of providing our firm with investment discretion on their behalf, pursuant to an executed investment advisory client agreement. By granting investment discretion, we are authorized to execute securities transactions, which securities are bought and sold, the total amount to be bought and sold, and the costs at which the transactions will be effected. Limitations may be imposed by the client in the form of specific constraints on any of these areas of discretion with our firm’s written acknowledgement. Item 17: Voting Client Securities We do not and will not accept the proxy authority to vote client securities. Clients will receive proxies or other solicitations directly from their custodian or a transfer agent. In the event that proxies are sent to our firm, we will forward them on to you and ask the party who sent them to mail them directly to you in the future. Clients may call, write or email us to discuss questions they may have about particular proxy votes or other solicitations. Item 18: Financial Information We are not required to provide financial information in this Brochure because: • • • • Our firm does not require the prepayment of more than $1,200 in fees when services cannot be rendered within 6 months; We do not take custody of client funds or securities; We do not have a financial condition or commitment that impairs our ability to meet contractual and fiduciary obligations to clients; and We have never been the subject of a bankruptcy proceeding. ADV Part 2A – Firm Brochure Page 17 Gradient Capital Advisors, LLC