Disclosures

LAST UPDATED: NOV 15 2020

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Tango is a collaboration among three entities: Franklin Advisors, Inc., Apex Clearing, and Bambu. Franklin Advisors is registered with the SEC as an investment adviser. Apex Clearing is a member of FINRA, a participant in SIPC and licensed in 53 states and territories. Bambu is a technology company based in Singapore, in which Franklin Templeton is a strategic investor.

Tango is a robo-advisor designed to empower advisors to provide personalized, goals-based wealth management at scale. The solution is a collaboration between Franklin Advisers, Inc. (“Franklin Advisers”), Apex Clearing Corporation (“Apex”) and Mangosteen BCC Pte Ltd (“Bambu”). Franklin Advisers provides the personalized, goals-based portfolio management advice to advisors through its proprietary Goals Optimization Engine (GOE™). Bambu’s white-label platform is the digital solution for clients and advisors, while Apex facilitates trading and custody through its modern back-end platform built for safety, scale and speed.

The Goals Optimization Engine used in Tango, is a digital solution that can be built into the electronic platforms of affiliated and unaffiliated investment advisers and other financial institutions (the “GOE Program Sponsors”) for use in connection with their managed account programs and the advisory services they provide to their clients (the “GOE Sponsor Clients”). The GOE Program uses Franklin Advisers’ proprietary investment algorithm (the “GOE Algorithm”) to select and recommend a portfolio (a “GOE Portfolio”) designed to best achieve a GOE Sponsor Client’s stated investment goal. The GOE Algorithm selects the recommended GOE Portfolio out of several prospective portfolios based on information provided about the GOE Sponsor Client relating to the client’s risk tolerance, initial investment amount, target goal amount, investment time horizon, priority of the goal, acceptable level of investment losses at goal tenure date, and expected future investment contributions and withdrawals. Franklin Advisers (based on the GOE Algorithm) then determines, in its discretion, whether to implement the GOE Portfolio recommendation. A GOE Portfolio will generally consist of U.S. Registered Funds, and in some cases will include or consist entirely of funds affiliated with Franklin Advisers or its affiliates (“Affiliated Funds”). The GOE Algorithm reassesses the progress of the GOE Portfolio at intervals pre-determined with each GOE Sponsor Client (or as the information provided on behalf of the GOE Sponsor Client is updated), and may identify and implement or recommend adjustments to the GOE Portfolio’s holdings at those times.

Franklin Advisers will, from time to time, have interests that conflict with the interests of clients investing through GOE. For example, Franklin Advisers and its affiliates receive asset-based and other fees for providing advisory and other services to the Affiliated Funds. Franklin Advisers, therefore, will have an incentive to include funds that have higher fees or profitability in any GOE Portfolio. Franklin Advisers may construct GOE Portfolios without considering the universe of potential funds sponsored by persons not affiliated with Frank Templeton (“Third Party Funds”), even though there may (or may not) be Third Party Funds that are more appropriate for inclusion in such GOE Portfolios, including available Third Party Funds in the applicable asset classes that have lower fees and expenses, greater performance or other favorable terms relative to an Affiliated Fund.

There are limitations inherent in the use of algorithms to manage accounts. For instance, an algorithm is not designed to actively manage asset allocations based on short-term market fluctuations or back-to-back down market events, or consider certain factors such as individual tax circumstances such as capital gains taxes. Rather, its functions consist of proposing a portfolio based on responses to the online questionnaire with respect to a GOE Sponsor Client, identifying opportunities for reallocation, and initiating recommendations accordingly. Franklin Advisers investment advisory personnel oversee the algorithm and the portfolios used and produced by the algorithm, but they do not personally or directly monitor each individual GOE Sponsor Client account. Franklin Advisers’ algorithms are subject to periodic updates, and modifications may have unintended consequences. There is also a risk that the algorithm and related software may not perform within intended parameters, which may result in a recommendation of a portfolio that is more aggressive or conservative than necessary, and trigger or fail to initiate a recommended reallocation.

Franklin Advisers has prepared a white paper describing GOE’s methodology in greater detail. A copy of the paper entitled “The Methodology Behind Franklin Templeton’s Goals Optimization Engine” is available upon request.

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