SHEARWATER CAPITAL

Informational Brochure SHEARWATER CAPITAL, LLC Mailing address: 2000 S Colorado Blvd, Tower One Suite 2000-1148 Denver, CO 80222 314-434-4750 314-256-9367 (fax) www.shearwatercapital.com March 2026 This brochure provides information about the qualifications and business practices of Shearwater Capital, LLC. If you have any questions about the contents of this brochure, please contact us at 314-434-4750 and/or contact@shearwatercapital.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. Shearwater Capital is a registered investment advisor. Registration of an investment advisor does not imply any level of skill or training. The oral and written communications provide you with information to determine to hire or retain Shearwater Capital as an Advisor. Additional information about Shearwater Capital, LLC also is available on the SEC website at www.adviserinfo.sec.gov. You can search this site by a unique identifying number, known as a CRD number. The CRD number for Shearwater Capital is 115399.  Item 2 - Material Changes This section describes the material changes since the last annual amendment of our Form ADV Brochure (February 2025). The following is a summary of the material changes: • None Shearwater Capital, LLC 2 Form ADV Part 2A Disclosure Brochure  Item 3 Table of Contents Form ADV – Part 2A – Firm Brochure: Item 1 - Cover Page Item 2 - Material Changes Item 3 - Table of Contents Item 4 - Advisory Business Item 5 - Fees and Compensation Item 6 - Performance Based Fees and Side-by-Side Management Item 7 - Types of Clients Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Item 9 - Disciplinary Information Item 10 - Other Financial Industry Activities and Affiliations Item 11 - Code of Ethics, Participation or Interest in Client Transactions Page 1 Page 2 Page 3 Page 4 Page 5 Page 7 Page 7 Page 9 Page 11 Page 11 Page 11 and Personal Trading Item 12 - Brokerage Practices Item 13 - Review of Accounts Item 14 - Clients Referrals and Other Compensation Item 15 - Custody Item 16 - Investment Discretion Item 17 - Voting Client Securities Item 18 - Financial Information Page 13 Page 14 Page 14 Page 15 Page 16 Page 16 Page 16 Shearwater Capital, LLC 3 Form ADV Part 2A Disclosure Brochure  Item 4 - Advisory Business: Shearwater Capital, LLC (hereafter referred to as Shearwater Capital) provides investment management advice, comprehensive financial planning and investment supervisory services for individuals and families, high net worth individuals, qualified retirement plans, and trusts. Shearwater Capital was founded in 1999 by Jeffrey Brown and Eric Malden, who serve as the company’s only principal owners. The Chief Compliance Officer is Jared Meese. The company takes a scientific approach to investing with an emphasis on broad global diversification, tax efficiency and low fees. We believe that investing should involve a long-term view and that stock selection and market timing generally do not add reliable risk-adjusted returns. Returns are sought through broadly diversified portfolios of domestic and international securities whose performance is based predominantly on passive asset class exposure. Our eligible security selection focuses primarily on mutual funds and exchange-traded funds with reasonable expenses and low turnover. The asset allocation strategy for each account is tailored to meet each client’s unique financial needs. An Investment Policy Statement (IPS) is prepared/tailored for each client, whether an individual, family or organization. The IPS includes relevant background information about the client, including the client’s investment objectives, risk tolerance, investment time horizon, and unique financial circumstances. The IPS also describes an asset allocation model designed to meet these investment goals, while taking into consideration the client’s personal characteristics and financial circumstances. The IPS is reviewed at least annually to determine if the client’s situation has changed and whether the asset allocation strategy should be changed. The IPS can also be reviewed, and modified, if necessary, any time at the client’s request. Clients may impose restrictions on investing in certain securities or types of securities within their own accounts. When appropriate, Shearwater Capital works with new clients to develop a plan to transition from a client's existing portfolio to the desired portfolio. An Investment Management Agreement, signed by the client and a firm representative, provides Shearwater Capital with the authority to make trades on the client’s behalf. As of March 2026, about 99.7% of the firm’s clients, representing $426,037,096 dollars in assets under management, prefer to have Shearwater Capital manage their accounts according to the asset allocation strategy specified in the IPS, without direct input from the client prior to each trade. The remaining 0.3% of clients, representing $1,228,103 dollars in assets under management, prefer to take an active role in the investment process, ranging from discussing the investment options before trades are placed to specifying which securities to buy or sell. Shearwater Capital is not an accounting firm or law firm and does not provide accounting or legal advice. Clients should seek the services of an accounting firm or law firm when necessary. Shearwater Capital is not an insurance broker and does not sell insurance. Shearwater Capital, LLC 4 Form ADV Part 2A Disclosure Brochure  Item 5 - Fees and Compensation: Shearwater Capital is a fee-only investment advisory firm, meaning that investment management fees are our only source of compensation. We are committed to keeping our fees below industry averages. Fees are charged quarterly, in arrears for the prior quarter, based on the following annualized fee schedule: Annual Fee Account Size 0.85% <$100,000 0.75% $100,000-$250,000 0.65% $250,000-$500,000 0.55% $500,000-$1,000,000 0.45% $1,000,000-$2,500,000 0.35% $2,500,000-$5,000,000 $5,000,000-$10,000,000 0.25% 0.15% > $10,000,000 The fee percentage is determined based on the total amount of assets under management for one family or household, regardless of the number of accounts. This is less expensive for the client than charging fees based on each account in isolation. An additional benefit is that we do not use a tiered or blended fee structure, which would apply a 0.85% fee to the first $100,000, 0.75% to the next $150,000, etc. Clients are charged the annual fee based on their total assets under management with Shearwater Capital, which results in a lower overall fee percentage. At Shearwater Capital, we do not use a commission-based fee structure, in which the advisor or broker benefits from increasing the number of trades. We do not receive compensation for the sale of securities or other investment products, including asset-based sales charges or service fees from the sale of mutual funds. This prevents a conflict of interest and facilitates keeping the client’s best interest as the only factor in security selection. The mutual funds we recommend are “no-load,” meaning that they do not charge a commission or sales charge. Our fee-only approach aligns the company’s goals with the client’s goals, in that both parties benefit from a growth in the client’s assets. Fees at Shearwater Capital are fixed, meaning that they do not change with the time the work takes or the amount the service is used. Shearwater Capital does not serve as custodian of any client funds. We utilize outside third- party custodians for all client assets. Most of our assets under management are held at Charles Schwab where we have negotiated agreements that we believe are beneficial for our clients. We also maintain some assets under management at other custodians, such as TIAA. Shearwater Capital does not use wrap fee programs. Some advisory accounts may be managed at a reduced fee or at no charge. Shearwater Capital, in its sole discretion, may negotiate to charge a greater or lesser fee than stated above. Shearwater Capital, LLC 5 Form ADV Part 2A Disclosure Brochure  Clients are invoiced at the beginning of each calendar quarter for investment management services provided over the previous quarter, based upon the value (market value or fair market value in the absence of market value) of the client's account at the end of the previous quarter. Each client receives a quarterly invoice showing the amount of the fee, the fee percentage, and the value of the client's assets on which the fee was based. Valuations are derived from recognized and independent pricing sources and determined by the custodian. New clients are charged a prorated fee for the portion of the quarter in which the new account was open. Clients do not pay fees in advance. The Investment Management Agreement specifies the fee structure. Clients may provide written limited authorization to Shearwater Capital to withdraw fees from their accounts. Clients may also choose to pay their fees via credit card or personal check. An advisory client has the right to terminate the contract without penalty within five (5) business days after entering into the contract. The Investment Management Agreement may be canceled at any time, for any reason, and by either party upon receipt of 30 days written notice. If a contract is terminated, the fees are pro- rated to cover only the dates during which investment management services are provided to the client. All fees paid to Shearwater Capital for investment supervisory services are separate and distinct from the fees and expenses charged by mutual funds or exchange-traded funds to their shareholders. These fees and expenses are described in each fund's prospectus. These fees will generally include a management fee, other fund expenses, and possibly a distribution fee. A client could potentially invest in mutual funds directly or through other brokers or agents that are not affiliated with the services of Shearwater Capital. In this case, the client would not receive the services provided by Shearwater Capital which are designed, among other things, to assist in determining which securities are most appropriate for each client's financial condition and objectives. The client should review the fees charged by Shearwater Capital and the fees charged by the funds to fully understand the total amount of fees to be paid by the client and to evaluate the advisory services being provided. Clients may incur brokerage and other transaction costs – see Investment Brokerage Discretion. Some clients may have a portion of their assets invested in separately managed accounts (“SMAs”) managed by an independent sub-advisor (see Item 7 below – Types of Investments), when we determine that such an arrangement is appropriate considering the client’s investment objectives and overall investment strategy. While Shearwater Capital does not select the individual securities bought or sold within these sub-advised accounts, we monitor the SMA as part of the client’s overall portfolio, including its continued suitability, performance, and alignment with the client’s financial circumstances and portfolio strategy. The sub-advisor is responsible for day-to-day investment management and individual security selection within the SMA. The sub-advisor’s privacy policy, Form ADV Part 2, and Form CRS are provided to the client. Shearwater Capital, LLC 6 Form ADV Part 2A Disclosure Brochure  The sub-advisor charges a separate fee for management of the separately managed account, which is deducted from the client’s account and paid directly to the sub-advisor. This fee currently ranges from 15 to 23 basis points annually (0.15% to 0.23%), billed quarterly. The amount of the fee varies depending on the sub-advisor and the investment strategy used in the account. This fee is in addition to the investment management fee charged by Shearwater Capital. Shearwater Capital does not set this fee, deduct it, or receive any portion of it. Shearwater Capital reviews the total fees charged and the sub-advisor’s performance to determine whether the arrangement remains appropriate and consistent with industry standards. Item 6 - Performance-Based Fees and Side-By-Side Management Shearwater Capital does not receive or participate in performance-based fees based on receiving a share of capital gains on or capital appreciation of client assets. Item 7 - Types of Clients: Shearwater Capital primarily provides investment advice to individuals and families, although the firm will also work with companies, pension and profit-sharing plans, and non-profit organizations. The types of accounts managed by Shearwater Capital include, but are not limited to, the following: 1. Individual accounts (taxable) 2. Joint accounts (e.g., Joint Tenants With Right of Survivorship; Tenants-in-Common) 3. Trust accounts 4. Individual Retirement Accounts (IRAs) 5. Roth Individual Retirement Accounts (Roth IRAs) 6. Qualified retirement trust accounts (e.g., 401(k) plan accounts, profit-sharing plan accounts) 7. Other tax-deferred retirement plans (e.g., 403(b), 457) 8. Cash balance plan accounts 9. Business brokerage accounts 10. Simplified Employee Pension Plan Individual Retirement Accounts (SEP IRAs) 11. Savings Incentive Match Plan for Employees of Small Employers (SIMPLE IRAs) 12. Health Savings Accounts (HSAs) 13. 529 Education Savings Accounts The minimum account size for a new client is $500,000; however, this requirement can be waived at the discretion of the company Principals. Shearwater Capital, LLC 7 Form ADV Part 2A Disclosure Brochure  Types of Investments: For most clients, we construct portfolios of exchange-traded funds (“ETFs”) and/or no-load mutual funds tailored to the asset allocation strategy described in the client’s Investment Policy Statement. Although we may invest client assets in a variety of securities and investment vehicles, we primarily use mutual funds and ETFs offered by Dimensional Fund Advisors LP (“Dimensional”) in constructing client portfolios. Dimensional mutual funds are generally available through approved financial advisors, select retirement and savings plans, and certain institutional channels, and are not typically offered directly to individual investors. Dimensional ETFs are available to all investors. Dimensional mutual funds and ETFs are structured to provide exposure to specific asset classes using a disciplined investment process rather than merely seeking to replicate a market index. Dimensional uses portfolio design and trading strategies intended to enhance long-term performance. In general, these funds have lower portfolio turnover and lower expenses than many actively managed funds. In addition to open-ended mutual funds, such as DIMENSIONAL funds, we also select from the following types of securities in constructing client portfolios: 1. Exchange-traded funds 2. Exchange-traded notes 3. Individual stocks 4. Corporate debt securities 5. Commercial paper 6. Certificates of deposit 7. Municipal bonds 8. United States government bonds 9. Government bonds issued by other countries Some clients may have assets invested in separately managed accounts (SMAs) offered through Dimensional or Charles Schwab. These accounts hold a portfolio of individual stocks or bonds intended to provide exposure similar to a particular asset class, mutual fund, index, or ETF, while also allowing for certain customization based on the client’s preferences and circumstances. For example, certain sectors, industries, or individual securities may be excluded, including for environmental, social, and governance (ESG) considerations. In addition, for clients with appropriate tax sensitivity, these accounts may be customized to facilitate tax- loss harvesting or charitable gifting of appreciated securities. Account guidelines and restrictions may be modified over time as client needs and objectives change. Because of customization, tax management, and other account-specific factors, these SMAs may have a significant tracking error relative to the target fund, ETF, index, or asset class, as well as from other client accounts. As a result, differences in holdings, position sizes, risk characteristics, and performance may be significant, and such differences generally increase as Shearwater Capital, LLC 8 Form ADV Part 2A Disclosure Brochure  the level of customization or tax management increases. Performance is not guaranteed, including performance relative to any benchmark or target strategy. Client accounts are subject to the risk of loss, and all investment strategies and account types described above may experience substantial variation in quarterly and annual results, including loss of principal. Past performance is not a guarantee or a reliable indicator of future results. Item 8 - Methods of Analysis, Investment Strategies, and Risk of Loss: Shearwater Capital's security analysis may be based on several factors including those derived from commercially available software technology, securities rating services, general market and financial information, due diligence reviews and specific portfolio analysis of asset allocation that clients may request. Shearwater Capital's main sources of information may include commercially and/or publicly available investment services, financial newspapers, periodicals, and issuer-prepared information. Shearwater Capital also receives historical market analysis, risk/return analysis, and continuing education from Dimensional Fund Advisors and Charles Schwab. Shearwater Capital's investment advice is based on long-term investment strategies incorporating the principles of Modern Portfolio Theory. Our investment approach is rooted in the belief that markets are relatively efficient and that investor returns are determined principally by asset allocation decisions. We build diversified client portfolios through the use of DIMENSIONAL mutual funds that are available only to institutional investors and clients of a network of selected investment advisors. We also use exchange-traded funds from DIMENSIONAL and other companies that are available to all investors. All investment strategies involving equities entail some degree of risk of loss that clients should be prepared to bear. However, Shearwater Capital seeks to limit risk through broad global diversification. Shearwater Capital's investment philosophy is designed for investors who desire a buy and hold strategy, with an investment time horizon of five years or more. Shearwater Capital seeks to minimize brokerage and other transaction costs by avoiding frequent trading of securities whenever possible. Although Shearwater Capital emphasizes a long-term, disciplined approach to investing, we also provide investment advice regarding short-term and intermediate-term holdings, based on the client’s needs. For example, if a client is interested in saving for a down payment on a house in the next year or two, our investment advice will be tailored to meet those needs. Margin accounts can be established at the client’s request. We usually advise clients against margin loans; however, in some circumstances margin loans provide a reasonable means of raising cash without having to sell the underlying securities. We generally advise clients interested in a margin loan to limit the size of the loan and to repay it as quickly as possible. Shearwater Capital, LLC 9 Form ADV Part 2A Disclosure Brochure  Investment-Related Risks: Investors should keep in mind that there is no certainty that any investment strategy will be profitable, insulate them from loss or be successful in achieving investment objectives, and that past investment performance is not indicative of future results. Examples of investment-related risks include, but are not limited to, the following: • Market Risk: Political, economic, and social issues can cause the value of securities to fluctuate and possibly lose money. • Asset Class Risk: Overweighting a particular asset class, such as value stocks or small cap stocks, may cause a portfolio to underperform the broad market averages at times or lose money. • Foreign Securities Risk: Investing in foreign securities involves risks related to political, economic, and social issues in those countries, which can cause these securities to change in value and lose money. • Foreign Currencies Risk: Investing in foreign securities may expose investors to the risk that the currencies in which the securities are denominated may weaken relative to the U.S. dollar. This in turn may cause the securities to decline in value and the investors may lose money. • Tax-Efficient Investing Risk: Tax strategies intended to minimize an investor’s tax burden may result in lower investment returns. Furthermore, tax laws may change and tax- efficient investment strategies may fail to minimize taxes. • Commodities Investment Risk: Commodity returns can be highly volatile and can be influenced by a variety of factors including interest rate movements, natural disasters, tariffs, and embargoes. Commodities can rapidly change in value and lose money. • Fixed Income Risk: Bond investments are subject to interest rate risk (a change in rates can decrease bond value), credit risk (the risk of default by the bond issuer), and call risk (in which a bond is redeemed by the issuer before the maturity date). Each of these risks can cause a bond or bond fund to lose value. • Regulatory Risk: The government can change any number of laws, which can affect after-tax returns for different investments. • Country Risk: Securities originating from a specific country may be volatile in isolation. Diversification is intended to minimize the effect of one country on the entire portfolio but may or may not be effective. • Emerging Markets Risk: Securities from emerging economies can have volatile returns that are affected by multiple factors, such as political, economic, and social issues, currency fluctuations, and problems related to corruption and property rights. • Error Risk: Errors in portfolio management, placing trades, and other aspects of the investment process can lead to loss of money. For this reason, investment processes are checked regularly and carefully for accuracy. • Fund and Fund Company Risk: There are risks associated with every investment fund and fund company. These risks are outlined in the investment prospectuses that are made available to each investor. Shearwater Capital, LLC 10 Form ADV Part 2A Disclosure Brochure  • Cybersecurity Risk – Breaches including unauthorized access, computer infection with viruses or malicious software may adversely affect custodians, Shearwater Capital, governments, regulatory authorities, banks, brokers, or other parties. Cybersecurity breaches could result in inability to provide services, execute trading or execute normal business operations, potentially resulting in financial losses to clients or firms. • Disruption Risk – changes in technology, new companies or structural changes can negatively impact the value of traditional investments, business competitiveness, company resilience and market stability. Item 9 - Disciplinary Information Since Shearwater Capital was founded in 1999, there have been no complaints filed against the company with state or federal regulatory agencies and no legal or disciplinary actions have been taken against the company or its principals or employees. Item 10 - Other Financial Industry Activities and Affiliations Management persons and employees of Shearwater Capital are not registered as broker- dealers or registered representatives of broker-dealers, futures commission merchants, commodity pool operators, commodity trading advisors or associated persons of the foregoing entities. Item 11 - Code of Ethics: Shearwater Capital has adopted a Code of Ethics to assure adherence to the highest ethical standards by all people involved in company business and client interactions. The firm’s principals, employees, independent contractors, registered representatives, and soliciting agents are required to sign and abide by this Code of Ethics. The complete Code of Ethics is available to clients by request. Its main points are noted below: All employees, independent contractors and principals of Shearwater Capital agree that at all times, they will: • Place the interests of every client ahead of their own interests; • Protect the confidentiality of all personal client data; • The Principals and employees of Shearwater Capital buy and sell securities for their own portfolios that are also recommended to clients. This represents a conflict of interest, which is mitigated by prohibiting front running. Investments by our principals and employees are in publicly traded securities and in volume or quantity usually not Shearwater Capital, LLC 11 Form ADV Part 2A Disclosure Brochure  affecting price. Any deviation from this policy must be reviewed prior to investment by our compliance committee. All personal securities transactions are conducted in such a manner to avoid any abuse of an employee’s position of trust and responsibility and in concordance with our company trading policies; • Shearwater Capital has a conflict of interest regarding advice given on adding new assets or transferring assets into accounts managed by Shearwater Capital in that we receive compensation for the client’s assets managed by our company. Therefore, adding assets or accounts to those managed by Shearwater Capital is only recommended if we believe it is in the best interest of the clients. • Make all investment management decisions in an independent manner and in the client’s best interest; • Uphold an impeccable standard of honesty, integrity and professionalism; • Comply with all state and federal securities laws; This list is not meant to be all inclusive. In each and every scenario the company policy is to “do the right thing” ethically, honestly, and in the best interest of the client. Participation or Interest in Client Transactions: The Shearwater Capital Principals and Chief Compliance Officer each have a substantial portion of their own financial assets managed by Shearwater Capital. Their accounts are managed in a similar fashion to the client accounts and hold many of the same securities. On a given day, all trades for the Shearwater Capital Principals and Chief Compliance Officer accounts are placed either at the same time or after all client trades to avoid any potential benefit from the clients’ trades (referred to as “front-running”) or the potential to adversely influence the clients’ fill prices. Retirement Plan Investment Advice: When we provide investment advice to the client regarding your retirement plan account or individual retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts. The way we make money creates some conflicts with the client’s interests, so we operate under a special rule that requires us to act in your best interest and not put our interest ahead of yours. Under this special rule’s provisions, we must: • Meet a professional standard of care when making investment recommendations (give prudent advice). Shearwater Capital, LLC 12 Form ADV Part 2A Disclosure Brochure  • Never put our financial interests ahead of yours when making recommendations (give loyal advice). • Avoid misleading statements about conflicts of interest, fees, and investments. • Follow policies and procedures designed to ensure that we give advice that is in your best interest. • Charge no more than is reasonable for our services. • Give you basic information about conflicts of interest. Item 12 - Brokerage Practices Shearwater Capital does not receive other products or services other than execution from a broker-dealer or a third party in connection with client securities transactions (no soft dollar benefits). There are no markups or markdowns on client commissions higher than those charged by the broker-dealers for soft dollar benefits. See Investment Brokerage Discretion for further information below. Shearwater Capital has entered into a custodial contract with Charles Schwab & Company, Inc, member FINRA/SIPC. Clients sign a separate contract with these custodians for custody and brokerage services. Shearwater Capital receives benefits from these custodians, including access to client account data, fee deduction capability, institutional trading and operations services, recordkeeping, client reporting and electronic form submission. This custodian also provides educational material on compliance, practice management, information technology and marketing. Our use of the institutional programs does not depend on the amount of brokerage transactions or number of accounts. Certain accounts at Charles Schwab may hold cash in the Schwab Sweep Vehicles which is a conflict of interest for Charles Schwab in that they receive revenue from holding these cash investments based on other offered cash interest rates available. Shearwater Capital in general attempts to hold low cash positions in clients’ accounts to minimize the conflict. Shearwater Capital does not receive client referrals from any broker-dealers. Many trades entered for our clients are completed on an individual basis. Shearwater Capital may aggregate the purchase or sale of securities for various client accounts as a block trade if we believe aggregating orders may be advantageous in achieving best execution including price across client accounts. Securities bought or sold with a block trade are distributed fairly among involved client accounts at the average purchase price. If the purchase or sale of the desired quantity of trades is only partially filled, then the shares are distributed pro rata across the involved client accounts based on their respective intended order size. There is no compensation received by Shearwater Capital or its employees for block trades. In all instances involving trade errors caused by Shearwater Capital, clients are made whole. If the correction of the trade error by the firm results in a loss, Shearwater is responsible for that loss. If a settled trade error results in a gain, the client keeps the gain. When multiple trades are corrected for the same client at the same time, the firm will net the result of each Shearwater Capital, LLC 13 Form ADV Part 2A Disclosure Brochure  correction against each other. If a trading error occurs due to actions of Shearwater Capital and is detected prior to settlement, it is considered an “Advisor Account Trade Error.” The custodian will move the security into a separate error account. Any losses incurred on a correcting trade are paid by Shearwater Capital. Any net gains realized on an Advisor Account corrected trade will be retained by Shearwater Capital and then donated to charity. Item 13 - Review of Accounts Client accounts are supervised continuously. Asset allocation is calculated and evaluated weekly. Account performance is calculated and reviewed monthly. The asset allocation of each account is compared to the target asset allocation in the Investment Policy Statement or to a mutually agreed upon change in the target. The asset allocation versus target for each account is communicated to the client at least annually. One of the company principals is responsible for the review of each client account. Client accounts are also reviewed at the time of new security purchases or sales. Each quarter, an account performance report and gain/loss statement from Shearwater Capital is sent to every client. These quarterly reports include each account's beginning-of-year balance, beginning-of-quarter balance, net contributions/withdrawals, end-of-quarter balance, quarter change in value and rate of return for the quarter and the year to date. A billing statement is included in each performance report listing the fee per account, total fee and fee percentage charged. Clients also receive monthly or quarterly account statements directly from the account custodian. These custodial statements provide details regarding the securities, transactions, and cash positions within each account; in addition to a beginning and ending account balance. Item 14 - Client Referrals - Independent Contractors, Registered Representatives and Solicitors Shearwater Capital may enter into arrangements with third parties, including independent contractors, registered representatives and/or solicitors, to provide services on behalf of the firm. In some cases, these individuals may receive compensation, either directly or indirectly, for assistance in managing the client relationship. In all cases, this arrangement will be disclosed to the client who is referred to Shearwater Capital. In all cases, the independent contractor, registered representative and/or solicitor is also a client with assets at Shearwater Capital. In limited cases, Shearwater Capital may also enter into written agreements with other companies to refer potential clients in exchange for a flat one-time referral fee. This referral fee is paid to the other company regardless of whether the referred potential client actually becomes a client. Solicitation arrangements entail an inherent conflict of interest because the solicitor is receiving an economic benefit for the referral or recommendation of our advisor services. Clients should understand that the referral payment to the third party has no effect on the immediate or future fees charged to the client and there are no additional charges to the Shearwater Capital, LLC 14 Form ADV Part 2A Disclosure Brochure  client. In all cases, referral arrangements will be disclosed to the client who is referred to Shearwater Capital. Item 15 - Custody Shearwater Capital clients maintain their funds in a separate account in each client’s name at a third-party custodian that is independent of our firm (Schwab, TIAA, etc.). The majority of our assets under management are held at Charles Schwab. Shearwater Capital is deemed to have custody as we have client authorized permission to deduct our advisory fee directly from the client’s account. Clients receive monthly account statements directly from the account custodian. These statements provide details regarding the securities, transactions, billing fees and cash positions within each account. A beginning and ending account balance also appear on the monthly account statements. Clients are urged to carefully review and compare the account statements they receive from the qualified custodian with those they receive quarterly from Shearwater Capital. Shearwater Capital is considered to have custody of clients’ funds or securities when clients have standing letters of authorization (SLOA) with their custodian in which Shearwater Capital has authority to direct the amount or date of transferring funds on behalf of the client (First- Party at different financial institutions or Third-Party Transfers). These standing letters of authorization, that have been put in place by the client’s written request and signature, designate the account at a specific custodian or bank from which the client wishes to withdraw money and the account at a specific custodian or bank to which the client wishes to deposit money. Shearwater Capital will only initiate these transfers at a specific amount and date when directed by the client. Shearwater Capital confirms that in those accounts involving a SLOA: (1) the client provides an instruction to the 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; (2) the client authorizes us, in writing, either on the custodian’s form or separately, to direct transfers to the third party either on a specified schedule or from time to time; (3) the custodian performs appropriate verification of the instruction, such as a signature review or other method to verify the client authorization, and the qualified custodian provides a transfer of funds notice to the client promptly after each transfer; (4) the client has the ability to terminate or change the instruction to the custodian; (5) we have 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; (6) we maintain records showing that the third party is not a related party of Shearwater Capital or located at the same address as Shearwater Capital; and (7) the custodian sends the client, in writing, an initial notice confirming the instruction and an annual notice reconfirming the instruction. Shearwater Capital, LLC 15 Form ADV Part 2A Disclosure Brochure  Shearwater Capital does not accept check writing privileges or non-account specific SLOAs on behalf of clients. Item 16 - Investment Brokerage Discretion Client accounts are established in the client’s name, or in the name of the appropriate trust, company, or non-profit organization. Shearwater Capital has discretionary trading privileges for each account including the selection of securities and the number of securities to be bought or sold. This discretionary authority is obtained after the client executes a limited power of attorney. However, Shearwater Capital does not hold or bundle client assets in our company name; specifically, client assets remain unbundled in individual client accounts in the individual client’s name, or in the name of the client’s trust or retirement plan, at the custodian. Shearwater Capital recommends broker-dealers with low transaction costs and efficient trade executions. However, the client may select another broker-dealer of his or her choice. A client who chooses to designate use of a particular broker or dealer should recognize that commissions vary and may not be competitive with other broker-dealers or with commissions that other clients of Shearwater Capital may pay. Brokerage fees, account maintenance fees and transaction costs vary based on type of security, custodian, and broker dealer. Item 17 - Voting Client Securities Many securities provide voting rights to the owner of the asset. Shearwater Capital does not accept the authority to and does not vote proxies. Clients retain the rights and responsibility for receiving and voting proxies for securities maintained in client accounts. Clients will receive their proxies from the custodian or a transfer agent. In a small number of cases, Dimensional Fund Advisors may vote proxies in its role as subadvisor for separately managed accounts with a large number of individual equity positions. In each of these cases, clients receive the form ADV and form CRS of the subadvisor and can request to retain their voting rights on all securities. Clients also retain the rights and responsibilities for all legal proceedings involving companies whose securities are held or previously were held in the client’s accounts, including, but not limited to, the filing of “Proofs of Claim” in class action settlements. Should questions about these processes arise, clients are encouraged to contact a Shearwater Capital representative. Item 18 - Financial Information Shearwater Capital does not require prepayment of fees. Shearwater Capital has never been the subject of bankruptcy petitions and has no financial condition that would impair or limit the company’s ability to meet contractual commitments to clients. Shearwater Capital, LLC 16 Form ADV Part 2A Disclosure Brochure