HOFFMANN HERMANSON LLC

P a g e | 1 Hoffmann Hermanson LLC CRD#130484 450 E. 17th Ave. | Suite 400 | Denver, CO 80203 p: 720-560-4836 p: 303-946-1810 f: 303-557-6238 www.hoffmannhermanson.com Part 2A of Form ADV Brochure December 31, 2024 ITEM 1: COVER PAGE Hoffmann Hermanson LLC (doing business as Hoffmann Hermanson) is a Registered Investment Adviser (RIA) based in Denver, Colorado. Registration is required by law but does not imply a certain level of skill or training. This brochure provides information about the qualifications and business practices of Hoffmann Hermanson. If you have any questions about the contents of this brochure, please contact us at 303-946-1810 or by e-mailing ghermanson@hoffmannhermanson.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 Hoffmann Hermanson is also is available on the SEC’s website at www.adviserinfo.sec.gov. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 2 ITEM 2: MATERIAL CHANGES The last annual update to this brochure was for the year ended 12/31/2023. This section addresses only material changes since the last annual update. On September 6, 2023 Charles Schwab & Co. acquired TD Ameritrade. As a result, Hoffmann Hermanson’s custodian is now Charles Schwab & Co. See Item 12 for additional information. We have updated item 4 to disclose the AUM as of 11/18/2024. We have amended the brochure to remove item 19 and the Part 2B brochure information because we are applying to be SEC registered. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 3 ITEM 3: TABLE OF CONTENTS 1 2 3 4 5 6 6 7 8 9 ITEM 1: COVER PAGE ITEM 2: MATERIAL CHANGES ITEM 3: TABLE OF CONTENTS ITEM 4: ADVISORY BUSINESS ITEM 5: FEES & COMPENSATION ITEM 6: PERFORMANCE-BASED FEES & SIDE-BY-SIDE MANAGEMENT ITEM 7: TYPES OF CLIENTS 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 AND PERSONAL TRADING ITEM 12: BROKERAGE PRACTICES ITEM 13: REVIEW OF ACCOUNTS ITEM 14: CLIENT REFERRALS & OTHER COMPENSATION ITEM 15: CUSTODY ITEM 16: INVESTMENT DISCRETION ITEM 17: VOTING CLIENT SECURITIES ITEM 18: FINANCIAL INFORMATION ITEM 19: REQUIREMENTS FOR STATE REGISTERED ADVISORS 9 11 12 12 12 12 13 13 13 FORM ADV PART 2B – INDIVIDUAL DISCLOSURE BROCHURE JERRY J. HOFFMANN BROCHURE SUPPLEMENT GLENN H. HERMANSON BROCHURE SUPPLEMENT 14 14 17 Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 4 ITEM 4: ADVISORY BUSINESS Advisory Firm Description Hoffmann Hermanson is a Limited Liability Company based in Denver, Colorado. The firm has 2 Managing Partners and Advisers – Jerry Hoffmann and Glenn Hermanson. Mr. Hoffmann and Mr. Hermanson each maintain 50% ownership of the firm. For detailed information regarding the background of the managing partners/advisers, please refer to Appendix A. As of 12/31/2024, Hoffmann Hermanson had $152.7 million in assets under management, $146.5 million of which is managed with discretionary authority and $6.2 million of which is non-discretionary. Advisory Firm Services Hoffmann Hermanson’s principal business is managing investment portfolios. Hoffmann Hermanson assesses the unique financial circumstances and goals of each client prior to making investment decisions. This process involves the following steps: 1. Establishing and defining the scope of the client-advisor relationship 2. Gathering client data, including relevant financial information and goals 3. Analyzing and evaluating client data 4. Developing an investment portfolio 5. Implementing the investment portfolio 6. Monitoring the investment portfolio In conjunction with our principal business, Hoffmann Hermanson may provide financial guidance commonly referred to as financial planning, which includes one or more of the following: • Retirement Planning • Education Planning • Insurance Planning • Tax Planning • Estate Planning • Household Financial Management (including mortgage selection, auto lease versus buy, cash management, and general budget decision making) Appropriately licensed advisers of Hoffmann Hermanson may also sell life insurance. Generally, the sale of life insurance is in conjunction with a comprehensive wealth management plan. Adviser Requirements To ensure that Hoffmann Hermanson investment advisers possess a high level of financial expertise, the firm requires advisers to have two of the following: 1. A Bachelor's or Master’s degree in finance, accounting, or economics 2. A CFP, CPA, or CFA designation Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 5 3. 5 years of experience in the financial services industry ITEM 5: FEES & COMPENSATION Asset Management Fees Hoffmann Hermanson’s primary compensation is in the form of fees assessed as a percentage of investment assets managed. Table 1 ~ Asset Management Fees Household Assets $0 - $1,000,000 $1,000,001-$5,000,000 $5,000,001 and over Quarterly Rate** 0.3125% 0.25% 0.1875% Annual Rate** 1.25% 1% 0.75% *Hoffmann Hermanson defines a household as any number of family members sharing the same residence. **All rates are marginal. For example, on an annual basis, a household with $1.5 million under management would be assessed a fee of 1.25% on the first $1,000,000 and a fee of 1% on the next $500,000. Negotiation of Fees Subject to the approval of the managing partners, Hoffmann Hermanson may negotiate adjustments to the fee schedule based on account size, prospective new assets or other factors. Calculating Fees Asset management fees are collected in advance of each quarter by multiplying the market value of the account on the last day of the preceding quarter by the appropriate quarterly rate. For example, an account with a market value of $100,000 on the last day of the previous calendar quarter would be assessed a fee of $312.50 ($100,000 x .3125%). For new accounts opened in the middle of a quarter, the first fee is paid at the beginning of the subsequent quarter. The fee for the partial quarter is pro-rated and collected in arrears along with the fee for the subsequent quarter. Fees are adjusted to reflect material additions to or subtractions from the account on a pro-rata basis Payment of Fees Advisory fees are withdrawn directly from client accounts pursuant to the client's written permission, which is granted as part of the client’s account application. Fee disbursements are reflected in the transaction summary of client account statements, which are provided by the firm’s account custodian. See Item 12 for more information about custodian selection and Item 15 for more information about electronic fee deduction. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 6 Account Termination A client may close their account at any time without penalty by notifying Hoffmann Hermanson in writing. If a client terminates an account before the end of a quarter that has already been billed, the client will receive a pro-rata refund. Example: A client pays $1,000 for second quarter fees and then terminated the account on May 31. The client would receive a refund of $1,000 x (30/91) = $329.67. Other Investment-Related Fees & Expenses Clients are responsible for all third-party investment expenses, including broker commissions, service fees as and mutual fund operating, administrative and sales expenses where applicable. Hoffmann Hermanson does not receive any portion of these fees and attempts to minimize them to the greatest extent possible by selecting competitively priced products and services. ITEM 6: PERFORMANCE-BASED FEES & SIDE-BY-SIDE MANAGEMENT Performance-based fees are fees charged based on the appreciation of a client’s account. Hoffmann Hermanson does not charge performance-based fees and thus does not manage any accounts “side-by-side” with accounts that are charged asset-based fees. ITEM 7: TYPES OF CLIENTS Hoffmann Hermanson provides advisory services to individuals, trusts, estates, charitable organizations, businesses and business entity retirement plans. Hoffmann Hermanson does not impose asset minimums to open or maintain an account. Each client brings a unique set of financial circumstances to the relationship, and the firm evaluates these circumstances on a case-by-case basis rather than by drawing an arbitrary line based on current investable assets. ITEM 8: METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS Methods of Analysis & Strategies Prior to making any investment decisions, Hoffmann Hermanson determines each client’s investor profile. The profile is created by assessing client-specific data, including current financial condition, financial goals, and tolerance for risk. The client profile can range from a conservative investor seeking income during retirement to an aggressive investor seeking long-term capital growth. Hoffmann Hermanson uses a combination of fundamental, technical and cyclical analysis to build a portfolio that is consistent with each investor’s unique profile. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 7 Investments can be long or short-term in nature dependent upon the client’s financial circumstances, time horizon and the firm’s evaluation of the investment. Fundamental analysis focuses on assessing a company’s value based on its current and projected earnings, cash flow, assets and liabilities. As part of this process, advisers review company annual reports, research provided by third parties, corporate rating services, company press releases, SEC filings and various financial periodicals. Technical analysis is a tool used to forecast the direction of future price movements based on historical price data. Technical analysis helps Hoffmann Hermanson advisers identify stocks with favorable supply and demand characteristics. As part of this process, advisers analyze supply and demand data, including price & volume charts provided by third parties. Cyclical analysis seeks to identify broad economic and market trends and then select investments that have historically performed favorably given those conditions. As part of this process, advisers analyze economic reports provided by a variety of government agencies and private companies as well as various financial periodicals. Types of Investments Hoffmann Hermanson provides advice and makes investments in the following types of securities: • U.S. and Foreign Common and Preferred Stock • U.S. and Foreign Corporate Bonds • U.S. and Foreign Government Bonds • State and Municipal Bonds • Real Estate and Real Estate Investment Trusts • Commodities • Private Equity • Diversified Alternative Investments • Options • Managed Futures • Cryptocurrency Exposure to these various securities can take the form of individual stocks & bonds, exchange-traded funds, mutual funds, annuities and investment trusts. If consistent with the client’s risk profile, option contracts and other derivatives may also be utilized. Material Risks Investing in securities involves the risk of loss that clients should be prepared to bear. The investments made by Hoffmann Hermanson on behalf of its clients are subject to various material risks that can lead to losses. These risks can be broken down into two broad categories - systematic and unsystematic. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 8 Systematic Risk Systematic risk is also known as market risk and relates to factors that affect the overall economy or securities markets. Systematic risk affects all companies, regardless of the company's financial condition, management, or capital structure, and can involve international as well as domestic factors. Here are some of the most common systematic risks: Interest-rate risk describes the risk that the value of a security will decline due to changes in interest rates. When interest rates increase, bond issuers must offer higher coupon rates on new bonds in order to attract investors. The consequence is that the prices of existing bonds drop because investors prefer the new bonds paying the higher rate. There is also interest-rate risk when rates fall because maturing bonds must be reinvested at a lower yield. Inflation risk describes the risk that increases in the prices of goods and services will reduce your purchasing power. Inflation risk and interest rate risk are closely tied, as interest rates commonly rise with inflation. Currency risk is specific to investments in non-U.S. securities and arises from a change in the relative value of two currencies. For example if you are a U.S. investor and you have stock in a Canadian company, the return is affected by both the change in the price of the stock and any change in the value of the Canadian dollar against the U.S. dollar. Liquidity risk is the risk that an investment cannot be sold quickly enough to prevent a loss or preserve a profit. Liquidity risk occurs when a willing buyer for a particular asset cannot be quickly and easily found. Geopolitical risk is the possibility that instability or unrest in one or more regions of the world will affect investment markets. Terrorist attacks, war, and pandemics are examples of events, (whether actual or anticipated) that impact investor attitudes toward the market in general and result in system-wide fluctuations in asset prices. Unsystematic Risk Unsystematic risk, in contrast to systematic risk, affects a much smaller number of companies or investments and is associated with investing in a particular company, country, region, sector or industry. Here are two examples of unsystematic risk: Management risk, also known as company risk, refers to the impact that bad management decisions or other internal missteps can have on a company's performance and, as a consequence, on the value of investments in that company. Credit risk, also called default risk, is the possibility that a bond issuer won't pay interest as scheduled or repay the principal at maturity. Credit risk is also present Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 9 with insurance companies that sell annuity contracts, where your ability to collect the interest and income you expect is dependent on the claims-paying ability of the issuer. ITEM 9: DISCPLINARY INFORMATION Hoffmann Hermanson is not subject to any disciplinary or legal actions past or pending. ITEM 10: OTHER INDUSTRY ACTIVITIES OR AFFLIATIONS Insurance Sales Jerry Hoffmann maintains certain insurance sales licenses individually and may receive personal compensation for insurance sales. Although the sale of insurance products is generally done in conjunction with a comprehensive wealth management plan that includes investment management or other financial advice provided by Hoffmann Hermanson, Mr. Hoffman’s insurance sales activities are not a part of or overseen by Hoffmann Hermanson. There are commissions generated by selling some insurance products, and this may present a conflict of interest. This potential conflict is disclosed on both the ADV Part 2 Brochure and in this Brochure Supplement. Clients are not required to purchase insurance through Mr. Hoffmann and are free to seek competitive quotes or products from other insurance sales persons. ITEM 11: CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING Code of Ethics Hoffmann Hermanson has adopted the CFP Board's Code of Ethics. This code and its underlying principals reflect the mutual respect, empathy and deep commitment to our fiduciary responsibility that we bring to each client relationship. Principle 1 – Integrity: Provide professional services with integrity. Integrity demands honesty and candor which must not be subordinated to personal gain. Advisers are placed in positions of trust by clients, and the ultimate source of that trust is the adviser’s personal integrity. Allowance can be made for innocent error and legitimate differences of opinion, but integrity cannot co-exist with deceit or subordination of one’s principles. Principle 2 – Objectivity: Provide professional services objectively. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 10 Objectivity requires intellectual honesty and impartiality. Regardless of the particular service rendered or the capacity in which an adviser functions, the adviser should maintain objectivity and avoid subordination of their judgment. Principle 3 – Competence: Maintain the knowledge and skill necessary to provide professional services competently. Competence means attaining and maintaining an adequate level of knowledge and skill, and application of that knowledge and skill in providing services to clients. Principle 4 – Fairness: Be fair and reasonable in all professional relationships. Disclose conflicts of interest. Fairness requires impartiality, intellectual honesty and disclosure of material conflicts of interest. It involves a subordination of one’s own feelings, prejudices and desires so as to achieve a proper balance of conflicting interests. Principle 5 – Confidentiality: Protect the confidentiality of all client information. Confidentiality means ensuring that information is accessible only to those authorized to have access. A relationship of trust and confidence with the client can only be built upon the understanding that the client’s information will remain confidential. Principle 6 – Professionalism: Act in a manner that demonstrates exemplary professional conduct, dignity and courtesy. Recommending or Investing in the Same Securities Advisers of Hoffmann Hermanson may utilize the same long-term asset allocation strategy as the firm's clients and thus may on occasion trade the same securities for their own account as are traded for clients. This is a reflection of the firm’s confidence in its investment strategies and portfolio management abilities. This creates a conflict of interest with respect to the timing of transactions. An advisor could trade ahead of a client account and potentially receive a better price. To address this conflict, advisers must trade their account behind all client trades or participate with clients as part of a block trade. To supervise compliance with this policy, Hoffmann Hermanson requires that anyone in the firm with access to advisory recommendations provide annual securities holdings reports and quarterly transaction reports to the firm's Chief Compliance Officer, Glenn Hermanson. Block Trading Portfolio transactions for client accounts are generally completed independently. The exception is when a decision is made to buy or sell the same security for a number of clients simultaneously. In this case, the total number of shares bought or sold is combined into one “block” order and executed at the same price for all clients. This approach ensures that all clients are treated equally with respect to the purchase or sale price of a security held in multiple accounts and that no client is “traded ahead” of another. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 11 ITEM 12: BROKERAGE PRACTICES Brokerage Selection Hoffmann Hermanson recommends that clients use Charles Schwab & Co. as their custodian and broker-dealer. At the discretion of the Managing Partners, Hoffmann Hermanson may accommodate client requests to custody assets at an alternative brokerage. When such an arrangement is accommodated, it is the client’s responsibility to monitor the business practices, including prevailing fees and commissions, of the broker dealer. Charles Schwab & Co. Contact Information Charles Schwab & Co., Inc. 1945 Northwestern Drive El Paso, TX 79912-1108 CRD#: Phone: Fax: Business Hours: 5393 1-800-515-2157 1-866-226-4615 Monday through Friday: 8:00 a.m. to 7:00 p.m. EST Charles Schwab was chosen due to its combination of scale, industry reputation, client support, free trading commissions, technical proficiency, and research offering. Charles Schwab clients have access to account statements, trade confirmations, real-time quotes, customized charts, analyst opinions, market news, and security screening services and 3rd party research reports at no additional cost. Clients pay their own third-party investment fees, including transaction fees, service fees and mutual fund operating expenses, administrative expense and sales charges where applicable. No clients receive transaction or service fee discounts or other benefits from Charles Schwab related to account size or trading frequency. Charles Schwab’s comprehensive pricing guide can be found at this link: Pricing Guide for Advisor Services | Charles Schwab Hoffmann Hermanson receives no commissions or any other compensation from Charles Schwab for using its custodial and clearing services and has no control over its transaction or service fees. Hoffmann Hermanson does not receive any portion of transaction or service fees assessed by Charles Schwab. Although not a primary consideration when determining whether to recommend that a client utilize the services of Charles Schwab, Hoffmann Hermanson does receive multiple free or discounted support services and products from Charles Schwab which assist Hoffmann Hermanson with the management of client investment accounts. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 12 ITEM 13: REVIEW OF ACCOUNTS Review Responsibility & Frequency Glenn H. Hermanson or Jerry J. Hoffmann, the Managing Partners of Hoffmann Hermanson LLC, review account positions daily and household investment allocations at least quarterly. Changes to investment allocations occur when a client's risk tolerance, goals or other financial circumstances have changed materially, requiring either a more aggressive or more conservative investment plan. Investment allocations may also be changed in response to changes in company-specific, market or broad economic conditions. Charles Schwab provides statements to clients at least quarterly, which include balance, position, and transaction information. Additionally, clients have 24/7 online access to comprehensive account information on Charles Schwab’s website, including archived account statements, trade confirmations and investment-related tax documents. ITEM 14: CLIENT REFERRALS & OTHER COMPENSATION Advisers of Hoffmann Hermanson may from time to time refer clients to accountants, lawyers or other professionals that in turn refer clients back to them. These relationships are based on a trust, experience and professionalism. Hoffmann Hermanson does not pay or receive compensation for client referrals. Hoffmann Hermanson receives no economic benefit (no commissions, equipment or non-research services) from a non-client in connection with giving advice. ITEM 15: CUSTODY Hoffmann Hermanson does not custody client funds or securities. Hoffman Hermanson is deemed to have constructive custody of funds if the client grants written authorization to withdraw advisory fees directly from their account. If electronic fees are deducted, the client receives an invoice from Hoffmann Hermanson and the amount of the fees are itemized on monthly statements provided by the custodian. See Item 12 for information regarding Hoffmann Hermanson’s choice of custodian. ITEM 16: INVESTMENT DISCRETION Advisers of Hoffmann Hermanson have discretionary authority in client accounts, including the authority to select the investments, the number of shares and the timing of the transaction. This authority is granted in writing both in the advisory contract and in the custodian's account application. Form ADV Part 2, Hoffmann Hermanson LLC  P a g e | 13 ITEM 17: VOTING CLIENT SECURITIES Hoffmann Hermanson does not vote, nor advise how to vote, proxies for securities held in clients’ accounts. ITEM 18: FINANCIAL INFORMATION Hoffmann Hermanson does not require or solicit payment of more than $500 in fees 6 months or more in advance. Hoffmann Hermanson has never been subject to a bankruptcy petition. Form ADV Part 2, Hoffmann Hermanson LLC