Baird Private Wealth Management Wrap Fee Program Brochure March 24, 2021

Discretionary Programs ALIGN Strategic Portfolios Private Investment Management BairdNext Portfolios Russell Model Strategies

Non-Discretionary Programs ALIGN Custom Portfolios Baird Advisory Choice

Separate Managed Account Programs Baird Equity Asset Management Portfolios Dual Contract Baird Recommended Managers Riverfront Managed Portfolios Baird SMA Network

Unified Managed Account Programs ALIGN UMA Select Portfolios Unified Advisory Select Portfolios

Robert W. Baird & Co. Incorporated 777 East Wisconsin Avenue Milwaukee, WI 53202 1-800-792-2473 rwbaird.com Member FINRA & SIPC SEC File No. 801-7571

This wrap fee program brochure (“Brochure”) provides information about the qualifications and business practices of Robert W. Baird & Co. Incorporated (“Baird”) and Baird Private Wealth Management, a department of Baird. Clients should carefully consider this information before becoming a client of Baird. If you have any questions about the contents of this Brochure, please contact us at the toll-free phone number listed above. The information contained 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 Baird is available on the SEC’s website at www.adviserinfo.sec.gov.

Material Changes Robert W. Baird & Co. Incorporated (“Baird”) updated the Form ADV Part 2A wrap fee program brochure for its Private Wealth Management Department (the “Brochure”) on March 24, 2021. The following summary discusses the material changes that Baird has made to the Brochure since March 19, 2020, the date of the last annual update to the Brochure.

• Baird has moved the location of many of the documents referenced in the Brochure to a new website address: bairdwealth.com/retailinvestor.

• Baird ceased offering its ALIGN Tactical Portfolios Program, effective January 5, 2021.

• Certain Riverfront Managed Portfolios are now offered through the Overlay Manager. See the Section of the Brochure entitled “Services, Fees and Compensation—SMA Programs—Riverfront Managed Portfolios Program” for more information.

• Baird explained the circumstances under which classes of mutual fund and UIT investments designed for brokerage accounts can be transferred from a brokerage account to a Baird Advisory Choice Account and Baird’s process for converting or liquidating those investments. See the Section of the Brochure entitled “Services, Fees and Compensation—Additional Program Information— Permitted Investments—Baird Advisory Choice Program” for more information.

• Baird updated information about tax harvesting, capital gain avoidance and other tax management services offered under the ALIGN Strategic Portfolios Program, the ALIGN Custom Program, the BairdNext Portfolios Program, the Russell Model Strategies Program, the ALIGN UMA Select Program and the UAS Program. See the Section of the Brochure entitled “Services, Fees and Compensation— Additional Program Information—Special Considerations for the Programs—ALIGN, BairdNext Portfolios, Russell, SMA and UMA Clients—Tax Management Services” for more information.

• Baird updated information about the trust services arrangements, margin loan program, and securities-based lending program that Baird offers to clients, the compensation that Baird and Baird Financial Advisors receive and the conflicts of interest associated with those activities. See the Subsections of the Brochure entitled “Trust Services Arrangements”, “Margin Loans” and “Securities- Based Lending Program”, respectively under the heading “Services, Fees and Compensation— Additional Program Information” for more information.

• Baird updated the range of Portfolio Fee rates that apply to new Accounts participating in certain SMA and UMA Programs. See the Section of the Brochure entitled “Services, Fees and Compensation—Program Fees—Fee Options and Fee Schedules—Asset-Based Fee Arrangements— Unified Advice Fee Arrangement—Portfolio Fee Schedule” for more information.

• Baird clarified that if a client maintains a debit balance in the client’s margin account, the balance has no bearing on the asset-based Program Fee the client pays Baird for advisory services. Baird also clarified that if a client has an option position in an advisory account, the value of the option will be excluded from the Program Fee calculation, unless a margin account was required for the option transaction, in which instance the absolute value of the current market price of the option will be used when calculating the client’s Program Fee. See the Section of the Brochure entitled “Services, Fees and Compensation—Program Fees—Calculation and Payment of Program Fees” for more information.

• Baird provided additional information about how Baird Financial Advisors are compensated, including additional information about the special compensation typically paid to Baird Financial Advisors joining Baird from another firm, how that compensation is often structured in the form of a forgivable loan and the financial incentives and potential conflicts of interest created by those compensation practices. See the Section of the Brochure entitled “Services, Fees and ii

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Compensation—Program Fees—Program Fee Payments to Baird, Financial Advisors and Investment Managers” for more information.

• Baird clarified that if a client directs Baird to liquidate assets in connection with a closure of an Account, Baird acts as broker-dealer, and not investment advisor, when processing such a liquidation request and that the client will generally be charged transaction-based fees in accordance with the applicable commission or other fee schedule.

• The portfolio management courses accepted by Baird that Financial Advisors may complete as part of their admission process into the PIM Program now include Certified Investment Management Analyst (CIMA) and Certified Portfolio Manager (CPM) in addition to Chartered Financial Analyst (CFA).

• Baird updated information about Baird’s regulatory assets under management. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Selection and Evaluation— Advisory Business” for more information.

• Baird added a description of Hilliard Lyons Trust Custom Portfolio Management. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Methods of Analysis—Certain Model Portfolios” for additional information.

• Baird updated the descriptions of the Baird Recommended Model Portfolio and Baird Rising Dividend Portfolio, including an update that no single company stock will comprise more than the greater of 5% of the applicable portfolio or 1.5 times the stock’s market weight in the S&P 500 index. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Methods of Analysis—Certain Model Portfolios” for additional information.

• Baird now offers certain private debt funds to eligible clients. See the Sections of the Brochure entitled “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Methods of Analysis—Certain Recommended Lists” and “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Methods of Analysis—Certain Eligible Product Lists” for additional information.

• Baird removed the American Funds Conservative Growth and Income Portfolio and added the American Funds Moderate Growth and Income Portfolio to the list of model portfolios available to Baird Advisory Choice Accounts. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Baird Advisory Choice Program” for a description of the portfolio.

• Baird added taxable and tax-exempt Baird-research backed asset allocation portfolios to the ALIGN UMA Select Portfolios Program. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Methods of Analysis— Certain Recommended Lists” and “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—ALIGN UMA Select Program” for a description of the portfolios.

• Baird updated information about risks associated with the use of private debt funds and funds of private debt funds and recent events, such as those associated with the ongoing coronavirus (COVID-19) pandemic, potential policy changes as the result of the recent U.S. Presidential election, trade disagreements, Brexit and other geopolitical events. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Principal Risks” for more specific information.

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• Baird updated its disclosures about how it casts proxy votes for clients and its use of an electronic vote management system to cast proxy votes. See the Section of the Brochure entitled “Portfolio Manager Selection and Evaluation—Voting Client Securities” for more information.

• Baird updated information about Baird’s financial services activities and its affiliates. See the Section of the Brochure entitled “Additional Information—Other Financial Industry Activities and Affiliations” for more information.

• Baird updated information about, and the conflicts of interest associated with, certain advisory account fee arrangements, ongoing product fees paid by mutual fund companies and Schwab related to client mutual fund investments, third party payments from mutual fund and UIT sponsors, Baird underwritten offerings and IPOs, and the compensation that Baird receives on certain client options or equity securities orders routed to some venues (commonly known as “payment for order flow”). See the Section of the Brochure entitled “Additional Information—Code of Ethics, Participation or Interest in Client Transactions and Personal Trading—Participation or Interest in Client Transactions” for more specific information.

A client should note that the foregoing summary only discusses material changes made to the Brochure since March 19, 2020. The updated Brochure contains changes that are not listed above.

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Table of Contents Material Changes ...... ii Table of Contents ...... v Services, Fees and Compensation ...... 1 The Client-Baird Fiduciary Relationship ...... 1 Summary of Services ...... 1 Discretionary Programs ...... 4 ALIGN Strategic Portfolios Program ...... 4 BairdNext Portfolios Program ...... 5 Private Investment Management Program ...... 6 Russell Model Strategies Program ...... 6 Non-Discretionary Programs ...... 7 ALIGN Custom Portfolios Program ...... 7 Baird Advisory Choice Program ...... 8 SMA Programs ...... 10 Baird Equity Asset Management Portfolios Program ...... 10 Baird Recommended Managers Program ...... 11 Baird SMA Network Program ...... 13 Dual Contract Program ...... 15 Riverfront Managed Portfolios Program ...... 17 Other SMA Strategy Information ...... 19 UMA Programs ...... 19 ALIGN UMA Select Portfolios Program ...... 19 Unified Advisory Select Portfolios Program ...... 21 SMA Strategy Information ...... 24 Additional Program Information ...... 24 Investment Discretion ...... 24 Trading for Client Accounts ...... 27 Complex Strategies and Complex Investment Products ...... 33 Permitted Investments ...... 36 Unsupervised Assets ...... 37 Special Considerations for the Programs ...... 38 Goal Management ...... 40 Investment Objectives ...... 41 Mutual Fund Share Class Policy ...... 42 Custody Services ...... 43 Cash Sweep Program ...... 44 Trust Services Arrangements ...... 45 Margin Loans ...... 46 Securities-Based Lending Program ...... 46 Client Responsibilities ...... 47 Legal and Tax Considerations ...... 47 Program Fees ...... 48 Fee Options and Fee Schedules...... 48 Program Account Minimums ...... 50 Calculation and Payment of Program Fees ...... 51

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Obtaining Program Services Separately: Brokerage or Advisory? Factors to Consider ...... 53 Program Fee Payments to Baird, Financial Advisors and Investment Managers ...... 54 Other Fees and Expenses ...... 57 Cost and Expense Information for Certain Investment Products ...... 57 Additional Account Fees and Charges ...... 57 Other Fees and Charges ...... 57 Compensation Received by Baird and Baird Financial Advisors ...... 58 Account Requirements and Types of Clients ...... 59 Opening an Account ...... 59 Certain Account Requirements ...... 59 Minimum Account Size ...... 59 Account Contributions and Withdrawals ...... 59 Liens and Use of Account Assets as Collateral ...... 61 Electronic Delivery of Documents ...... 61 Termination of Accounts ...... 61 Types of Clients...... 62 Portfolio Manager Selection and Evaluation ...... 62 Selection and Evaluation ...... 62 Baird Equity Asset Management Portfolios Program ...... 62 Baird Recommended Managers Program ...... 63 Baird SMA Network, Dual Contract and Riverfront Managed Portfolios Programs ...... 63 ALIGN, BairdNext Portfolios, PIM and Russell Programs ...... 64 UMA Programs ...... 65 Oversight of the Programs ...... 66 Performance Calculation ...... 67 Portfolio Management by Baird and Related Persons ...... 68 Advisory Business ...... 69 Performance-Based Fees and Side-By-Side Management ...... 69 Methods of Analysis, Investment Strategies and Risk of Loss ...... 70 Investment Strategies and Methods of Analysis ...... 70 Principal Risks ...... 103 Voting Client Securities ...... 120 Baird Advisory Choice Program and Other Non-Discretionary Accounts ...... 120 UMA Programs ...... 120 Separately Managed Accounts ...... 120 Discretionary and ALIGN Programs ...... 120 Other Proxy Voting Information ...... 121 Legal Proceedings and Corporate Actions ...... 122 Providing Baird Voting Instructions...... 122 Client Information Provided to Portfolio Managers ...... 122 Client Contact with Portfolio Managers ...... 122 Additional Information ...... 122 Disciplinary Information ...... 122

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Other Financial Industry Activities and Affiliations ...... 124 Broker-Dealer Activities ...... 124 Investment Management Activities ...... 124 Certain Affiliations ...... 125 Other Financial Industry Activities ...... 128 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading ...... 129 Code of Ethics ...... 129 Participation or Interest in Client Transactions ...... 129 Review of Accounts ...... 136 Client Account Review ...... 136 Account Statements and Performance Reports ...... 136 Client Referrals and Other Compensation ...... 138 Financial Information ...... 138 Special Considerations for Retirement Accounts ...... 138

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Services, Fees and Compensation practices or may receive compensation or other This Brochure describes some of the investment benefits that create a potential for conflict advisory services that Robert W. Baird & Co. between the interests of clients and the interests Incorporated (“Baird”) offers to its clients through of Baird or its associates. Baird generally its Private Wealth Management (“PWM”) addresses potential conflicts of interest by department. Baird and PWM offer other disclosing them to clients through documents investment advisory services not described in this provided to clients, including, without limitation, Brochure. Separate brochures describe those this Brochure, Brochure supplements that contain other investment advisory services and discuss information about individuals providing the terms and conditions, fees and costs and investment advice to clients and the services they potential conflicts of interest for those services. provide, and the agreements clients enter into This Brochure also references other documents with Baird. In addition, Baird has adopted internal that contain additional important information policies and procedures for Baird and its about Baird. Those documents describe the types associates that require them to: provide of services that Baird offers to clients and certain investment advice that is suitable for advisory types of investments it makes available to clients, clients (based upon the information provided by including the terms, conditions, fees and costs such clients); make full disclosure of all potential, applicable to those services and investments and material conflicts of interest; act with utmost care certain risks and conflicts of interest associated and good faith in dealings with advisory clients; with those services and investments. Those and seek to obtain “best execution” of advisory documents are available on Baird’s website at client transactions. The specific business practices bairdwealth.com/retailinvestor. Included on that that create potential conflicts of interest with website is Baird’s Form CRS Client Relationship clients and additional measures used by Baird to Summary and Client Relationship Details address them are discussed in other sections of documents (together they are referred to as the this Brochure. Client Relationship Booklet). A client of Baird should have already received a copy of the Client A client should note that registration as an Relationship Booklet. A client or prospective client investment adviser does not imply a certain level who wishes to obtain a brochure for another of skill or training. investment advisory service provided by Baird, or a paper copy of any of the other documents Summary of Services referenced in this Brochure, including the Client This Brochure describes certain investment Relationship Booklet, should contact a Baird advisory programs and services that Baird PWM Financial Advisor or call Baird toll-free at 1-800- offers to clients (“Programs”) and applies to each 792-2473. advisory account enrolled in a Program (“Account”). The investment advisory services The information contained in this Brochure is offered under the Programs generally include current as of the date above and is subject to investment advice and consulting services, which change at Baird’s discretion. Please retain this are provided by Baird PWM’s home office Brochure for your records. investment professionals or the client’s Baird Financial Advisor, and, depending upon the The Client-Baird Fiduciary Relationship Program that a client selects, the Program may Baird is registered with the Securities and include portfolio management. The Programs Exchange Commission (“SEC”) as an investment consist of: adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Baird and • discretionary programs, whereby a client gives its associates are deemed to have a fiduciary Baird (including Baird PWM’s home office relationship with a client when providing the investment professionals or the client’s Baird investment advisory services that are described in Financial Advisor) full discretionary authority to this Brochure. That means that Baird and its manage the client’s Account (“Discretionary associates are required to act in the best interest Programs”); of the client when providing investment advisory services. From time to time, Baird or its • non-discretionary programs, whereby Baird associates may engage in certain business provides investment advice and

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recommendations but the client retains full meaning the client has two contracts; one authority with respect to the management of contract with Baird and another contract with the the client’s Account (“Non-Discretionary client’s investment manager. Programs”); The UMA Programs allow a client to invest in a • separately managed account (“SMA”) programs combination of mutual funds, exchange traded and services, whereby investment managers, products (“ETPs”), primarily exchange traded which may include third party investment funds (“ETFs”) and exchange traded notes managers unrelated or related to Baird (“Other (“ETNs”), SMA Strategies, and groups of mutual Managers”) or Baird, manage the client’s funds and ETFs (referred to as “sleeves”) and Account according to a strategy (each, an “SMA other model portfolios of securities managed by Strategy”) with full discretionary authority, and Baird (such sleeves and model portfolios Baird provides additional consulting services to collectively, “Baird-Managed Portfolios”) using a the client (collectively, “SMA Programs”); and single Account.

• unified managed account (“UMA”) Programs, Baird has engaged the Overlay Manager to whereby the client gives Baird and an overlay provide certain subadvisory services to clients management firm, Envestnet Asset that participate in certain SMA Programs and the Management, Inc. (the “Overlay Manager”), UMA Programs. The SMA and UMA Programs selected by Baird authority to manage the make available two types of SMA Strategies: (1) client’s Account according to a strategy (each, a manager-traded strategies, whereby the manager “UMA Strategy”) selected by the client (“UMA itself manages a client’s Account and conducts the Programs”). trading to implement the SMA Strategy selected by the client (a “Manager-Traded Strategy”); and Depending on their particular needs or objectives, (2) model-traded strategies, whereby the clients may use one or more of these Programs. manager does not manage a client’s Account (a “Model Provider”) but instead provides a model The Discretionary Programs include: ALIGN portfolio (“Model Portfolio”) to an overlay Strategic Portfolios; BairdNext Portfolios; Private management firm, which may include the Overlay Investment Management (“PIM”); and Russell Manager, Baird or other third party firm (each, an Model Strategies. The Non-Discretionary “Implementation Manager”), that in turn manages Programs include: ALIGN Custom Portfolios and a client’s Account and conducts the trading to Baird Advisory Choice. The SMA Programs implement the SMA Strategy selected by the include: Baird Equity Asset Management client (a “Model-Traded Strategy”). If a client Portfolios; Baird Recommended Managers selects a Model-Traded Strategy, the Model (“BRM”); Baird SMA Network (“BSN”); Dual Provider will provide the Model Portfolio and Contract (“DC”); and Riverfront Managed updates to the Implementation Manager, and the Portfolios. The UMA Programs include: ALIGN UMA Implementation Manager will manage the client’s Select Portfolios and Unified Advisory Select Account with full discretionary authority according (“UAS”) Portfolios. to the strategy selected by the client. Otherwise, if the client selects a Manager-Traded Strategy, The SMA Programs are generally offered under a the investment manager will directly manage the “single contract” arrangement. Under a single client’s Account with full discretionary authority as contract arrangement, a client enters into an more fully described below. advisory agreement with Baird, and Baird, in turn, enters into a subadvisory or similar agreement Baird is also registered with the SEC as a broker- with the investment manager on the client’s dealer under Securities Exchange Act of 1934, as behalf. This type of arrangement is frequently amended (the “Exchange Act”). Baird provides referred to as a single contract arrangement the Programs described in this Brochure under a because there is only one contract between the “wrap fee” arrangement. This means that in client and Baird; the client does not have an addition to the investment advisory services that agreement directly with the client’s investment Baird provides in connection with each Program, manager. Under the Dual Contract Program, a Baird, in its capacity as broker-dealer, also client has a “dual contract” arrangement, provides clients with trade execution, custody and other standard brokerage services for a single fee

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(“Program Fee”). A client should note that the Some asset allocation strategies use strategic client may incur costs in addition to the Program investment strategies, which involve investing Fee. See “Additional Program Information— accounts in accordance with a predetermined Trading for Client Accounts” and “Other Fees and target allocation to different asset classes. Some Expenses” below for more information. asset allocation strategies use tactical investing, which typically involves tactically and actively Each Program is designed to address different adjusting account allocations to different asset investment needs of clients. All of the Programs classes based upon the manager’s perception of discussed in this Brochure may not be appropriate how those asset classes will perform in the short- for every client. For example, the Programs may term. Some asset allocation strategies involve the not be appropriate for clients who have low or no use of both strategic and tactical investment trading activity, who maintain their accounts strategies, sometimes referred to as dynamic invested in high levels of cash, who do not want strategies. Asset allocation strategies may be ongoing professional investment advice or implemented using a variety of investment types, account monitoring, who tend to execute such as individual securities, mutual funds and transactions without the recommendation or ETPs, including ETFs and ETNs. The amount advice of an advisor, which are commonly allocated to an asset class or investment type referred to as “unsolicited” transactions, or who varies by strategy, and some strategies may have intend to utilize an investment strategy, product little or no allocation to one or more asset classes or solution that is not available in a Program. or types of investments described above. See “Portfolio Manager Selection and Evaluation— Some Programs offer clients the ability to pursue Methods of Analysis, Investment Strategies and alternative investment strategies (“Alternative Risk of Loss—Investment Strategies and Methods Strategies”) or other non-traditional or complex of Analysis—Investment Strategies—Asset investment strategies that involve special risks Allocation Strategies” below for more information. not apparent in more traditional investments like stocks and bonds (collectively, “Complex The Programs make available investment Strategies”). Similarly, some Programs offer products and services offered by parties that are clients the ability to invest in non-traditional or not related to Baird. Some Programs make real assets (“Non-Traditional Assets”). Some available investment products and services Programs also offer the ability to invest in offered by parties related to Baird, including: investment products that pursue Alternative Baird Advisors and Baird Equity Asset Strategies (“Alternative Investment Products”) or Management, investment management other Complex Strategies (collectively, “Complex departments of Baird; Chautauqua Capital Investment Products”). The use of these Management (“CCM”), a division of Baird Equity strategies and investment products involves Asset Management; Riverfront Investment Group, special risks, and a client should not engage in a LLC (“Riverfront”) and Strategas Asset strategy or purchase an investment product Management, LLC (“Strategas”), investment unless the client understands the related risks. managers that are affiliated with Baird; Hilliard See “Additional Program Information—Complex Lyons Trust (“HLT”), a trust company that is Strategies and Complex Investment Products” affiliated with Baird; and mutual funds offered by and “Portfolio Manager Selection and Evaluation— Baird Funds, Inc. (the “Baird Funds”), which is Methods of Analysis, Investment Strategies and affiliated with Baird. For more information about Risk of Loss—Principal Risks” below for more these and other related parties, see “Additional information. Information—Other Financial Industry Activities and Affiliations” below. Certain Programs make available asset allocation investment strategies. Asset allocation strategies Baird clients typically work with a Baird Financial involve investing in one or more categories of Advisor to determine the services that are assets, such as equity securities, fixed income appropriate given their financial goals and securities, Non-Traditional Assets, Alternative circumstances. During the new account process, Investment Products and cash, and one or more clients provide information that assists the client subcategories of assets, called asset classes. and the client’s Financial Advisor with determining Asset allocation strategies have varying the client’s investment needs, objectives, investment objectives and investment strategies. investment time horizon, and risk tolerances for

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the assets being invested. However, it is a client the client’s advisory agreement. Clients are that ultimately selects the Program and encouraged to review this Brochure and their investment strategy that is most appropriate for advisory agreement carefully. the client. Discretionary Programs A client that wishes to participate in a Program ALIGN Strategic Portfolios Program will enter into a client relationship agreement or Under the ALIGN Strategic Portfolios Program, other investment advisory agreement with Baird Baird manages a client’s Account with full (“advisory agreement”). The client’s advisory discretionary authority according to a proprietary agreement will contain the specific terms model strategic asset allocation strategy applicable to the services selected by the client, developed by Baird (each such model an “ALIGN fees payable by the client, and other terms Strategic Portfolio”) that is selected by the client. applicable to the client’s advisory relationship with The ALIGN Strategic Portfolios Program offers Baird. A client should note that the client’s model asset allocation portfolios that have advisory relationship with Baird does not begin different investment objectives and use different until Baird enters into the applicable advisory strategic investment strategies. Each ALIGN agreement with the client, which occurs when Strategic Portfolio provides for specific levels of Baird PWM’s Home Office has accepted the client’s investment across different asset classes, such as advisory agreement and determined that all of the equity securities, fixed income securities, Non- client’s paperwork is in order. See “Account Traditional Assets, Alternative Investment Requirements and Types of Clients” below for Products and cash. Each Portfolio generally uses more information. mutual funds and ETPs, primarily ETFs, in order to implement the model asset allocation strategy. As mentioned above, Baird, in its capacity as The amount allocated to an asset class or type of broker-dealer, also provides Program clients with investment varies by Portfolio, and some trade execution, custody and other standard Portfolios may have little or no allocation to one brokerage services. For this reason, a client will or more asset classes or types of investments also enter into a client relationship agreement or described above. other account agreement with Baird (“account agreement”) if the client has not already done so. Baird constructs each ALIGN Strategic Portfolio The client’s account agreement authorizes Baird and adjusts the asset allocation of each ALIGN to execute trades for, and perform related Strategic Portfolio from time to time. Baird also brokerage and custody services to, the client’s determines the mutual funds and ETPs that are Account. Baird generally does not permit a client available in the ALIGN Strategic Portfolios to include assets in the client’s Account that are Program, including the percentage each mutual held by a third party custodian or that are fund or ETP comprises in each asset class within otherwise held outside of a Baird account (“Held- an ALIGN Strategic Portfolio. Baird may make Away Assets). changes to an ALIGN Strategic Portfolio from time to time as it deems appropriate and without Each Program has different structures, providing prior notice to, or obtaining the consent administration, types and levels of service, and of, a client. fees and expenses. In particular, a client should note that the investment advisory services The ALIGN Strategic Portfolios include certain provided by Baird and its associates, including the element portfolios (“ALIGN Elements Portfolios”) depth of initial and ongoing research, evaluation, that are designed for clients with smaller accounts monitoring and review of the investments in a and as such do not invest in as many mutual client’s Account, varies by Program and the funds or ETFs compared to other ALIGN Strategic investments selected for the Account. Portfolios. Clients that are able to satisfy applicable account minimums for other ALIGN The foregoing discussion of the Programs is only a Strategic Portfolios are encouraged to discuss summary. More specific information about the with their Financial Advisor whether another Programs and the particular investment advisory portfolio may be a more appropriate choice for services that Baird provides in connection with them. each Program are further described below and in

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For more specific information about the ETFs, in order to implement the model asset investment options made available through the allocation strategy. The amount allocated to an Program and the level of initial and ongoing asset class or type of investment varies by research, evaluation, monitoring and review Portfolio, and some Portfolios may have little or performed by Baird on those investment options, no allocation to one or more asset classes or if any, see “Portfolio Manager Selection and types of investments described above. Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Investment Baird constructs each BairdNext Portfolio and Strategies and Methods of Analysis—ALIGN adjusts the asset allocation of each BairdNext Programs” below. Portfolio from time to time. Baird also determines the mutual funds and ETPs that are available in Some of the services provided under this Program the BairdNext Portfolios Program, including the may be provided to a client by a Baird Financial percentage each mutual fund or ETP comprises in Advisor assigned to the client’s Account. Typically, each asset class within a BairdNext Portfolio. a client selects the ALIGN Strategic Portfolio Baird may make changes to a BairdNext Portfolio appropriate for the client’s Account with the from time to time as it deems appropriate and assistance of the client’s Baird Financial Advisor. without providing prior notice to, or obtaining the consent of, a client. Baird may replace investments in a client’s Account, rebalance a client’s Account assets to be The BairdNext Portfolios Program is designed for consistent with the client’s chosen ALIGN clients with smaller accounts and as such does Strategic Portfolio strategy, change the client’s not invest in as many mutual funds or ETFs asset allocation, or engage in tax management compared to other Programs. Clients that are able strategies in certain circumstances. See to satisfy applicable account minimums for other “Additional Program Information—Special Programs are encouraged to discuss with their Considerations for ALIGN, BairdNext Portfolios, Financial Advisor whether another Program may Russell, SMA and UMA Clients” below for more be a more appropriate choice for them. information. For more specific information about the Important Information about Affiliated investment options made available through the Funds. Some of the mutual funds offered by Program and the level of initial and ongoing Baird Funds, which is affiliated with Baird, have research, evaluation, monitoring and review been selected by Baird for inclusion in certain performed by Baird on those investment options, ALIGN Strategic Portfolios. This presents a conflict if any, see “Portfolio Manager Selection and of interest. For more information, see “Additional Evaluation—Methods of Analysis, Investment Information—Other Financial Industry Affiliations Strategies and Risk of Loss—Investment and Activities” below. Strategies and Methods of Analysis—BairdNext Portfolios Program” below. BairdNext Portfolios Program Under the BairdNext Portfolios Program, Baird Some of the services provided under this Program manages a client’s Account with full discretionary may be provided to a client by a Baird Financial authority according to a proprietary model Advisor assigned to the client’s Account. Typically, strategic asset allocation strategy developed by a client selects the BairdNext Portfolio appropriate Baird (each such model, a “BairdNext Portfolio”) for the client’s Account with the assistance of the that is selected by the client. The BairdNext client’s Baird Financial Advisor. Portfolios Program offers model asset allocation portfolios that have different investment Baird may replace investments in a client’s objectives and use different strategic investment Account, rebalance a client’s Account assets to be strategies. Each BairdNext Portfolio provides for consistent with the client’s chosen BairdNext specific levels of investment across different asset Portfolio strategy, change the client’s asset classes, such as equity securities, fixed income allocation, or engage in tax management securities, Non-Traditional Assets, Alternative strategies in certain circumstances. See Investment Products and cash. Each Portfolio “Additional Program Information—Special generally uses mutual funds and ETPs, primarily Considerations for ALIGN, BairdNext Portfolios,

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Russell, SMA and UMA Clients” below for more money market mutual funds or may be deposited information. in interest-bearing bank accounts. Additional information about the types of investments a PIM Important Information about Affiliated Manager may use for client accounts is contained Funds. Some of the mutual funds offered by under the heading “Additional Program Baird Funds, which is affiliated with Baird, have Information—Permitted Investments” below. For been selected by Baird for inclusion in certain more information about the PIM Program, see BairdNext Portfolios. This presents a conflict of “Portfolio Manager Selection and Evaluation— interest. For more information, see “Additional Methods of Analysis, Investment Strategies and Information—Other Financial Industry Affiliations Risk of Loss—Investment Strategies and Methods and Activities” below. of Analysis—Private Investment Management Program” below. Private Investment Management Program Under the PIM Program, a client grants full Baird may remove any PIM Manager or strategy discretionary authority and management of the from the PIM Program at any time and transfer client’s Account to Baird and the client’s Baird day-to-day management responsibility of a Financial Advisor who has been approved by Baird client’s Account to another PIM Manager or Baird to manage client accounts in the PIM Program (a Financial Advisor at any time without providing “PIM Manager”). prior notice to, or obtaining the consent of, a client. In the PIM Program, a client’s PIM Manager seeks to meet the client’s particular investment needs Important Information about PIM Accounts. by developing a customized investment strategy PIM Managers may engage in strategies that based upon guidelines that are jointly established involve: concentrated and less diversified by the client and the client’s PIM Manager. At the portfolios of securities; leverage or margin; and commencement of services, the client’s PIM frequent trading for client accounts. In addition, Manager reviews the client’s investment PIM Managers may invest client accounts in objectives and risk tolerance. Based upon that illiquid securities, community bank stocks and review and other information provided by the Complex Investment Products. These types of client, the PIM Manager makes a subsequent strategies and investments involve special, recommendation to the client as to which sometimes significant, risks and are not investment strategy the PIM Manager believes is appropriate for all clients. A client should best suited for the client. Some PIM Managers use understand those risks before engaging in those model portfolios, which may include proprietary strategies or investing in those products. See model asset allocation portfolio strategies “Additional Program Information—Complex developed by Baird, or other investment Strategies and Complex Investment Products” strategies. Some PIM Managers take a and “Portfolio Manager Selection and Evaluation— “counseled” or more customized approach to Methods of Analysis, Investment Strategies and management of client accounts. A client makes Risk of Loss—Principal Risks” below for more the final decision as to which investment strategy information. is chosen for the client’s Account. More specific information as to how the client’s PIM Manager Mutual funds, ETFs and other investment products will manage the client’s Account is provided to the affiliated with Baird are available to clients under client in connection with the opening of the the PIM Program. This presents a conflict of Account. interest. For more information, see “Additional Information—Other Financial Industry Affiliations A PIM Manager may make investments in various and Activities” below. types of securities, including, but not limited to, equity securities, fixed income securities, Non- Russell Model Strategies Program Traditional Assets, certain Alternative Investment Under the Russell Model Strategies Program (the Products and mutual funds and ETPs that in turn “Russell Program”), Baird manages a client’s invest in those investments. All or a portion of the Account with full discretionary authority according assets in a client’s Account may be held in cash or to a model mutual fund asset allocation strategy cash equivalents, including securities issued by (a “Russell Strategy”) developed by Russell

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Investment Management, LLC (“Russell”) that is Some of the services provided under this Program selected by a client. The Russell Program offers may be provided to a client by a Baird Financial model asset allocation portfolios that have Advisor assigned to the client’s Account. Typically, different investment objectives and use different a client selects the Russell Strategy appropriate strategic and tactical investment strategies. Each for the client’s Account with the assistance of the Russell Strategy provides for specific levels of client’s Baird Financial Advisor. investment across different asset classes, such as equity securities, fixed income securities, Non- Baird may rebalance a client’s Account assets to Traditional Assets, Alternative Investment be consistent with the client’s chosen asset Products and cash. Each Strategy generally uses allocation strategy, change the client’s asset mutual funds and ETFs in order to implement the allocation, or engage in tax management model asset allocation strategy. The amount strategies in certain circumstances. See allocated to an asset class or type of investment “Additional Program Information—Special varies by Strategy, and some Strategies may Considerations for ALIGN, BairdNext Portfolios, have little or no allocation to one or more asset Russell, SMA and UMA Clients” below for more classes or types of investments described above. information. Each Russell Strategy will typically invest exclusively or significantly in mutual funds offered Non-Discretionary Programs by Russell Investment Company (the “Russell ALIGN Custom Portfolios Program Funds”), although some non-Russell Funds may be used. The ALIGN Custom Portfolios Program is a Non- Discretionary Program whereby Baird manages a Russell constructs each Russell Strategy and client’s Account on a non-discretionary basis adjusts the asset allocation of each Strategy from according to a custom model asset allocation time to time. Russell also determines the mutual strategy (an “ALIGN Custom Portfolio”) that is funds and ETFs, including the Russell Funds, that selected by the client. ALIGN Custom Portfolios are available in each Russell Strategy, including involve the use of various different investment the percentage each mutual fund and ETF strategies because they are customized for each comprises in each Strategy. From time to time, client. An ALIGN Custom Portfolio provides a Russell may remove mutual funds and ETFs and client with a customized level of investment replace them with other mutual funds and ETFs. across different asset classes, such as equity securities, fixed income securities, Non-Traditional Assets, Alternative Investment Products and cash. Baird anticipates that it generally will implement a To implement the asset allocation strategy, a Russell Strategy as proposed by Russell. client selects the investments for the Account However, Baird has sole discretionary authority from among those mutual funds and ETPs that over a client’s Account invested in a Russell Baird has determined are eligible for use in the Strategy, and Baird may implement a Russell Program. Strategy differently than proposed by Russell or may sell the client’s investments if Baird determines such action to be necessary and in the For more specific information about the client’s best interest. investment options made available through the Program and the level of initial and ongoing research, evaluation, monitoring and review For more specific information about the performed by Baird on those investment options, investment options made available through the if any, see “Portfolio Manager Selection and Program and the level of initial and ongoing Evaluation—Methods of Analysis, Investment research, evaluation, monitoring and review Strategies and Risk of Loss—Investment performed by Baird on those investment options, Strategies and Methods of Analysis—ALIGN if any, see “Portfolio Manager Selection and Programs” below. Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Investment Strategies and Methods of Analysis—Russell Model Some of the services provided under this Program Strategies Program” below. may be provided to a client by a Baird Financial Advisor assigned to the client’s Account. Typically, a client develops and selects the ALIGN Custom Portfolio appropriate for the client’s Account with

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the assistance of the client’s Baird Financial Choice Account to the target asset allocations Advisor. specified by the model portfolio at predetermined intervals. Currently, Baird offers the following While a client retains discretionary authority and automatic rebalance options to applicable management over the client’s ALIGN Custom Advisory Choice Accounts: annual, semi-annual Portfolios Account, a client participating in the and quarterly. ALIGN Custom Portfolios Program gives Baird the authority to replace investments in a client’s Baird does not have discretionary authority over Account, rebalance a client’s Account assets to be the assets in a client’s Baird Advisory Choice consistent with the client’s chosen ALIGN Custom Account, and Baird and the client’s Baird Financial Portfolio strategy, or engage in tax management Advisor cannot purchase or sell any securities or strategies in certain circumstances. See other investments in the client’s Baird Advisory “Additional Program Information—Special Choice Account, including purchases and sales to Considerations for ALIGN, BairdNext Portfolios, rebalance the Account, without the client’s Russell, SMA and UMA Clients” below for more authorization. Ultimately, the client makes the information. final decision as to selection of investments for the client’s Baird Advisory Choice Account. Important Information about the ALIGN Furthermore, if a client selects a model portfolio Custom Portfolios Program. Mutual funds and for the client’s Baird Advisory Choice Account, a ETFs affiliated with Baird are available to clients client should understand that the client is under the ALIGN Custom Portfolios Program. This ultimately responsible for: the selection of the presents a conflict of interest. For more model portfolio, the model portfolio’s information, see “Additional Information—Other implementation, and the selection of an automatic Financial Industry Affiliations and Activities” rebalance option, if any. below. A client should understand that Baird only The ALIGN Custom Portfolios Program is a non- provides a client with certain consulting services discretionary Program. Once an investment is and, for eligible Accounts, automatic Account made by the client, the investment will only be rebalancing services under the Baird Advisory removed from the client’s Account upon the Choice Program. The consulting services that may removal of the investment from the Program or be available in the Program from the client’s the client’s direction to do so. A client should Financial Advisor include research, analysis, carefully consider the foregoing when deciding to advice and recommendations regarding: financial participate in the ALIGN Custom Portfolios and investment goals and needs; asset allocation Program and also consider whether another Baird strategies, investment strategies and investment Program may be more appropriate for the client. restrictions; methods for implementing investment strategies; trends and expectations Baird Advisory Choice Program regarding securities and other investments, securities markets, and economic sectors and The Baird Advisory Choice Program is a Non- industries; and the purchase, holding and sale of Discretionary Program whereby Baird provides securities and other investments. The specific advice to a client in connection with the client’s consulting services to be provided to a client will own management of the client’s Account. be determined by mutual agreement between the client and the client’s Financial Advisor. Baird Some of the services provided under this Program does not undertake to provide any other may be provided to a client by a Baird Financial consulting or investment advisory services under Advisor assigned to the client’s Account. this Program unless Baird agrees to do so in writing. Some Baird Financial Advisors may recommend that a client implement a model portfolio in the Baird or the client’s Financial Advisor will provide client’s Advisory Choice Account. A client investment recommendations for the client’s implementing a model portfolio in the client’s Account and may recommend the amount, type Advisory Choice Account may have the option to and timing with respect to buying, holding, have Baird and the client’s Financial Advisor exchanging, converting and selling securities and automatically rebalance the client’s Advisory other assets for the client’s Account. Baird or the

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client’s Financial Advisor may recommend security selection independent of the advice of investments in various types of securities, Baird or their Financial Advisor or a client who including, but not limited to, equity securities, does not receive or request investment advisory fixed income securities, Non-Traditional Assets, or other non-trading services from Baird. A Baird certain Alternative Investment Products and Advisory Choice Account is also not for day mutual funds and ETPs that in turn invest in those trading or other extreme trading activity, investments. All or a portion of the assets in a including excessive options trading or trading in client’s Account may be held in cash or cash mutual funds based on market timing. If a client’s equivalents, including securities issued by money Baird Advisory Choice Account engages in market mutual funds or may be deposited in “excessive trading activity” (herein defined as interest-bearing bank accounts. Additional activity that would be considered “excessive” by information about the types of investments Baird industry professionals in a non-discretionary, fee- or a Financial Advisor may recommend for client based program, as determined by Baird in its sole accounts is contained under the heading discretion), Baird may, to the extent permitted by “Additional Program Information—Permitted applicable law, immediately, upon sending notice Investments” below. For more information about to the client, restrict the activity occurring in the the Baird Advisory Choice Program, see “Portfolio client’s Account, terminate the Account, convert Manager Selection and Evaluation—Methods of the Account to a commission-based account, or Analysis, Investment Strategies and Risk of charge a higher fee at such rate as Baird, in its Loss—Investment Strategies and Methods of sole discretion, may elect. A client is responsible Analysis—Baird Advisory Choice Program” below. for monitoring the client’s Account and determining the desirability of maintaining the A client should ask the client’s Baird Financial Account as opposed to maintaining a traditional, Advisor questions about the investment styles, commission-based brokerage account. In addition philosophies, strategies, analyses and techniques to Baird Advisory Choice Accounts and traditional, the client’s Baird Financial Advisor will use in commission-based brokerage accounts, Baird order to meet the client’s objectives. offers various other advisory programs in which it has investment discretion. A client should Important Information about Baird Advisory periodically reevaluate whether the ongoing use Choice Accounts. A Baird Advisory Choice of this Non-Discretionary Advisory Program is Account provides a fee-based alternative to a desired and request a Baird Financial Advisor to traditional, commission-based brokerage account. explain the benefits and disadvantages of Unlike a traditional brokerage account where a maintaining a Baird Advisory Choice Account and client is paying for traditional brokerage services, the availability of alternative arrangements. an Advisory Choice client is also paying for investment advice and other investment advisory Additional information regarding the differences services above and beyond those available in a between brokerage and advisory relationships can traditional brokerage account. Each client should be found in the “Understanding Brokerage and determine whether a Baird Advisory Choice Investment Advisory Relationships” document Account is appropriate. In making this that is available on Baird’s website at determination, a client should carefully consider bairdwealth.com/retailinvestor. all relevant factors, including the client’s investment objectives, risk tolerance, past and A client may terminate a Baird Advisory Choice anticipated trading practices, current assets, Account and convert it into a traditional, current investments, the value and type of commission-based brokerage account at any time Permitted Investments to be held in the Account, by contacting the client’s Baird Financial Advisor. anticipated use of other Baird products and Baird also has the right, at any time upon notice services, and the costs and benefits of the to a client, to terminate a client’s Baird Advisory Account. The costs of a Baird Advisory Choice Choice Account and convert it into commission- Account may be more or less than in an account based brokerage account. where the client is charged on a per-transaction basis. A Baird Advisory Choice Account may not A client should note that the client’s Baird be appropriate for a client who anticipates little or Advisory Choice Account may be engaged in no trading activity, a client who prefers to direct strategies that involve concentrated and less the client’s own investment strategies and diversified portfolios of securities, leverage or

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margin, options, and frequent trading. In Baird Equity Asset Management also manages addition, the client’s Baird Advisory Choice client portfolios according to other strategies Account may be invested in illiquid securities and selected by clients (“Other Baird Equity Asset Complex Investment Products. These types of Management Strategies”, and with the Baird strategies and investments involve special, Equity Asset Management Growth Strategies, the sometimes significant, risks and are not SAM Strategies, and the Baird Equity Asset appropriate for all clients. A client should Management Value Strategies, the “Baird Equity understand those risks before engaging in those Asset Management Strategies”). strategies or investing in those products. See “Additional Program Information—Complex The SAM Strategies are model asset allocation Strategies and Complex Investment Products” portfolios that have different investment and “Portfolio Manager Selection and Evaluation— objectives and strategies. Each SAM Strategy Methods of Analysis, Investment Strategies and provides for specific levels of investment across Risk of Loss—Principal Risks” below for more different asset classes, such as equity securities, information. fixed income securities, Non-Traditional Assets, Alternative Investment Products and cash. Each Mutual funds, ETFs and other investment products Strategy generally uses individual securities, affiliated with Baird are available to clients under mutual funds and ETFs in order to implement the the Advisory Choice Program. This presents a model asset allocation strategy. The amount conflict of interest. For more information, see allocated to an asset class or type of investment “Additional Information—Other Financial Industry varies by Strategy, and some Strategies may Affiliations and Activities” below. have little or no allocation to one or more asset classes or types of investments described above. SMA Programs Baird Equity Asset Management Portfolios A SAM Custom Portfolio provides a client with a Program customized level of investment across one or more of the asset classes described above. The Under the Baird Equity Asset Management custom model asset allocation strategy is Portfolios Program, a client grants full determined by the client with the assistance of discretionary authority and management of the Baird Equity Asset Management. client’s Account to Baird Equity Asset Management, an investment management Baird Equity Asset Management may invest a department of Baird, or an Other Manager client’s Baird Equity Asset Management Strategies selected by the client, to manage the client’s Account in various types of securities, which will Account. Under the Baird Equity Asset be chosen by Baird Equity Asset Management and Management Portfolios Program, Baird Equity which may include mutual funds or other Asset Management determines the Other investment products affiliated with Baird. Managers and their strategies eligible to participate in the Program. Affiliates of Baird may manage client accounts under the Baird Equity Clients are urged to review Baird Equity Asset Asset Management Portfolios Program. Management’s Form ADV Part 2A Brochure, which contains additional important information about Baird Equity Asset Management Strategies Baird Equity Asset Management, including information about the Baird Equity Asset Baird Equity Asset Management provides portfolio Management Strategies, the types of investments management to clients desiring investments in Baird Equity Asset Management may use for a equity and balanced portfolios. Baird Equity Asset client’s Account, and the risks associated with Management offers: growth investment strategies investing in those Strategies. Baird Equity Asset (the “Baird Equity Asset Management Growth Management’s Form ADV Part 2A Brochure is Strategies”); Specialized Asset Management available upon request. (“SAM”) portfolio strategies (the “SAM Strategies”), consisting of SAM Strategic Portfolio Other Manager Strategies strategies and SAM Custom Portfolio strategies; and value investment strategies (the “Baird Clients that are considering engaging an Other Equity Asset Management Value Strategies”). Manager under this Program are urged to review the Other Manager’s Form ADV Part 2A Brochure

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(“Other Manager Brochure”), which should contain client’s Financial Advisor’s assistance with additional important information about the Other determining the client’s financial needs, Manager, including information about the Other investment goals and investment restrictions and Manager’s strategies, the types of investments periodically reviewing the manager’s the Other Manager may use for a client’s Account, performance. Baird does not undertake to provide and the risks associated with investing in the any other consulting or investment advisory Other Manager’s SMA Strategies. Other Manager services under this Program unless Baird agrees Brochures are available upon request. to do so in writing.

Selecting a Strategy Important Information about Baird Equity Some of the services provided under this Program Asset Management. Baird Equity Asset may be provided to a client by a Baird Financial Management is an investment management Advisor assigned to the client’s Account. department of Baird. Baird has a potential conflict of interest to the extent Baird would advise clients If the client has decided to retain Baird Equity to participate in advisory services offered by Baird Asset Management or an Other Manager under Equity Asset Management. For more information, this Program to manage the client’s Account, the see “Additional Information—Other Financial client’s Financial Advisor will generally assist the Industry Affiliations and Activities” below. client in selecting a Portfolio suitable for the client’s Account. A client’s appointment and continued retention of Baird Equity Asset Management or an Other If a client selects a Baird Equity Asset Manager to manage the client’s Account are Management Strategy or an Other Manager based upon the client’s review of Baird Equity strategy under this Program, the client authorizes Asset Management or such Other Manager and and directs Baird to appoint Baird Equity Asset their services. Once retained by the client, Baird Management to serve as sub-adviser to the Equity Asset Management or the Other Manager client’s Account. If the client has selected a Baird will only be removed from managing the client’s Equity Asset Management Strategy, the client also Account upon the manager’s withdrawal, removal authorizes and directs Baird Equity Asset from the Program, or the client’s direction to do Management to manage the client’s Account with so. full discretionary authority in accordance with the Baird Equity Asset Management Strategy selected Baird Recommended Managers Program by the client. If the client has selected an Other The Baird Recommended Managers Program is a Manager strategy, the client authorizes and program whereby a client provides Baird and the directs Baird Equity Asset Management to appoint client’s Financial Advisor with discretionary the Other Manager as sub-adviser, and the client authority to appoint investment managers to also authorizes and directs such Other Manager to manage the client’s Account with full discretionary manage the client’s Account with full discretionary authority and to terminate or replace investment authority in accordance with the Other Manager managers for the client’s Account. The Baird strategy selected by the client. Recommended Managers Program is designed for a client who wishes to have the client’s Account If a client’s Account is managed by an Other managed by investment managers that are Manager under this Program, the client should monitored by Baird on an ongoing basis. understand that: Baird does not manage the Account and does not otherwise have any Under the Baird Recommended Managers influence over the Other Manager’s investment Program, Baird determines the investment decisions or securities selections, and therefore, managers (“Recommended Managers”) and their Baird is not responsible for the decisions made by strategies (“BRM Strategies”) eligible to the Other Manager; Baird does not provide any participate in the Program through an initial and recommendation or investment advice regarding ongoing evaluation process. the purchase or sale of investment products made for the client’s Account; and Baird and the client’s For more specific information about the managers Financial Advisor only provide the client with and SMA Strategies made available through the certain consulting services, which may include the Baird Recommended Managers Program and the

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level of initial and ongoing research, evaluation, Certain BRM Strategies are only made available monitoring and review performed by Baird on through Implementation Managers. The BRM those managers and SMA Strategies, see Strategies offered through Implementation “Portfolio Manager Selection and Evaluation— Managers consist of Manager-Traded Strategies Selection and Evaluation—Baird Recommended and Model-Traded Strategies. If a BRM Strategy Managers Program” below. offered through an Implementation Manager is selected for a client’s Account, the client Recommended Managers have varying investment authorizes and directs Baird to appoint the objectives, styles and strategies, and they may Implementation Manager to serve as sub-adviser invest a client’s Account in various types of to the client’s Account. If a Model-Traded securities, which will be chosen by the Strategy offered through an Implementation Recommended Manager and which may include Manager is selected for a client’s Account, the mutual funds, ETFs or other investment products client authorizes and directs the Implementation affiliated with the manager or Baird. Manager to manage the client’s Account with full discretionary authority in accordance with the Clients are urged to review the Recommended selected BRM Strategy. If a Manager-Traded Manager’s Form ADV Part 2A Brochure, which Strategy offered through an Implementation should contain additional important information Manager is selected for a client’s Account, the about the Recommended Manager, including client authorizes and directs the Implementation information about the Recommended Manager’s Manager to appoint the applicable Recommended strategies, the types of investments the Manager as sub-adviser, and the client also Recommended Manager may use for a client’s authorizes and directs such Recommended Account, and the risks associated with investing in Manager to manage the client’s Account with full a BRM Strategy. Such brochures are available discretionary authority in accordance with the upon request. selected BRM Strategy.

Some of the services provided under the Baird If a Model-Traded Strategy offered through an Recommended Managers Program will be Implementation Manager is selected for a client’s provided to a client by a Baird Financial Advisor Account, the Implementation Manager will assigned to the client’s Account. A client, typically typically implement the Model Portfolio as working with a Baird Financial Advisor, initially proposed by the Model Provider. However, since selects the Recommended Manager and BRM the Implementation Manager has discretionary Strategy for the client’s Account. Thereafter, authority over the client’s Account, the whenever Baird or the client’s Financial Advisor Implementation Manager may implement the deems it necessary, Baird or the client’s Financial Model Portfolio differently than proposed by the Advisor will replace a Recommended Manager or Model Provider if the Implementation Manager BRM Strategy with another Recommended determines such action to be necessary and in the Manager or BRM Strategy for the client’s Account client’s best interest. A client should note that based upon the list of Recommended Managers Baird does not monitor or ascertain whether a and BRM Strategies that Baird makes available for third party Implementation Manager is fully and the Baird Recommended Managers Program. faithfully implementing the Model Portfolio on a continuous basis. The client should periodically If a client participates in the Baird Recommended discuss the Account’s performance with the Managers Program, the client authorizes and client’s Financial Advisor. directs Baird to appoint Recommended Managers to serve as sub-adviser to the client’s Account Certain managers of Model-Traded Strategies and to otherwise manage the client’s Account in offered through the Overlay Manager have accordance with the terms of the Baird adopted trade rotation policies that allow them to Recommended Managers Program. The client also send Model Portfolio updates to the Overlay authorizes and directs the Recommended Manager after they have implemented the Model Managers to manage the client’s Account with full Portfolio updates for client accounts managed by discretionary authority in accordance with the them or after they have otherwise completed BRM Strategy selected. trading for those accounts. As a result, the performance of a Baird client Account pursuing a Model Portfolio strategy offered by those Model

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Providers will differ, perhaps in a materially A client who prefers to continue using an negative manner, from the performance of other investment manager that has been removed from client accounts managed by those Model the Baird Recommended Managers Program, or Providers. See “Additional Program Information— who directs or otherwise requests that a Trading for Client Accounts—Trading Practices of particular investment manager not recommended Investment Managers” below for more by Baird be selected to manage the client’s information. Account, will need to move to another Program, such as the BSN Program. See “Baird SMA If a client’s Account is managed by an Other Network Program” below for more information. Manager under the Baird Recommended Clients who elect to do so will no longer receive Managers Program, the client should understand the same level of rigorous ongoing monitoring, that, notwithstanding the discretionary authority evaluation, or review of that investment manager granted to Baird and the client’s Financial Advisor from Baird. under the Program: Baird and the client’s Financial Advisor do not manage the Account and Important Information about Affiliated do not otherwise have any influence over the Managers. The Baird Recommended Managers Other Manager’s investment decisions or Program makes available to clients investment securities selections, and therefore, Baird and the services that are offered by Baird Equity Asset client’s Financial Advisor are not responsible for Management, an investment management the decisions made by the Other Manager; and department of Baird. Baird has a potential conflict Baird and the client’s Financial Advisor do not of interest to the extent Baird would advise a provide any recommendation or investment client to select investment products offered by advice regarding the purchase or sale of Baird Equity Asset Management. For more investment products made for the client’s information, see “Additional Information—Other Account. Financial Industry Affiliations and Activities” below. From time to time, Baird may remove investment managers from the Baird Recommended Baird SMA Network Program Managers Program, and Baird may select a The BSN Program is a program whereby a client replacement manager to manage the client’s independently selects an investment manager to Account. In such event, Baird, at the direction of manage the client’s Account with full discretionary the client’s replacement manager, or the client’s authority according to a strategy selected by the replacement manager may sell all or a portion of client. The BSN Program is designed to the securities or other investments in the Account accommodate a client who wishes to that were managed by the prior manager and the independently select an investment manager not replacement manager will reinvest the cash available in the Baird Recommended Managers proceeds of those sales. Sales of securities or Program to manage the assets in the client’s other investments could result in adverse tax Account. consequences for the client. Under the BSN Program, Baird determines the If Baird terminates an investment manager from investment managers (“BSN Managers”) and their the Baird Recommended Managers Program, a strategies (“BSN Strategies”) eligible to client authorizes Baird to invest, with full participate in the Program through a significantly discretionary authority, the assets in the client’s less rigorous evaluation process compared to the Account previously managed by the terminated Baird Recommended Managers Program. investment manager in other securities, including, However, a client should note that Baird does not but not limited to, mutual funds and ETPs. Baird’s make any recommendation to clients regarding discretionary authority to make such other any BSN Strategy or any representations investments will continue until a replacement regarding a BSN Manager’s qualifications as an investment manager is selected or alternative investment adviser or abilities to manage client arrangements are made for the management of assets. the client’s assets. For more specific information about the managers and SMA Strategies made available through the

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BSN Program and the level of initial and ongoing Manager-Traded Strategies and Model-Traded research, evaluation, monitoring and review Strategies. If a client selects a BSN Strategy performed by Baird on those managers and SMA offered through the Overlay Manager for the Strategies, if any, see “Portfolio Manager client’s Account, the client authorizes and directs Selection and Evaluation—Selection and Baird to appoint the Overlay Manager to serve as Evaluation—Baird SMA Network, Dual Contract sub-adviser to the client’s Account. If a client and Riverfront Managed Portfolios Programs” selects a Model-Traded Strategy offered through below. the Overlay Manager for the client’s Account, the client authorizes and directs the Overlay Manager A client should only participate in the BSN to manage the client’s Account with full Program if the client wishes to take more discretionary authority in accordance with the responsibility for monitoring the client’s Account, BSN Strategy selected by the client. If a client the Baird Recommended Managers Program does selects a Manager-Traded Strategy offered not contain an SMA Strategy that meets the through the Overlay Manager for the client’s client’s particular needs, and the client Account, the client authorizes and directs the understands the risks of doing so. Overlay Manager to appoint the applicable BSN Manager as sub-adviser, and the client also BSN Managers have varying investment authorizes and directs such BSN Manager to objectives, styles and strategies, and they may manage the client’s Account with full discretionary invest a client’s Account in various types of authority in accordance with the BSN Strategy securities, which will be chosen by the BSN selected by the client. Manager and which may include mutual funds, ETFs or other investment products affiliated with If a client selects a Model-Traded Strategy offered the manager or Baird. through the Overlay Manager for the client’s Account, the Overlay Manager will typically Clients are urged to review the BSN Manager’s implement the Model Portfolio as proposed by the Form ADV Part 2A Brochure, which should contain Model Provider. However, since the Overlay additional important information about the BSN Manager has discretionary authority over the Manager, including information about the BSN client’s Account, the Overlay Manager may Manager’s strategies, the types of investments implement the Model Portfolio differently than the BSN Manager may use for a client’s Account, proposed by the Model Provider if the Overlay and the risks associated with investing in a BSN Manager determines such action to be necessary Strategy. Such brochures are available upon and in the client’s best interest. A client should request. note that Baird does not monitor or ascertain whether the Overlay Manager is fully and Some of the services provided under the BSN faithfully implementing the Model Portfolio on a Program may be provided to a client by a Baird continuous basis. The client should periodically Financial Advisor assigned to the client’s Account, discuss the Account’s performance with the and the client’s Financial Advisor may provide his client’s Financial Advisor. or her own advice and recommendations about BSN Managers. Certain managers of Model-Traded Strategies offered through the Overlay Manager have If a client participates in the BSN Program, the adopted trade rotation policies that allow them to client authorizes and directs Baird to appoint the send Model Portfolio updates to the Overlay BSN Manager selected by the client to serve as Manager after they have implemented the Model sub-adviser to the client’s Account. The client also Portfolio updates for client accounts managed by authorizes and directs the BSN Manager to them or after they have otherwise completed manage client’s Account with full discretionary trading for those accounts. As a result, the authority in accordance with the BSN Strategy performance of a Baird client Account pursuing a selected by the client. Model Portfolio strategy offered by those Model Providers will differ, perhaps in a materially Certain BSN Strategies are only made available negative manner, from the performance of client through the Overlay Manager. The BSN Strategies accounts managed by those Model Providers. See offered through the Overlay Manager consist of “Additional Program Information—Trading for

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Client Accounts—Trading Practices of Investment Selection and Evaluation—Baird SMA Network, Managers” below for more information. Dual Contract and Riverfront Managed Portfolios Programs” below for further information. If a client’s Account is managed by an Other Manager under the BSN Program, the client Important Information about the BSN should understand that: Baird does not manage Program. Portfolios managed by Baird PWM’s the Account and does not otherwise have any home office investment professionals and influence over the Other Manager’s investment investment managers affiliated with Baird are decisions or securities selections, and therefore, available to clients under the BSN Program. This Baird is not responsible for the decisions made by presents a conflict of interest. For more the Other Manager; Baird does not provide any information, see “Additional Information—Other recommendation or investment advice regarding Financial Industry Affiliations and Activities” the purchase or sale of investment products made below. for the client’s Account; and Baird and the client’s Financial Advisor only provide the client with The BSN Program is designed to accommodate a certain consulting services, which may include the client who wishes to independently select an client’s Financial Advisor’s assistance with investment manager that is not available in the determining the client’s financial needs, Baird Recommended Managers Program to investment goals and investment restrictions and manage the client’s Account. The client assumes periodically reviewing the manager’s ultimate responsibility for monitoring the client’s performance. Baird does not undertake to provide BSN Program Account and the BSN Manager’s any other consulting or investment advisory performance. A client’s appointment and services under the BSN Program unless Baird continued retention of a BSN Manager to manage agrees to do so in writing. the client’s Account are based ultimately upon the client’s independent review of the BSN Manager A client that participates in the BSN Program is and the BSN Manager’s services. The client strongly encouraged to contact the client’s Baird ultimately determines that the BSN Strategy to be Financial Advisor or BSN Manager on a periodic used in managing the client’s Account is basis to discuss: the Account and its investment consistent with the client’s stated investment performance; the BSN Manager’s investment objectives and financial needs and risk tolerance. philosophy and style (to determine if the BSN Once retained by the client, a BSN Manager will Strategy remains appropriate for the client); any only be removed from managing the client’s BSN potential conflicts of interest; and any investment Program Account upon the manager’s withdrawal, restrictions the client may wish to impose or removal from the BSN Program, or the client’s change. A client should also periodically check the direction to do so. A client should carefully registration status, disciplinary events and other consider the foregoing when deciding to information regarding the BSN Manager, participate in the BSN Program and also consider described on the manager’s Form ADV, which is whether another Baird Program, such as the Baird available on the SEC's website at www.adviser Recommended Managers Program, may be more info.sec.gov. appropriate for the client.

The BSN Strategies and BSN Managers made Dual Contract Program available under the BSN Program are subject to The DC Program is a program whereby a client change or removal at any time in Baird’s sole independently selects an investment manager to discretion. Under the terms of the BSN Program, manage the client’s Account with full discretionary Baird cannot appoint a replacement manager or authority according to a strategy selected by the otherwise manage a client’s Account assets. Given client. The DC Program is designed to the terms of the BSN Program, upon the accommodate a client who wishes to withdrawal or removal of an investment manager independently select an investment manager not from the BSN Program, a client’s BSN Program available in the Baird Recommended Managers Account will be automatically removed from the Program or BSN Program to manage the assets in BSN Program and the Account will become an the client’s Account. unmanaged brokerage account, unless the client provides contrary instructions to Baird. See “Portfolio Manager Selection and Evaluation—

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Under the DC Program, Baird determines the or her own advice and recommendations about investment managers (“DC Managers”) and their DC Managers. strategies (“DC Strategies”) eligible to participate in the Program through a significantly less Under the DC Program, DC Managers are offered rigorous evaluation process compared to the Baird to clients through a dual contract arrangement, Recommended Managers Program. However, a and a client will need to enter into a separate client should note that Baird does not make any agreement with the DC Manager in addition to the recommendation to clients regarding any DC advisory agreement the client enters into with Strategy or any representations regarding a DC Baird. A client participating in the DC Program is Manager’s qualifications as an investment adviser solely responsible for negotiating the client’s or abilities to manage client assets. agreement with the client’s DC Manager, and neither Baird nor its Financial Advisors will For more specific information about the managers participate or advise a client regarding the terms and SMA Strategies made available through the of such an agreement, the advisability of entering DC Program and the level of initial and ongoing into such an agreement, or the retention of the research, evaluation, monitoring and review client’s DC Manager. performed by Baird on those managers and SMA Strategies, if any, see “Portfolio Manager If a client’s Account is managed by an Other Selection and Evaluation—Selection and Manager under the DC Program, the client should Evaluation—Baird SMA Network, Dual Contract understand that: Baird does not manage the and Riverfront Managed Portfolios Programs” Account and does not otherwise have any below. influence over the Other Manager’s investment decisions or securities selections, and therefore, A client should only participate in the DC Program Baird is not responsible for the decisions made by if the client wishes to take more responsibility for the Other Manager; Baird does not provide any monitoring the client’s Account, the Baird recommendation or investment advice regarding Recommended Managers Program does not the purchase or sale of investment products made contain an SMA Strategy that meets the client’s for the client’s Account; and Baird and the client’s particular needs, and the client understands the Financial Advisor only provide the client with risks of doing so. certain consulting services, which may include the client’s Financial Advisor’s assistance with DC Managers have varying investment objectives, determining the client’s financial needs, styles and strategies, and they may invest a investment goals and investment restrictions and client’s Account in various types of securities, periodically reviewing the manager’s which will be chosen by the DC Manager and performance. Baird does not undertake to provide which may include mutual funds, ETFs or other any other consulting or investment advisory investment products affiliated with the manager services under the DC Program unless Baird or Baird. agrees to do so in writing.

Clients are urged to review the DC Manager’s A client that participates in the DC Program is Form ADV Part 2A Brochure, which should contain strongly encouraged to contact the client’s Baird additional important information about the DC Financial Advisor or DC Manager on a periodic Manager, including information about the DC basis to discuss: the Account and its investment Manager’s strategies, the types of investments performance; the DC Manager’s investment the DC Manager may use for a client’s Account, philosophy and style (to determine if the DC and the risks associated with investing in a DC Strategy remains appropriate for the client); any Strategy. Such brochures are available upon potential conflicts of interest; and any investment request. restrictions the client may wish to impose or change. A client should also periodically check the Some of the services provided under the DC registration status, disciplinary events and other Program may be provided to a client by a Baird information regarding the DC Manager, described Financial Advisor assigned to the client’s Account, on the manager’s Form ADV, which is available on and the client’s Financial Advisor may provide his the SEC's website at www.adviserinfo.sec.gov.

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The DC Strategies and DC Managers made Riverfront Managed Portfolios Program available under the DC Program are subject to The Riverfront Managed Portfolios Program is a change or removal at any time in Baird’s sole Program whereby a client independently selects discretion. Under the terms of the DC Program, an investment manager to manage the client’s Baird cannot appoint a replacement manager or Account with full discretionary authority according otherwise manage a client’s Account assets. Given to a strategy offered by Riverfront (a “Riverfront the terms of the DC Program, upon the Portfolio”) that is selected by the client. Certain withdrawal or removal of an investment manager Riverfront Portfolios are made available through from the DC Program, a client’s DC Program The Overlay Manager. The Account is managed by Account will be automatically removed from the Riverfront or The Overlay Manager depending DC Program and the Account will become an upon the strategy selected by the client. unmanaged brokerage account, unless the client provides contrary instructions to Baird. See The Riverfront Portfolio strategies are model asset “Portfolio Manager Selection and Evaluation— allocation portfolios that have different Selection and Evaluation—Baird SMA Network, investment objectives and use different strategic Dual Contract and Riverfront Managed Portfolios and tactical investment strategies. Each Programs” below for more information. Riverfront Portfolio provides for specific levels of investment across different asset classes, such as Important Information about the DC equity securities, fixed income securities, Non- Program. Other investment management Traditional Assets, Alternative Investment departments of Baird and managers affiliated with Products and cash. Each Portfolio generally uses Baird are available to clients under the DC mutual funds and ETPs, primarily ETFs and ETNs, Program. This presents a conflict of interest. For in order to implement the model asset allocation more information, see “Additional Information— strategy. The amount allocated to an asset class Other Financial Industry Affiliations and Activities” or type of investment varies by Portfolio, and below. some Portfolios may have little or no allocation to one or more asset classes or types of investments The DC Program is designed to accommodate a described above. client who wishes to independently select an investment manager that is not available in the The Riverfront Portfolio strategies that Riverfront Baird Recommended Managers Program or BSN offers under the Riverfront Managed Portfolios Program to manage the client’s Account. The Program include Riverfront Asset Allocation client assumes ultimate responsibility for Portfolios (also known as “Advantage Portfolios”); monitoring the client’s DC Program Account and Riverfront ETF Portfolios (also known as “ETF the DC Manager’s performance. A client’s Advantage Portfolios”); and RiverShares Model appointment and continued retention of a DC Portfolios. Manager to manage the client’s Account are based ultimately upon the client’s independent Riverfront or the Overlay Manager may invest a review of the DC Manager and the DC Manager’s client’s Account in various types of securities, services. The client ultimately determines that the which will be chosen by Riverfront or the Overlay DC Strategy to be used in managing the client’s Manager and which will likely include mutual Account is consistent with the client’s stated funds, ETFs or other investment products investment objectives and financial needs and risk affiliated with Riverfront or Baird. tolerance. Once retained by the client, a DC Manager will only be removed from managing the Clients are urged to review Riverfront’s Form ADV client’s DC Program Account upon the manager’s Part 2A Brochure, which contains additional withdrawal, removal from the DC Program, or the important information about Riverfront, including client’s direction to do so. A client should carefully information about the Riverfront Portfolios, the consider the foregoing when deciding to types of investments Riverfront may use for a participate in the DC Program and also consider client’s Account, and the risks associated with whether another Baird Program, such as the Baird investing in those Portfolios. If a client has Recommended Managers Program, may be more selected a Riverfront Portfolio offered through the appropriate for the client. Overlay Manager, the client should also review the Overlay Manager’s Form ADV Part 2A

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Brochure. Riverfront’s and the Overlay Manager’s Model Portfolio differently than proposed by Form ADV Part 2A Brochures are available upon Riverfront if the Overlay Manager determines request. such action to be necessary and in the client’s best interest. A client should note that Baird does Some of the services provided under this Program not monitor or ascertain whether the Overlay may be provided to a client by a Baird Financial Manager is fully and faithfully implementing the Advisor assigned to the client’s Account. Model Portfolio on a continuous basis. The client should periodically discuss the Account’s If the client has decided that Riverfront Portfolios performance with the client’s Financial Advisor. meet the client’s needs, the client’s Financial Advisor will generally assist the client in selecting Certain managers of Model-Traded Strategies a Riverfront Portfolio suitable for the client’s offered through the Overlay Manager have Account. adopted trade rotation policies that allow them to send Model Portfolio updates to the Overlay If a client selects a Riverfront Portfolio managed Manager after they have implemented the Model by Riverfront, the client authorizes and directs Portfolio updates for client accounts managed by Baird to appoint Riverfront to serve as sub- them or after they have otherwise completed adviser to the client’s Account. The client also trading for those accounts. As a result, the authorizes and directs Riverfront to manage the performance of a Baird client Account pursuing a client’s Account with full discretionary authority in Model Portfolio strategy offered by those Model accordance with the Riverfront Portfolio selected Providers will differ, perhaps in a materially by the client. negative manner, from the performance of client accounts managed by those Model Providers. See Certain Riverfront Portfolios are only made “Additional Program Information—Trading for available through the Overlay Manager. The Client Accounts—Trading Practices of Investment Riverfront Portfolios offered through the Overlay Managers” below for more information. Manager consist of Manager-Traded Strategies and Model-Traded Strategies. If a client selects a If a client’s Account is managed by an Other Riverfront Portfolio offered through the Overlay Manager under this Program, the client should Manager for the client’s Account, the client understand that: Baird does not manage the authorizes and directs Baird to appoint the Account and does not otherwise have any Overlay Manager to serve as sub-adviser to the influence over Riverfront’s investment decisions client’s Account. If a client selects a Model-Traded or securities selections, and therefore, Baird is not Strategy offered through the Overlay Manager for responsible for the decisions made by Riverfront; the client’s Account, the client authorizes and Baird does not provide any recommendation or directs the Overlay Manager to manage the investment advice regarding the purchase or sale client’s Account with full discretionary authority in of investment products made for the client’s accordance with the Riverfront Portfolio selected Account; and Baird and the client’s Financial by the client. If a client selects a Manager-Traded Advisor only provide the client with certain Strategy offered through the Overlay Manager for consulting services, which may include the client’s the client’s Account, the client authorizes and Financial Advisor’s assistance with determining directs the Overlay Manager to appoint Riverfront the client’s financial needs, investment goals and as sub-adviser, and the client also authorizes and investment restrictions and periodically reviewing directs Riverfront to manage the client’s Account the manager’s performance. Baird does not with full discretionary authority in accordance undertake to provide any other consulting or with the Riverfront Portfolio selected by the client. investment advisory services under this Program unless Baird agrees to do so in writing. If a client selects a Model-Traded Strategy offered through the Overlay Manager for the client’s Under the terms of the Riverfront Managed Account, the Overlay Manager will typically Portfolios Program, Baird cannot appoint a implement the Model Portfolio as proposed by replacement manager or otherwise manage a Riverfront. However, since the Overlay Manager client’s Account assets. Given the terms of the has discretionary authority over the client’s Riverfront Managed Portfolios Program, upon the Account, the Overlay Manager may implement the withdrawal of Riverfront or removal of a Riverfront Portfolio, a client’s Riverfront Managed

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Portfolios Program Account will be automatically UMA Programs removed from the Riverfront Managed Portfolios ALIGN UMA Select Portfolios Program Program and the Account will become an Under the ALIGN UMA Select Portfolios Program, unmanaged brokerage account, unless the client Baird and the Overlay Manager manage a client’s provides contrary instructions to Baird. See Account with full discretionary authority according “Portfolio Manager Selection and Evaluation— to a proprietary model asset allocation strategy Selection and Evaluation—Baird SMA Network, developed by Baird (each such model, an “ALIGN Dual Contract and Riverfront Managed Portfolios UMA Select Portfolio”) that is selected by the Programs” below for further information. client. The ALIGN UMA Select Portfolios Program offers model asset allocation portfolios that have Important Information about Riverfront. different investment objectives and use different Some Riverfront Portfolios utilize research or investment strategies. Each ALIGN UMA Select other services provided by Strategas or CCM. Portfolio provides for specific levels of investment Baird is affiliated, and may be deemed to be across different asset classes, such as equity under common control, with Riverfront, Strategas securities, fixed income securities, Non-Traditional and CCM by virtue of their common indirect Assets, Alternative Investment Products and cash. ownership. Baird has a potential conflict of Each Portfolio generally uses mutual funds, ETPs, interest to the extent Baird would advise a client primarily ETFs, and SMA Strategies in order to to participate in advisory services offered by implement the model asset allocation strategy. Riverfront, Strategas or CCM. For more The amount allocated to an asset class or type of information, see “Additional Information—Other investment varies by Portfolio, and some Financial Industry Affiliations and Activities” Portfolios may have little or no allocation to one below. or more asset classes or types of investments described above. A client’s appointment and continued retention of Riverfront to manage the client’s Account are Baird constructs each ALIGN UMA Select Portfolio based upon the client’s review of Riverfront and and adjusts the asset allocation of each ALIGN its services. In selecting the Riverfront Portfolio, UMA Select Portfolio from time to time. Baird also the client ultimately determines that the strategy determines the mutual funds, ETPs, or SMA to be used by Riverfront in managing the client’s Strategies that are available in the ALIGN UMA Account is consistent with the client’s stated Select Portfolios Program, including the investment objectives and financial needs and risk percentage each investment comprises in each tolerance. Once retained by the client, Riverfront asset class within an ALIGN UMA Select Portfolio. will only be removed from managing the client’s Baird may remove mutual funds, ETPs, or SMA Account upon Riverfront’s withdrawal or the Strategies used in the ALIGN UMA Select client’s direction to do so. Portfolios Program from time to time and replace them with other investment options. Baird may Other SMA Strategy Information make changes to an ALIGN UMA Select Portfolio Certain SMA Strategies are available through from time to time as it deems appropriate and multiple Programs. The overall cost of an SMA without providing prior notice to, or obtaining the Strategy and the types and levels of service consent of, a client. provided to a client in connection with an SMA Strategy will vary depending upon the particular The ALIGN UMA Select Portfolios Program makes Program selected by the client. A client should ask available: (1) certain mutual funds and ETPs that the client’s Financial Advisor whether an SMA Baird determines are eligible for the UMA Strategy is available through multiple Programs Programs through an initial and ongoing and, if so, the client should discuss with the evaluation process (“UMA Recommended Funds”); Financial Advisor the different costs of the and (2) certain BRM Strategies that Baird Programs and the types and levels of service determines are eligible for the UMA Programs provided in connection with the Programs. A client through an initial and ongoing evaluation process is solely responsible for selecting the Program in (“UMA Recommended SMA Strategies”). which the client’s Account will participate. For more specific information about the investment options made available through the

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Program and the level of initial and ongoing terms of the ALIGN UMA Select Program. If an research, evaluation, monitoring and review ALIGN UMA Select Portfolio contains a Model- performed by Baird on those investment options, Traded Strategy, the client authorizes and directs if any, see “Portfolio Manager Selection and the Overlay Manager to manage such SMA Evaluation—Selection and Evaluation—UMA Strategy within the client’s Account with full Programs” and “Portfolio Manager Selection and discretionary authority in accordance with the Evaluation—Methods of Analysis, Investment SMA Strategy. If an ALIGN UMA Select Portfolio Strategies and Risk of Loss—Investment contains a Manager-Traded Strategy, the client Strategies and Methods of Analysis—UMA authorizes and directs the Overlay Manager to Programs” below. appoint the applicable investment manager as sub-adviser, and the client also authorizes and Investment managers participating in the ALIGN directs such investment manager to manage such UMA Select Portfolios Program have varying SMA Strategy within the client’s Account with full investment objectives, styles and strategies, and discretionary authority in accordance with the they may invest a client’s Account in various SMA Strategy. types of securities, which will be chosen by the investment manager and which may include If an ALIGN UMA Select Portfolio contains a mutual funds, ETFs or other investment products Model-Traded Strategy, the Overlay Manager will affiliated with the manager or Baird. typically implement the Model Portfolio as proposed by the Model Provider. However, since Clients are urged to review the investment the Overlay Manager has discretionary authority manager’s Form ADV Part 2A Brochure, which over the applicable portion of the client’s Account, should contain additional important information the Overlay Manager may implement the Model about the investment manager, including Portfolio differently than proposed by the Model information about the investment manager’s Provider if the Overlay Manager determines such strategies, the types of investments the action to be necessary and in the client’s best investment manager may use for a client’s interest. A client should note that Baird does not Account, and the risks associated with investing in monitor or ascertain whether the Overlay the investment manager’s SMA Strategies. Such Manager is fully and faithfully implementing the brochures are available upon request. Model Portfolio on a continuous basis. The client should periodically discuss the Account’s Some of the services provided under this Program performance with the client’s Financial Advisor. may be provided to a client by a Baird Financial Advisor assigned to the client’s Account. Typically, Certain managers of Model-Traded Strategies a client selects the ALIGN UMA Select Portfolio offered through the Overlay Manager have appropriate for the client’s Account with the adopted trade rotation policies that allow them to assistance of the client’s Baird Financial Advisor. send Model Portfolio updates to the Overlay Manager after they have implemented the Model Baird has engaged the Overlay Manager to Portfolio updates for client accounts managed by provide certain subadvisory services in connection them or after they have otherwise completed with the ALIGN UMA Select Portfolios Program. trading for those accounts. As a result, the The ALIGN UMA Select Portfolios Program makes performance of a Baird client Account pursuing a both Manager-Traded Strategies and Model- Model Portfolio strategy offered by those Model Traded Strategies available to clients. If a client Providers will differ, perhaps in a materially selects an ALIGN UMA Select Portfolio, the client negative manner, from the performance of client authorizes and directs Baird to manage the accounts managed by those Model Providers. See client’s Account with full discretionary authority in “Additional Program Information—Trading for accordance with the ALIGN UMA Select Portfolio Client Accounts—Trading Practices of Investment selected by the client. The client also authorizes Managers” below for more information. and directs Baird to appoint the Overlay Manager to serve as sub-adviser to the client’s Account If a portion of client’s ALIGN UMA Select Portfolios and directs the Overlay Manager to manage the Account is managed by an Other Manager, the client’s Account in accordance with the ALIGN client should understand that: Baird does not UMA Select Portfolio selected by the client and the manage such portion of the Account and does not otherwise have any influence over the Other

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Manager’s investment decisions or securities and a Financial Advisor who has been approved selections, and therefore, Baird is not responsible by Baird to manage client accounts in the UAS for the decisions made by the Other Manager; Portfolios Program (a “UAS Manager”). If a client and Baird does not provide any recommendation selects that option, a client grants full or investment advice regarding the purchase or discretionary authority and management of the sale of investment products made for such portion client’s Account to Baird and the client’s UAS of the client’s Account. Manager. A client’s UAS Manager will manage the client’s Account on a discretionary basis according A client participating in the ALIGN UMA Select to the UAS Portfolio strategy selected by the client Program gives the Overlay Manager and Baird the by investing Account assets in various mutual authority to replace investments in a client’s funds, ETPs, SMA Strategies and Baird-Managed Account, rebalance a client’s Account assets to be Portfolios that Baird has determined are eligible consistent with the client’s chosen asset allocation for use in the Program. strategy, or engage in tax management strategies in certain circumstances. See “Additional Program The UAS Portfolios Program makes available two Information—Special Considerations for ALIGN, categories of mutual funds and ETPs: (1) UMA BairdNext Portfolios, Russell, SMA and UMA Recommended Funds that Baird determines are Clients” below for more information. eligible for the UMA Programs through an initial and ongoing evaluation process; and (2) certain Important Information about Affiliated other mutual funds and ETPs (“UAS Available Products. Some of the investment services and Funds”) that Baird makes available under the UAS products offered by Riverfront, and mutual funds Program through a significantly less rigorous offered by the Baird Funds, both of which are evaluation process compared to the UMA affiliated with Baird, have been selected by Baird Recommended Funds. for inclusion in certain ALIGN UMA Select Portfolios. This presents a conflict of interest. For Similarly, the UAS Portfolios Program makes more information, see “Additional Information— available two categories of SMA Strategies: (1) Other Financial Industry Affiliations and Activities” UMA Recommended SMA Strategies that Baird below. determines are eligible for the UMA Programs through an initial and ongoing evaluation process; Unified Advisory Select Portfolios Program and (2) certain SMA Strategies (“UAS Available Under the UAS Portfolios Program, Baird and the SMA Strategies”) made available by certain Overlay Manager generally manage a client’s managers (“UAS Available Managers”) through Account on a non-discretionary basis according to the Overlay Manager that Baird makes available a custom model asset allocation strategy (each under the UAS Program through a significantly such model, a “UAS Portfolio”) that is selected by less rigorous evaluation process compared to the the client. UAS Portfolios involve the use of UMA Recommended SMA Strategies. various different investment strategies because they are customized for each client. A UAS If a client has not selected the discretionary Portfolio provides a client with a customized level management option of the UAS Program, the of investment across different asset classes, such client should note that: (1) the UAS Available as equity securities, fixed income securities, Non- Funds and UAS Available SMA Strategies are Traditional Assets, Alternative Investment made available to accommodate a client who Products and cash. To implement the asset wishes to independently select investments that allocation strategy, a client selects the are not on a Baird recommended list for the investments for the Account from among those client’s Account: (2) Baird does not make any mutual funds, ETPs, SMA Strategies and Baird- recommendation to clients regarding any UAS Managed Portfolios that Baird has determined are Available Fund or UAS Available SMA Strategy and eligible for use in the Program. Baird does not select any investments for the client’s UAS Program Account: (3) Baird does not The UAS Portfolios Program also makes available make any representation to clients regarding any a discretionary management option, whereby a UAS Available Manager’s qualifications as an client grants discretionary investment authority investment adviser or abilities to manage client over the client’s UAS Program Account to Baird assets. If a client has selected the discretionary option of the UAS Program, the client should note

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that the client’s UAS Manager may use UAS appropriate for the client’s Account with the Available Funds and UAS Available SMA Strategies assistance of the client’s Baird Financial Advisor. for the client’s UAS Program Account if the UAS If the client has selected the discretionary Manager believes such investments are consistent management option of the Program, Baird and with the client’s investment objectives, risk the Financial Advisor, acting as UAS Manager, will tolerance and in the client’s best interest. manage the client’s Account.

For more specific information about the Baird has engaged the Overlay Manager to investment options made available through the provide certain subadvisory services in connection Program and the level of initial and ongoing with the UAS Select Portfolios Program. The UAS research, evaluation, monitoring and review Portfolios Program makes both Manager-Traded performed by Baird on those investment options, Strategies and Model-Traded Strategies available if any, see “Portfolio Manager Selection and to clients. If a client selects a UAS Portfolio, the Evaluation—Selection and Evaluation—UMA client authorizes and directs Baird to manage the Programs” and “Portfolio Manager Selection and client’s Account in accordance with the UAS Evaluation—Methods of Analysis, Investment Portfolio selected by the client and the terms of Strategies and Risk of Loss—Investment the UAS Program. The client also authorizes and Strategies and Methods of Analysis—UMA directs Baird to appoint the Overlay Manager to Programs” below. serve as sub-adviser to the client’s Account and directs the Overlay Manager to manage the A client retaining discretion over the client’s UAS client’s Account in accordance with the UAS Program Account should only select UAS Available Portfolio selected by the client and the terms of Funds or UAS Available SMA Strategies if the the UAS Program. If a UAS Portfolio contains a client wishes to take more responsibility for Model-Traded Strategy, the client authorizes and managing and monitoring the client’s UAS directs the Overlay Manager to manage such SMA Program Account, the UMA Recommended Funds Strategy within the client’s Account with full and UMA Recommended SMA Strategies do not discretionary authority in accordance with the meet the client’s particular needs, and the client SMA Strategy. If a UAS Portfolio contains a understands the risks of doing so. Manager-Traded Strategy, the client authorizes and directs the Overlay Manager to appoint the Investment managers participating in the UAS applicable investment manager as sub-adviser, Portfolios Program have varying investment and the client also authorizes and directs such objectives, styles and strategies, and they may investment manager to manage such SMA invest a client’s Account in various types of Strategy within the client’s Account with full securities, which will be chosen by the investment discretionary authority in accordance with the manager and which may include mutual funds, SMA Strategy. If a UAS Portfolio contains a Baird- ETFs or other investment products affiliated with Managed Portfolio, the client authorizes and the manager or Baird. directs Baird to manage such Baird-Managed Portfolio within the client’s Account with full Clients are urged to review the investment discretionary authority in accordance with the manager’s Form ADV Part 2A Brochure, which Baird-Managed Portfolio. should contain additional important information about the investment manager, including If a UAS Portfolio contains a Model-Traded information about the investment manager’s Strategy, the Overlay Manager will typically strategies, the types of investments the implement the Model Portfolio as proposed by the investment manager may use for a client’s Model Provider. However, since the Overlay Account, and the risks associated with investing in Manager has discretionary authority over the the investment manager’s SMA Strategies. Such applicable portion of the client’s Account, the brochures are available upon request. Overlay Manager may implement the Model Portfolio differently than proposed by the Model Some of the services provided under this Program Provider if the Overlay Manager determines such may be provided to a client by a Baird Financial action to be necessary and in the client’s best Advisor assigned to the client’s Account. Typically, interest. A client should note that Baird does not a client develops and selects the UAS Portfolio monitor or ascertain whether the Overlay Manager is fully and faithfully implementing the

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Model Portfolio on a continuous basis. The client change. A client should also periodically check the should periodically discuss the Account’s registration status, disciplinary events and other performance with the client’s Financial Advisor. information regarding the investment manager, described on the manager’s Form ADV, which is Certain managers of Model-Traded Strategies available on the SEC's website at offered through the Overlay Manager have www.adviserinfo.sec.gov. adopted trade rotation policies that allow them to send Model Portfolio updates to the Overlay Baird constructs each Baird-Managed Portfolio and Manager after they have implemented the Model may make changes to a Baird-Managed Portfolio Portfolio updates for client accounts managed by from time to time as it deems appropriate and them or after they have otherwise completed without providing prior notice to, or obtaining the trading for those accounts. As a result, the consent of, a client. performance of a Baird client Account pursuing a Model Portfolio strategy offered by those Model A client participating in the UAS Portfolios Providers will differ, perhaps in a materially Program gives the Overlay Manager and Baird the negative manner, from the performance of client authority to replace investments in a client’s accounts managed by those Model Providers. See Account, rebalance a client’s Account assets to be “Additional Program Information—Trading for consistent with the client’s chosen asset allocation Client Accounts—Trading Practices of Investment strategy, or engage in tax management strategies Managers” below for more information. in certain circumstances. See “Additional Program Information—Special Considerations for ALIGN, If a portion of client’s UAS Program Account is BairdNext Portfolios, Russell, SMA and UMA managed by an Other Manager, the client should Clients” below for more information. understand that: Baird does not manage such portion of the Account and does not otherwise If a client has not selected the discretionary have any influence over the Other Manager’s management option of the Program, the client investment decisions or securities selections, and retains discretionary authority over the selection therefore, Baird is not responsible for the of mutual funds, ETFs, SMA Strategies and Baird- decisions made by the Other Manager; and Baird Managed Portfolios for the Account. However, by does not provide any recommendation or selecting an SMA Strategy or Baird-Managed investment advice regarding the purchase or sale Portfolio, the client authorizes and directs Baird, of investment products made for such portion of the Overlay Manager and the client’s investment the client’s Account; and if the client has not manager, as applicable, to manage each SMA selected the discretionary management option of Strategy or Baird-Managed Portfolio portion of the the Program, Baird and the client’s Financial Account with full discretionary authority in Advisor only provide the client with certain accordance with the SMA Strategy or Baird- consulting services, which may include the client’s Managed Portfolio selected by the client. Financial Advisor’s assistance with determining the client’s financial needs, investment goals and If a client has selected the discretionary investment restrictions and periodically reviewing management option of the UAS Portfolios the manager’s performance. Baird does not Program, the client should note that Baird may undertake to provide any other consulting or remove any UAS Manager or strategy from the investment advisory services under this Program UAS Portfolios Program at any time and transfer unless Baird agrees to do so in writing. day-to-day management responsibility of a client’s Account to another UAS Manager or Baird A client that selects a UAS Available SMA Strategy Financial Advisor at any time without providing is strongly encouraged to contact the client’s prior notice to, or obtaining the consent of, a Baird Financial Advisor or investment manager on client. a periodic basis to discuss: the Account and its investment performance; the investment Important Information about the UAS manager’s investment philosophy and style (to Portfolios Program. Other investment determine if the UAS Available SMA Strategy management departments of Baird, and remains appropriate for the client); any potential managers, mutual funds and ETFs affiliated with conflicts of interest; and any investment Baird are available to clients under the UAS restrictions the client may wish to impose or

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Portfolios Program. This presents a conflict of Additional Program Information interest. For more information, see “Additional Investment Discretion Information—Other Financial Industry Affiliations Investment Selection and Trading and Activities” below. Authorizations If a client has not selected the discretionary A client retains complete discretion over management option of the UAS Program, it is investment selection and trading decisions with important to note that: the UAS Available Funds respect to assets in a client’s Non-Discretionary and UAS Available SMA Strategies are made Program Accounts, and Baird will only execute available to accommodate a client who wishes to transactions for such Accounts pursuant to the independently select investments that are not on client’s instruction or authorization. a Baird recommended list for the client’s Account; the client assumes ultimate responsibility for If a client’s Account participates in a Discretionary monitoring each UAS Available Fund and UAS Program, the client’s advisory agreement provides Available SMA Strategy and the manager’s Baird and the client’s Financial Advisor, as performance; the client’s selection and continued applicable, discretionary authority to manage the holding of a UAS Available Fund or a UAS assets in the client’s Account in accordance with Available SMA Strategy are based ultimately upon the terms of the Program selected by the client. the client’s independent review of such investment; the client ultimately determines that If a client’s Account participates in the Baird each UAS Available Fund and UAS Available SMA Recommended Managers Program, the client’s Strategy in the client’s Account is consistent with advisory agreement provides Baird and the the client’s stated investment objectives and client’s Financial Advisor discretionary authority to financial needs and risk tolerance; and once an appoint investment managers to manage the investment is made by the client, the investment client’s Account and to terminate or replace will only be removed from the client’s Account investment managers for the client’s Account for upon the manager’s withdrawal, removal of the any reason without prior notice to the client. If investment from the Program, or the client’s Baird terminates an investment manager from direction to do so. A client should carefully management of a client’s Baird Recommended consider the foregoing when deciding to select a Managers Program Account, the client’s advisory UAS Available Fund or UAS Available SMA agreement provides Baird discretionary authority Strategy or when deciding to participate in the to manage the assets in the client’s Account until UAS Program and also consider whether another a replacement investment manager is selected or mutual fund, ETF, SMA Strategy or Baird Program alternative arrangements are made for the may be more appropriate for the client. management of the client’s assets.

SMA Strategy Information If a client’s Account participates in an SMA Certain SMA Strategies are available through Program, the client’s advisory agreement provides multiple Programs. The overall cost of an SMA the investment manager selected to manage the Strategy and the types and levels of service client’s Account, which may include an provided to a client in connection with an SMA Implementation Manager, discretionary authority Strategy will vary depending upon the particular to manage the assets in the client’s Account in Program selected by the client. A client should ask accordance with the terms of the SMA Program the client’s Financial Advisor whether an SMA selected by the client. Strategy is available through multiple Programs and, if so, the client should discuss with the If a client’s Account participates in a UMA Financial Advisor the different costs of the Program, the client provides Baird, the client’s Programs and the types and levels of service UAS Manager, the Overlay Manager and the provided in connection with the Programs. A client client’s investment manager, as applicable, is solely responsible for selecting the Program in discretionary authority to manage the assets in which the client’s Account will participate. the client’s Account in accordance with the terms of the UMA Program selected by the client.

If a client grants discretionary authority over the client’s Account to Baird, the client’s Financial

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Advisor or the client’s investment manager, the has provided other instructions in writing. Baird, client’s advisory agreement authorizes Baird, the as broker-dealer, will rely upon any such client’s Financial Advisor and the client’s instructions of any investment managers selected investment manager, as applicable, to manage to manage the client’s Account. the client’s Account and to make investment decisions for the client’s Account, with the If a client participates in an SMA or UMA Program, authority to determine the amount, type and the client authorizes Baird to share client’s timing for buying, holding, exchanging, information with the Overlay Manager and any converting and selling securities and other assets Other Manager or Implementation Manager for the client’s Account, subject to the terms of managing the client’s Account. The client also the Program selected by the client. The client’s authorizes and directs Baird to transmit to the advisory agreement also grants to Baird, the Overlay Manager and any such Other Manager or client’s Financial Advisor and the client’s Implementation Manager any instructions that the investment manager, as applicable, complete and client may provide to Baird to the extent unlimited trading authorization and appoints them necessary to carry out the client’s instructions. as the client’s agents and attorneys-in-fact to manage the assets in the client’s Account on the Client Investment Restrictions client’s behalf, subject to the terms of the The Discretionary, SMA and UMA Programs offer a Program selected by the client. Pursuant to such client the ability to impose reasonable investment authorization and powers of attorney, Baird, the restrictions on the management of an Account, client’s Financial Advisor and the client’s including the designation of particular securities investment manager may, in their sole discretion or types of securities that should not be and at the client’s risk, purchase, sell, exchange, purchased for the client’s Account, but a client convert and otherwise trade the securities and may not require that particular funds or securities other assets in the client’s Account, as well as (or types) be purchased for the client’s Account. arrange for delivery and payment in connection Reasonable investment restrictions requested by with the above, and act on the client’s behalf in a client will apply only to those assets over which all matters necessary or incidental to the handling Baird or a client’s investment manager has of the client’s Account without prior notice to the discretion. client. Such trading authorizations and powers of attorney, whether granted to Baird, the client’s Certain Programs offer clients a socially Financial Advisor or the client’s investment responsible investing (“SRI”) service, which manager, shall remain in full force and effect until assists a client in restricting investments to those terminated by the client, the client’s investment that are consistent with the client’s social manager or Baird. investment guidelines or objectives. Clients electing the SRI service generally bear the cost of Orders for the purchase and sale of securities in a the SRI service as it is generally included in the client’s Discretionary Program Accounts will Program Fee. generally be executed by Baird, in its capacity as broker-dealer, as further described under the In the event that a client’s Account is restricted heading “Trading for Client Accounts” below, from investing in certain securities, Baird or the unless Baird’s duty to seek to obtain best client’s investment manager, as applicable, will execution otherwise requires or unless the client select such other replacement securities, if any, has provided other instructions to Baird in writing. as they deem appropriate. Accounts with Baird does not have discretionary authority over investment restrictions may perform differently the assets in a client’s SMAs or UMAs that are from accounts without restrictions and managed by an Other Manager and cannot performance may be poorer. In addition, in the purchase or sell such assets without the consent event there is a change in the classification or of the client or such Other Manager. The credit rating of a security held in the client’s investment manager for a client’s SMAs or UMAs Account, a client’s investment restrictions may may initiate securities transactions through Baird, force Baird or the client’s investment manager to in its capacity as broker-dealer, as further sell such security at an inopportune time, possibly described under the heading “Trading for Client negatively impacting Account performance and Accounts” below, subject to the manager’s duty to causing the client’s Account to realize taxable seek to obtain best execution, or unless a client

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gains or losses, which could be significant. A Other Manager or to any of its affiliates for client should also be aware that, if the client’s investment advisory or other services they Account holds any investment vehicle (such as a provide. mutual fund or ETF), any investment restrictions the client places on the client’s Account may not By signing an advisory agreement with Baird, a flow through to the securities owned by that client consents to each Other Manager managing investment vehicle. client’s Account investing all or a portion of the client’s Account in investment products that pay Should a client wish to impose or modify existing advisory or other fees to the Other Manager or its restrictions, or the client’s financial condition or affiliates. Each Other Manager is responsible for investment objectives have changed, the client providing to the client information about the should contact the client’s Financial Advisor. amount of fees received by the Other Manager and its affiliates and the criteria used by the Affiliated Investment Products Other Manager in deciding to invest in products Baird and its affiliates may use the discretionary affiliated with the Other Manager. A client should authority granted to them by a client to invest the contact the Other Manager and review the Other client’s Account in investment products affiliated Manager’s Form ADV Part 2A Brochure for more with Baird or that pay fees to Baird or to any of information. A client’s consent may be revoked at its affiliates for investment advisory or other any time. services they provide (“affiliated investment products”). Baird and its affiliates may receive Investment Policy Statements fees or other compensation related to such Baird and its associates will not review, monitor, investments made by the client. accept or adhere to an investment policy statement or similar document that was not By signing an advisory agreement with Baird, a prepared by Baird, unless Baird otherwise client consents to Baird and its affiliates investing specifically agrees to do so in writing. Adherence all or a portion of the client’s Account in affiliated to any such investment policy statement or investment products. The amount of fees received similar document is solely a client’s responsibility. by Baird and its affiliates is generally described in the prospectus or other offering or disclosure Conversion, Exchange or Sale of Certain documents for the investment product. Additional Investments information is also available on Baird’s website at By participating in a Program, a client authorizes bairdwealth.com/retailinvestor. Baird and its Baird to convert or exchange any shares of affiliates will use their discretionary authority to investment funds, such as mutual funds, ETFs, invest the client’s Account in affiliated investment closed-end funds, unit investment trusts (“UITs”), products when they determine it to be in the Complex Investment Products, and other similar client’s best interest to do so. Generally, the investment pools (collectively, “Investment criteria used by them in deciding to invest in Funds”) held in the client’s Account to a class of affiliated investment products are the same as shares of the same fund, such as advisory class those used in deciding to invest a client’s assets shares, institutional class shares, financial in investment products unaffiliated with Baird. For intermediary class shares, or another class of more information about the criteria used by Baird, shares primarily designed for use in advisory clients should review the section of the Brochure programs (collectively, “Advisory Class Shares”), entitled “Portfolio Manager Selection and to the extent made available by the mutual fund Evaluation” below. For more information about or other Investment Fund in accordance with the criteria used by Baird’s affiliates, clients policies established by Baird from time to time, should review the affiliate’s Form ADV Part 2A including, without limitation the Mutual Fund Brochure. A client’s consent may be revoked at Share Class Policy that is described below. any time. A client should understand that, the client may Other Managers may use the discretionary not hold Advisory Class Shares in a non-Advisory authority granted to them by a client to invest the Account and that the client may not be able to client’s Account in investment products affiliated hold certain Advisory Class Shares in an account with the Other Manager or that pay fees to the held at another firm. Upon the termination of a

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Program for an Account or the closure of an its best execution obligations to a client, to place Account for any reason, Baird may convert or a client’s trade order with a firm other than Baird. exchange the Advisory Class Shares held in the If Baird places trade orders for the client’s Account to an appropriate non-Advisory Class Account for execution by a firm other than Baird, Shares issued by the same fund, or, if an and the other firm imposes a commission or appropriate non-Advisory Class Shares is not equivalent fee on the trade (including a available, Baird may redeem or sell such Advisory commission imbedded in the price of the Class Shares. investment), the client will incur trading costs in addition to the Program Fee. Trading for Client Accounts Baird’s Trading Practices Trade Aggregation, Allocation and Rotation Practices Placement of Client Trade Orders Baird may aggregate contemporaneous buy and Baird will select the broker-dealers that will sell orders for the accounts over which it has execute trade orders for Non-Discretionary discretionary authority (a practice also known as Accounts and with respect to Accounts that are bunching trades or block transactions). This managed directly by Baird unless the client has practice may enable Baird to obtain more provided instructions to Baird to the contrary. As favorable execution, including better pricing and investment adviser, Baird has an obligation to enhanced investment opportunities, than would seek “best execution” of client trade orders. “Best otherwise be available if orders were not execution” means that Baird must place client aggregated. Using block transactions may also trade orders with those broker-dealers that Baird assist Baird in potentially avoiding an adverse believes are capable of providing the best effect on the price of a security that could result qualitative execution of client trade orders under from simultaneously placing a number of the circumstances, taking into account the full separate, successive or competing client orders. range and quality of the services offered by the broker-dealer, including the value of the research Baird generally aggregates buy and sell orders provided (if any), the broker-dealer’s execution when executing trades for client account assets capabilities, the cost of the trade, the broker- under its direct discretionary management when dealer’s financial responsibility, and its it has the opportunity to do so. When utilizing responsiveness to Baird. It is important to note block transactions, Baird generally aggregates a that Baird’s best execution obligation does not client’s trade orders with trade orders for clients require Baird to solicit competitive bids for each who are participating in the same Program and transaction or to seek the lowest available cost of pursuing the same model portfolio or strategy. In trade orders, so long as Baird reasonably believes some cases, Baird may aggregate a client’s trade that the broker-dealer selected can be reasonably orders with trade orders for other advisory clients expected to provide clients with the best who are not participants in the Programs qualitative execution under the circumstances. described in this Brochure. However, Baird determines whether or not to utilize block Because a client does not pay commissions to transactions for a client in its sole discretion and Baird when Baird, acting as broker-dealer, Baird’s decision is subject to its duty to seek best executes a client’s trade orders, and because a execution. In determining the amount to be client may incur commission costs in addition to allocated to an account, if any, Baird takes into the Program Fee if trade orders were to be consideration account specific investment executed by another broker-dealer firm, clients restrictions, undesirable position size, account generally receive a cost advantage whenever portfolio weightings, client tax status, client cash Baird executes client transactions. For this positions and client preferences. reason, and given Baird’s execution capabilities as broker-dealer, Baird expects that it will generally All advisory clients participating in a block execute trade orders, as broker-dealer, for Non- transaction will receive the same execution price Discretionary Accounts and the client’s Accounts for the security bought or sold. Average prices that are directly managed by Baird. may be used when allocating purchases and sales to a client’s Account because such securities may However, in some instances, circumstances may be purchased and sold at different prices in a arise that may require Baird, in compliance with

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series of block transactions. As a result, the manner intended to be fair and equitable to average price received by a client may be higher applicable clients over time. Furthermore, when a or lower than the price the client may have trade order for fixed income securities is only received had the transaction been effected for the partially filled, Baird and its Financial Advisors client independently from the block transaction. may place orders for other fixed income securities that have similar characteristics, such as issuer The amount of securities available in the name, structure, credit rating, or market sector. marketplace, at a particular price at a particular time, may not satisfy the needs of all clients Because Baird is unable to buy or sell any security participating in a block transaction and may be for a client’s Non-Discretionary Accounts without insufficient to provide full allocation across all the client’s authorization, Baird generally does not client accounts. To address this possibility, Baird aggregate or bunch trades for those Accounts has adopted trade allocation policies and with the same or similar trades for other client procedures that are designed to make securities accounts. Because similar orders for the client allocations to discretionary client accounts in a and Baird’s other clients may be placed and filled manner such that all such clients receive fair and at different times, the client may buy or sell equitable treatment over time. If a block securities at prices that are different from the transaction cannot be executed in full at the same prices obtained by other clients who received the price or time, the securities actually purchased or same or similar advice from Baird or the client’s sold by the close of each business day will Baird Financial Advisor. generally be allocated pro rata among the clients participating in the block transaction. However, Directed Brokerage Arrangements Baird may also make random allocations to client In some cases, a client may direct Baird to use a accounts in certain circumstances, such as when particular broker-dealer for execution of the Baird deems a partial fill for the total block order client’s trade orders (a “directed brokerage to be low. Adjustments may also be made to arrangement”), and Baird may agree to the avoid a nominal allocation to client accounts. arrangement. This may occur when a client’s Account is held at another broker-dealer firm and When Baird is not able to aggregate trades, Baird a client directs Baird to execute trades through generally uses a trade rotation process that is such firm, or when a client’s retirement account designed to be fair and equitable to its advisory or other account is maintained on a platform clients over time. However, a client should be operated and managed by a third party aware that Baird’s trade rotation practices may at unaffiliated with Baird and trades must be times result in a transaction being effected for the executed through that platform. A client should client’s Account that occurs near or at the end of understand that Baird considers such the rotation and, in such event, client’s trade arrangements to be directed brokerage orders will significantly bear the market price arrangements. A client should also understand impact, if any, of those trades executed earlier in that if the client has a directed brokerage the rotation, and, as a result, the client may arrangement, Baird may be unable to achieve receive a less favorable net price for the best execution for the client’s transactions. A applicable trade. client should note that any costs related to the directed brokerage arrangement are not included Notwithstanding the foregoing, if an aggregated in the Program Fee and that the client will be trade order involves fixed income securities, Baird solely responsible for monitoring, evaluating and and its Financial Advisors may allocate the reviewing the arrangement with the directed securities based on the needs of client accounts. broker-dealer and paying any commissions or In addition, Baird and its Financial Advisors will at markups or markdowns or other costs imposed by times place aggregated trade orders for fixed the directed broker-dealer. A client should also income securities prior to determining how the note that Baird generally will not aggregate the aggregated trade order will be allocated to client client’s directed brokerage trade orders with accounts. In those instances when an aggregated orders for other Baird clients. As a result, a trade order for fixed income securities is placed client’s transaction costs may be higher because prior to determining client allocations or when the client will not benefit from any volume such trade order is only partially filled, Baird or discounts or other reduced transaction costs that the Financial Advisor will seek to allocate trades in

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Baird may obtain for its other clients. A client securities involved, and less through the type of should further note that Baird generally will not independent arms-length negotiation that might include such client trade orders in its trade otherwise occur. Baird has adopted internal rotation process and that Baird will generally policies and procedures that require Baird and its place the client’s trade orders with the directed Financial Advisors to obtain approval of Baird’s broker-dealer after Baird completes its trading for Compliance Department before affecting a cross other Baird client accounts. The client’s trade trade. orders will significantly bear the market price impact, if any, of those trades executed earlier in Trade Error Correction Baird’s rotation. As a result, the client may It is Baird’s policy that if there is a trade error for receive a less favorable net price for the trade. which Baird is responsible, Baird will take actions, based on the facts and circumstances surrounding If a client directs Baird to use a particular broker- the error, to put the client’s Account in the dealer, and if the particular broker-dealer referred position that it would have been in as if the error the client to Baird or if the particular broker- had not occurred, including by adjusting or dealer refers other clients to Baird in the future, reversing the transaction, entering an offsetting Baird may benefit from the client’s directed transaction, or other methods that may be brokerage arrangement. Because of these deemed appropriate by Baird. Errors caused by potential benefits, Baird may have an economic Baird will be corrected at no cost to client’s interest in having the client continue the directed Account, with the client’s Account not recognizing brokerage arrangement. The benefits that Baird any loss from the error. Baird may net gains and receives conflict with the client’s interest in losses from a single error event involving more having Baird recommend that the client utilize than one transaction in a security or transactions another broker-dealer to execute some or all in multiple securities. The client’s Account will be transactions for the client’s Account. fully compensated for any losses incurred as a result of an error event. If the trade error results Before directing Baird to use a particular broker- in a gain, the gain may be retained by Baird but dealer, a client should carefully consider the such gain is not given to or shared with any Baird possible costs or disadvantages of directed associate. brokerage arrangements. Baird offers many services and, from time to Cross Trading Involving Advisory Accounts time, may have other clients in other programs From time to time, when Baird believes that each trading in opposition to a client. To avoid favoring respective transaction is consistent with the one client over another client, Baird attempts to client’s best interest, Baird, acting as investment use objective market data in the correction of any manager, may cause (or in the case of Non- trading errors. Discretionary accounts, recommend) the sale of securities from the account of an advisory client If a client’s Account is managed by an Other while at or about the same time causing (or, in Manager, the client should review the Other the case of Non-Discretionary accounts, Manager’s Brochure and contact the Other recommending) the purchase of the same Manager for information about how the Other securities for the account of another Baird Manager corrects trade errors. advisory client. Such transactions may have the benefit of reducing transaction and market impact Trading Practices of Investment Managers costs. If a client’s Account or a portion thereof is managed by an investment manager, the client In such cases, because Baird is acting as should note that, like Baird, such investment investment adviser for both buyer and seller, manager has a duty to seek best execution for Baird is subject to potentially conflicting interests the client’s Account. in causing (or recommending) the transactions. Also, because Baird is acting as investment Investment managers may participate in other adviser for both buyer and seller, transaction wrap fee programs sponsored by firms other than prices may be determined more by reference to Baird. In addition, investment managers may market information or dealer indications for the manage institutional and other accounts not part

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of a wrap fee program. In the event an Model Portfolio strategy offered by those Model investment manager purchases or sells a security Providers will have trades executed for the client’s for all accounts using a particular SMA Strategy Account at the end of the Model Provider’s trade offered by the investment manager, the rotation on a regular and consistent basis. As a investment manager may have to potentially result, trade orders for such an Account will effect similar transactions through a number of significantly bear the market price impact, if any, different broker-dealers. In some cases, to of those trades executed earlier in the Model address this situation, investment managers may Provider’s rotation and the performance of the decide to aggregate all such client transactions Account will differ, perhaps in a materially into a block trade that is executed through one negative manner, from the performance of client broker-dealer. This practice may enable the accounts managed by the Model Provider. In investment manager to obtain more favorable addition and for the same reasons described execution, including better pricing and enhanced above, the performance of a Model Portfolio, as investment opportunities, than would otherwise reported by the Model Provider, will differ, be available if orders were not aggregated. Using perhaps in a materially negative manner, from block transactions may also assist the investment the actual performance realized by Baird client manager in potentially avoiding an adverse effect Accounts pursuing the Model Portfolio strategy. on the price of a security that could result from Baird does not make or control any investment simultaneously placing a number of separate, manager’s trade rotation policies, and Baird does successive or competing client orders. However, not monitor, evaluate or review any investment as it pertains to Baird Program clients, this manager’s compliance with the manager’s trade practice may result in “trading away” from Baird, rotation policies or whether such trade rotation which is more fully described below. policies result in inequitable performance of client Accounts. A client selecting a Model Portfolio Alternatively, an investment manager may utilize offered by such a Model Provider is urged to a trade rotation process where one group of obtain a copy of the Model Provider’s Form ADV clients may have a transaction effected before or Part 2A Brochure and review the description of after another group of the investment manager’s the Model Provider’s trade rotation policy clients. A client should be aware that an contained in that document. A copy of a Model investment manager’s trade rotation practices Provider’s Brochure can be obtained by contacting may at times result in a transaction being effected a Baird Financial Advisor. A client should also for the client’s Account that occurs near or at the monitor the performance of an Account pursuing end of the investment manager’s rotation and, in such a Model Portfolio strategy and compare that such event, client’s trade orders will significantly performance with the performance reported for bear the market price impact, if any, of those the Model Portfolio by the Model Provider. A client trades executed earlier in the investment should discuss questions about Account manager’s rotation, and, as a result, the client performance or the Model Provider’s trade may receive a less favorable net price for the rotation policy with the client’s Financial Advisor. trade. Additional information regarding an investment manager’s trade rotation policies, if Because a client does not pay commissions to any, is available in the investment manager’s Baird when Baird, acting as broker-dealer, Form ADV Part 2A Brochure. executes a client’s trade orders, and because a client generally would incur trading costs in Certain Model Providers have adopted trade addition to the Program Fee if trade orders were rotation policies that allow them to send Model to be executed by another broker-dealer firm, Portfolio updates to the Overlay Manager after clients generally receive a cost advantage they have implemented the Model Portfolio whenever Baird executes Program client updates for client accounts managed by them or transactions. For this reason, and given Baird’s after they have otherwise completed trading for execution capabilities as broker-dealer, those accounts. The Overlay Manager has investment managers may determine that placing provided to Baird a list of Model Providers that trade orders for the client’s Account with Baird is have such trade rotation policies, which list is the most favorable option for the client. However, available on Baird’s website at investment managers may place a client’s trade bairdwealth.com/retailinvestor. A Baird client orders with a broker-dealer firm other than Baird should understand that an Account pursuing a if the manager determines that it must do so to

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comply with its best execution obligations. This like to obtain specific information about trade practice is frequently referred to as “trading aways and the amount of commissions or other away” and these types of trades are frequently costs, if any, the client incurred in connection with called “step out trades”. A client’s trade order so step out trades. executed is then cleared and settled through Baird in what is frequently referred to as a “step A client should note that each investment in”. manager is solely responsible for ensuring that it complies with its best execution obligations to the In some instances, step out trades are executed client. A client should review the manager’s by the other firm without any additional trading for the client’s Account because Baird commission or markup or markdown, but in other does not monitor, review or evaluate whether the instances, the executing firm may impose a manager is complying with its best execution commission or a markup or markdown on the obligations to the client. A client should review trade. If a client’s investment manager places the manager’s Form ADV Part 2A Brochure, trade orders for the client’s Account with a firm inquire about the manager’s trading practices, other than Baird, and the other firm imposes a and consider that information carefully, before commission or equivalent fee on the trade selecting a manager. In particular, the client (including a commission imbedded in the price of should carefully consider any additional trading the investment), the client will incur trading costs costs the client may incur before selecting a in addition to the Program Fee. manager to manage the client’s Account.

Some managers have historically placed nearly all A client should note that the client’s advisory client trades with broker-dealer firms other than agreement permits Baird to trade as principal on Baird for execution. Some managers have placed orders received from Other Managers. See “Trade nearly all or all client trades resulting from Execution Services Performed by Baird—Principal changes to their model portfolios or strategies Transactions” below for more information. with firms other than Baird. Similarly, some managers have frequently placed client trade Trade Execution Services Performed by Baird orders for fixed income, foreign and small cap If Baird provides trade execution services for a securities with firms other than Baird. In some client’s Account, Baird will generally act as agent cases, the other executing broker-dealer firm when routing client trade orders for execution. imposes a commission or markup or markdown However, Baird may cross trades between client (which is embedded in the price of the security) accounts or may act as principal for its own for executing the trade. As a result, these types of account in certain circumstances to the extent managers and their strategies could be more permitted by applicable law as is more fully costly to a client than managers that primarily described below. place client trade orders with Baird for execution. A client should understand that certain securities, A list of managers that have informed Baird that such as securities traded over-the-counter and they have traded away from Baird during 2019 - fixed income securities, are primarily traded in 2020 and general information about the additional dealer markets. When Baird purchases or sells cost of those trades (if any) is available on Baird’s these types of securities for client accounts, it website at bairdwealth.com/retailinvestor. The generally does so through broker-dealer firms information about each manager provided on acting as a dealer or principal. Dealers executing Baird’s website is based solely upon the principal trades typically include a markup, information provided to Baird by such manager. markdown or spread in the net price at which Baird has not independently verified the transactions are executed. A client bears such information, and as a result, none of Baird or any costs in addition to the Program Fee. of its affiliates or associates makes any representation as to the accuracy of any such Agency Cross Transactions information. In certain circumstances and to the extent A client should contact the client’s Baird Financial permitted by applicable law and regulation, Baird Advisor or investment manager if the client would and its Financial Advisors may effect “agency cross” transactions with respect to a client’s

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Account. An “agency cross” transaction is a Baird may realize profits from principal transaction in which Baird or its affiliates act as transactions with a client based on the difference broker for the party or parties on both sides of between the price Baird paid for the security and the transaction. As compensation for brokerage the price at which Baird sold the security, which services, Baird may receive compensation from may include a markup, markdown or spread from parties on both sides of an agency cross the prevailing market price, an underwriting fee, transaction, the amount of which may vary. Baird selling dealer concession, or other incentive to Financial Advisors may receive compensation execute the transaction. Baird Financial Advisors from Baird related to agency cross transactions. may receive compensation from Baird related to Therefore, Baird and its Financial Advisors may principal trades of securities underwritten by have a conflicting division of loyalties and Baird. Any compensation received by Baird or a responsibilities. However, in all cases, Baird and Financial Advisor in a principal transaction is in its Financial Advisors will seek to obtain the best addition to the Program Fee paid by the client. execution for each respective advisory client and Principal trades also allow Baird to sell securities will effect agency cross transactions only in from its account that it deems undesirable and to accordance with the requirements of Rule 206(3)- buy securities for its account that it deem 2 under the Advisers Act. Furthermore, Baird will desirable. Thus, in trading as principal with a comply with additional regulations applicable to client, Baird and its Financial Advisors will have retirement accounts. potentially conflicting division of loyalties and responsibilities regarding their own interests and Where applicable, a client’s advisory agreement the interests of the client. This potential discusses agency cross transactions and compensation may give Baird and its Financial authorizes Baird and its Financial Advisors to Advisors an incentive to recommend a transaction effect agency cross transactions for a client’s in which Baird and its Financial Advisors act as Account. A client’s authorization to Baird and principal over other transactions. Nonetheless, its Financial Advisors to effect “agency Baird and its Financial Advisors have a fiduciary cross” transactions is given pursuant to Rule duty to act in the client’s best interest and to seek 206(3)-2 under the Advisers Act and may be best execution for advisory clients. Baird revoked at any time by the client in client’s addresses this conflict through disclosure in this sole discretion by notifying the client’s Baird Brochure. Furthermore, Baird has adopted Financial Advisor in writing. internal procedures that require Baird and its Financial Advisors, when acting in a principal Principal Transactions capacity, to disclose all material information regarding Baird’s interest in the transaction, and Subject to the requirements of applicable law, obtain the client’s approval of the transaction Baird and its Financial Advisors may execute prior to settlement. transactions for a client’s Account while acting as principal for Baird’s own account. Baird and its Financial Advisors act as principal when they sell A client’s advisory agreement discloses, where a security from Baird’s inventory to a client or applicable, the possibility of Baird’s role in they purchase a security from a client for Baird’s potential principal transactions, and each inventory. Baird and its Financial Advisors also act transaction confirmation sent to Baird clients as principal when they sell new issue securities to discloses the capacity in which Baird served in the clients in securities offerings underwritten by transaction and whether Baird is a market maker Baird. Baird also acts as principal in riskless in each security the client bought or sold. principal transactions. Riskless principal transactions refer to transactions in which Baird, To the extent permitted by applicable law and after having received a client’s order, executes an regulation, if a client’s Account participates in a identical order in the marketplace to fill the Non-Discretionary Program or other non- client’s order while acting as principal. Baird and discretionary service, or if the Account is its Financial Advisors commonly engage in managed by an Other Manager, the client’s principal trades with clients in the Baird Advisory advisory agreement provides Baird and its Choice Program. Financial Advisors with a blanket authorization to act as principal for Baird’s own account in selling any security to, or purchasing any security from, the client’s Account. With this authorization, Baird

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and its Financial Advisors may effect any and all interest rates, credit spreads, and private principal transactions with the client’s Account companies, may be used for diversification without having to provide specific written purposes. They may also be used to try to reduce disclosures or obtain written client consent prior market and inflation risk. The performance of to completion of each proposed principal trade, Non-Traditional Assets may not correspond to the subject to the requirements of an exemptive performance of the stock markets generally, and order issued by the SEC to Baird (Rel. No. IA- investments in Non-Traditional Assets will 4596) and other applicable law and regulation. generally impact an account’s returns differently This authorization to enable Baird and its than more traditional investments like stocks or Financial Advisors to trade as principal with bonds. Non-Traditional Assets are subject to risks a client’s Account may be revoked at any that are different from, and in some instances, time by the client in client’s sole discretion greater than, other assets like stocks and bonds. by notifying the client’s Baird Financial Non-Traditional Assets are generally more difficult Advisor in writing. to value, less liquid, and subject to greater volatility compared to stocks and bonds. Complex Strategies and Complex Investment Products Margin and Leverage Some Programs offer clients the ability to pursue Margin Alternative Strategies or other Complex Margin involves borrowing money from a firm, Strategies that involve special risks not apparent such as Baird, to buy securities or other property. in more traditional investments like stocks and If a client wishes to pay for securities by bonds. Complex Strategies may be pursued in borrowing part of the purchase price from Baird, a multiple ways, including by investing in client must open a margin account with Baird, and alternative mutual funds, ETFs, hedge funds, Baird may provide the client with a margin loan. managed futures, private equity funds and SMAs Securities held in a client’s margin account are managed by third party managers. Some used as Baird’s collateral for the margin loan. The Complex Strategies invest in Non-Traditional value of the collateral in the margin account must Assets, such as real estate, commodities (which be maintained at a certain level relative to the may include metals, mining, energy and margin loan for the duration of the loan. If the agricultural products), currencies, movements in securities in the margin account decline in value, securities indices, credit spreads and interest so does the value of the collateral supporting the rates, and venture capital and buyout margin loan, and as a result, Baird may take investments in private companies. Some Complex action, such as issue a margin call and sell Strategies engage in the use of margin or securities in the account. leverage or selling securities short (“short sales”). Some Complex Strategies invest in derivative Leverage instruments such as options, convertible securities, futures, swaps, or forward contracts. Leverage generally attempts to obtain investment Complex Investment Products generally engage in exposure in excess of available assets through the one or more Complex Strategies. Additional use of borrowings, short sales and other information about Alternative Strategies and derivative instruments. While leverage can Complex Strategies is contained under the potentially enhance returns, it can also heading “Portfolio Manager Selection and exacerbate losses if changes in the markets, or Evaluation—Methods of Analysis, Investment the values of the investments subject to the Strategies and Risk of Loss—Investment leverage, are adverse to the strategy being Strategies and Methods of Analysis—Alternative pursued. The use of leverage may also increase Strategies and Complex Strategies” below. an Account’s volatility. Additional information about Complex Strategies and Complex Investment Products, generally, is Short Sales provided below. Short selling attempts to benefit from an anticipated decline in the market value of a Non-Traditional Assets security. To affect a short sale, a client sells a Non-Traditional Assets, such as investments in security the client does not own. When a client commodities, currencies, securities indices, sells a security short, Baird borrows the security

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from a lender and makes delivery to the buyer on With a call option, the purchaser has the right to the client’s behalf. Because short sales involve an buy, and the seller (writer) the obligation to sell, extension of credit from Baird to the client, a the underlying security or index at a client must use a margin account. A client must predetermined price (i.e., the exercise or strike also eventually purchase the same shares sold price) prior to expiration of the option. The short and return them back to the lender. It is premium paid to the seller (writer) for the option possible that the prices of securities that a client is in consideration for the underlying obligations sells short may increase in value, in which case imposed on the seller should the option be the client may lose money on the short position. exercised. With a put option, the purchaser has Short selling thus runs the risk of loss if the price the right to sell, and the seller has the obligation of the securities sold short does not decline below to buy, the underlying security or index at the the price at which they were originally sold. This exercise price prior to expiration of the option. risk of loss is theoretically unlimited, as there is no cap on the amount that the price of a security In buying a call option, the purchaser expects may appreciate. that the market value of the underlying security or index will appreciate, which would enable the Clients should note that investment managers purchaser of a call to buy the underlying security managing a client’s Account or investment or index at a strike price lower than the prevailing products in the client’s Account may also engage market price. The purchaser of the call option in short sales. Thus, a client’s Account will be makes a profit if the prevailing market price is subject to short sales risks if the investment greater than the sum of the strike price plus the manager managing the client’s Account or an premium paid for the option. The seller of a call investment product in the client’s Account option earns income in the form of the premium engages in short sales. received from the purchaser for the option and expects that the market value of the underlying Options and Other Derivative Instruments security or index will depreciate such that the Derivative Instruments option will expire without being exercised. The seller of a call option makes a profit if the Derivatives instruments, such as options, prevailing market price of the underlying security convertible securities, futures, swaps, and or index is less than the sum of the strike price forward contracts are financial contracts that plus the premium received. derive value based upon the value of an underlying asset, such as a security, commodity, In buying a put option, the purchaser expects that currency, or index. Derivative instruments may be the market value of the underlying security or used as a substitute for taking a position in the index will depreciate, which would enable the underlying asset. Derivative instruments may also purchaser of a put to sell the underlying security be used to try to hedge or reduce exposure to or index at a strike price higher than the other risks. They may also be used to make prevailing market price. The purchaser of the put speculative investments on the movement of the option makes a profit if the prevailing market value of an underlying asset. The use of price is less than the sum of the strike price and derivative instruments involves risks different the premium paid for the option. The seller of a from, or possibly greater than, the risks put option earns income in the form of the associated with investing directly in securities and premium received from the purchaser for the other traditional investments. Investing in option and expects that the market value of the derivatives also generally involves leverage. underlying security or index will appreciate such Derivatives are also generally less liquid, and that the option will expire without being subject to greater volatility compared to stocks exercised. The seller of a put option makes a and bonds. profit if the prevailing market price of the underlying security or index is greater than the Options difference between the strike price and the Options transactions may involve the buying or premium. writing of puts or calls on securities. In some cases, Baird may require clients to open a margin In purchasing a put or call option, the purchaser account to engage in options trading. faces the risk of loss of the premium paid for the option if the market price moves in a direction

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opposite to what the purchaser had expected. In clients because they involve special risks. A client selling or writing an option, the seller faces should not engage in those strategies or invest in significantly more risk. A seller of a call option those products unless the client is prepared to faces the risk of significant loss if the prevailing experience significant losses in the client’s market price of the underlying security or index Account. This is especially true for short selling, increases above the strike price, and a seller of a which can result in unlimited losses as there is no put option faces the risk of significant loss if the limit to the amount borrowed securities can rise in prevailing market price of the underlying security value. See “Portfolio Manager Selection and or index decreased below the strike price. Evaluation—Methods of Analysis, Investment Strategies and Risk of Loss—Principal Risks” Clients should note that investment managers below for more information. Before using those managing a client’s Account or investment types of strategies or products, a client is strongly products in the client’s Account may also engage urged to discuss them with the client’s Financial in options transactions. Thus, a client’s Account Advisor and any investment manager managing will be subject to options risks if the investment the client’s Account. A client should also carefully manager managing the client’s Account or an review the client’s agreements with Baird and investment product in the client’s Account related disclosure documents, which the client engages in options transactions. should have received when opening the Account. Additional information about Complex Strategies Complex Investment Products and Complex Investment Products is provided under the heading “Portfolio Manager Selection Complex Investment Products typically invest and Evaluation—Methods of Analysis, Investment primarily in Non-Traditional Assets or engage in Strategies and Risk of Loss—Investment one or more Complex Strategies. Complex Strategies and Methods of Analysis—Investment Investment Products include Alternative Strategies—Alternative Strategies and Complex Investment Products, such as hedge funds, funds Strategies” below and on Baird’s website at of hedge funds, private equity funds, funds of bairdwealth.com/retailinvestor. private equity funds, private debt funds, and managed futures, but also include other investments pursuing Complex Strategies, A client assumes responsibility for engaging in including but not limited to, exchange or swap Complex Strategies and investing in Complex funds, leveraged funds, inverse funds, and other Investment Products. If a client determines that special situation funds, structured certificates of the client no longer wants to engage in those deposit and structured notes (“structured strategies or invest in those products, the client is products”), ETNs, business development responsible for notifying the client’s Financial companies (“BDCs”), real estate investment trusts Advisor and any investment manager managing (“REITs”), and master limited partnerships the client’s Account. Baird is not responsible for (“MLPs”). any losses resulting from any Other Manager’s failure or delay in implementing any such instructions. In addition, a client should be aware that more traditional investments, such as mutual funds, ETFs, UITs and variable annuities may also pursue The use of Complex Strategies or Complex Complex Strategies, thereby making them Investment Products has a unique impact upon Complex Investment Products. A client should the calculation of a client’s asset-based Program carefully review the prospectus or other offering Fee. See “Program Fees—Calculation and document for each investment and understand Payment of Program Fees” below for more the strategy being pursued before deciding to information. A client should also understand that invest. More detailed information about mutual Baird and the client’s Financial Advisor have a funds, ETFs, UITs and variable annuities is financial incentive to use, or recommend the use available on Baird’s website at of, certain Complex Strategies or Complex bairdwealth.com/retailinvestor. Investment Products, including margin and short sales. See “Additional Information—Code of Ethics, Participation or Interest in Client Additional Important Information Transactions and Personal Trading” below. The use of Complex Strategies or Complex Investment Products is not appropriate for some

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As a creditor, Baird may have interests that are Baird Equity Asset Management Portfolios adverse to a client. Neither Baird nor its Financial Program. Permitted Investments for the Baird Advisors will act as investment adviser to a client Equity Asset Management Portfolios Program are with respect to the liquidation of securities held in described in Baird Equity Asset Management’s an Account to meet a call on a margin loan. Any Form ADV Part 2A Brochure and the Other such sale of assets will be executed in Baird’s Managers’ Form ADV Part 2A Brochures, which capacity as broker-dealer and creditor and may, are available upon request. as permitted by law, result in executions on a principal basis. Baird Advisory Choice Program. Permitted Investments for the Baird Advisory Choice Permitted Investments Program generally include, but are not limited to, Under the Discretionary, Non-Discretionary and the following types of investments: UMA Programs, Baird determines the asset categories and investment products that clients • equity securities, including, but not limited to, may access for investment (“Permitted common stocks, American Depositary Receipts Investments”) and those that are not permitted in (“ADRs”), and ordinary shares, including Program Accounts (“Unpermitted Investments”). whether exchange-traded, or over-the-counter Permitted Investments vary by Program. Although traded; Baird determines the Permitted Investments under those Programs, the level of initial and • fixed income securities, including but not limited ongoing evaluation, monitoring and review that to, debt securities issued by domestic and Baird and its Financial Advisors perform on foreign corporations and other entities; Permitted Investments varies. For more preferred stocks, asset-backed securities information, see the descriptions of each Program (including mortgage-backed securities and under “Services, Fees and Compensation” above collateralized mortgage obligations (“CMOs”)); and under “Portfolio Manager Selection and convertible debt securities; obligations issued Evaluation—Methods of Analysis, Investment by U.S., state, or foreign governments or their Strategies and Risk of Loss—Investment agencies, instrumentalities, or authorities, such Strategies and Methods of Analysis” below. as securities issued by the U.S. Treasury, federal government agencies or federal Baird may add Permitted Investments or restrict government-sponsored enterprises (“Agency client access to a Permitted Investment at any securities”), or foreign governments; municipal time in its sole discretion. securities; money market mutual funds; certificates of deposit (“CDs”) (primary or Some Permitted Investments contain restrictions secondary); commercial paper; that limit their use, and clients will not be permitted to purchase or hold such investments • rights or warrants on equity securities, and outside of an Account. See “Account written covered call and written cash secured Requirements and Types of Clients” below for put equity options; more information. • open-end mutual funds shares that Baird has In certain limited instances, Baird may allow a selected for use in the Program, which generally client to hold an investment in an Account that is includes only those funds with which Baird has a an Unpermitted Investment. selling agreement and only those funds that are no-load, load-waived, or institutional are ALIGN, BairdNext Portfolios and UMA allowed for purchase; shares that were Programs. The ALIGN, BairdNext Portfolios and originally purchased in a Baird brokerage UMA Programs generally only permit investments account and not sold when transitioned to an in certain mutual funds and ETPs, and with advisory account will held in the account as respect to UMA Portfolios, SMA Strategies and non-billable assets when the original purchase Baird-Managed Portfolios, that Baird has selected was subject to a front-end sales charge for use in those Programs. For more information, (typically 36 months) or until the Contingent see the descriptions of each Program under Deferred Sales Charge (CDSC) expires (typically “Services, Fees and Compensation” above. 13 months) if subject to a back-end sales

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charge after which time they will be converted • commodities, futures or options on to the appropriate advisory share class and commodities, and commodity pools; and become billable assets; • private investment funds and Complex • closed-end funds, ETFs, and UITs that have cost Investment Products that Baird has not selected structures designed for use in fee-based for use in the Program. investment advisory programs; UITs originally purchased in a brokerage account and not sold PIM Program. Permitted Investments and when transitioned to an advisory account will be Unpermitted Investments for the PIM Program are held as non-billable assets until the UIT generally the same as the Baird Advisory Choice termination date at which time they will be Program, except the following types of liquidated and the proceeds are billable; investments are generally not permitted for PIM Accounts: • BDCs, publicly-traded REITs and MLPs (which may be organized as limited liability companies • leveraged funds; (“LLCs”)); • put options; • ETNs, leveraged funds, inverse funds, and other special situation mutual funds, and exchange or • hedge funds, funds of hedge funds, private swap funds; equity funds, funds of private equity funds structured products, private debt funds and • certain hedge funds, funds of hedge funds, managed futures; and private equity funds, funds of private equity funds, structured products, private debt funds • variable annuities. and managed futures that Baird has selected for use in the Program; SMA Programs. Investment products under the SMA Programs are selected solely by the • variable annuities that have cost structures investment manager providing services to the designed for use in fee-based investment client. The investment products used by an advisory programs; and investment manager may include products that Baird does not permit to be used in connection • cash and cash equivalents. with the other Programs described above. A client should review the investment manager’s Form The Unpermitted Investments for the Baird ADV Part 2A Brochure for more information. Advisory Choice Program generally include, but are not limited to: Russell Program. The Russell Program generally only permits investments in mutual funds selected • Class B or Class C shares offered by mutual by Russell, which will exclusively or substantially funds or any other class of mutual fund shares consist of Russell Funds, although non-Russell that impose a contingent deferred or level sales Funds may be used. charge (back-end or level load); Unsupervised Assets • UITs that impose an initial or deferred sales Under certain circumstances, Baird, in its sole charge (load); discretion, may accept a client request to hold an asset in an Account that is not included in the • private REITs and other real estate interests, investment advisory services provided by Baird or and MLPs and LLC units that are not publicly- a Baird Financial Advisor or otherwise monitored, traded; overseen or supervised by them (an “Unsupervised Asset”). For example, if Baird • all annuities and insurance products, except for permits a client to hold an Unpermitted variable annuities that have cost structures Investment in an Account, the asset is typically designed for use in fee-based investment also considered an Unsupervised Asset. Baird, in advisory programs; its sole discretion, may also designate an asset that is otherwise a Permitted Investment as an

Robert W. Baird & Co. Incorporated Baird PWM Wrap Brochure 777 East Wisconsin Avenue, Milwaukee, WI 53202 Rev. 03/24/2021 800-RW-BAIRD.rwbaird.com.Member FINRA & SIPC

Unsupervised Asset under certain circumstances, Portfolios, from the ALIGN, BairdNext Portfolios, such as when a client acquires the asset in an Russell or UMA Programs, and Baird may replace unsolicited transaction, transfers the asset from them with other mutual funds, ETPs, or SMA an account held at another firm or Baird Strategies or Baird-Managed Portfolios, as it brokerage account, or continues to hold the asset deems appropriate. If a client’s Account against Baird’s or the client’s Financial Advisor’s participates in those Programs, Baird may replace recommendation. If a client holds an any such investments in the client’s Account Unsupervised Asset in an Account, the client whenever Baird removes the investment option should understand that the Unsupervised Asset from those Programs. Baird may make such may not be included in performance reports replacement in the client’s Account without provided to the client and that Baird and its providing prior notice to, or obtaining the consent Financial Advisors do not manage, provide of, the client. investment advice, or otherwise act as an investment adviser with respect to the Tax Management Services Unsupervised Asset, even if the Unsupervised If a client’s Account participates in the ALIGN Asset is included in account statements or Strategic Portfolios Program, the ALIGN Custom performance reports provided to the client. Program, the BairdNext Portfolios Program, the Because Baird and its Financial Advisors do not Russell Model Strategies Program or the ALIGN manage or provide investment advisory services UMA Select Program, the client has the option to regarding Unsupervised Assets, no asset-based engage Baird to employ tax harvesting, whereby Program Fee is charged on Unsupervised Assets. Baird will sell certain securities in the client’s While Unsupervised Assets are not subject to the Account deemed appropriate by Baird in order to asset-based Program Fee, Baird may impose realize capital gains or losses, and Baird will additional fees upon Accounts holding reinvest the proceeds of such sale in one or more Unsupervised Assets. See “Other Fees and ETFs, cash equivalents or other securities deemed Expenses” below for more information. A client appropriate by Baird for the duration of any should also understand that holding an applicable wash sale period; and after the Unsupervised Asset in an Account may increase expiration of any applicable wash sale period, sell the risk of trade errors, overinvestment, and such ETF shares, cash equivalents or other negative Account performance. A client should securities and re-invest the proceeds in a manner consult the client’s Financial Advisor for further consistent with the target asset allocation for the information. Account. A client with an eligible Account wishing opt into this service and should contact the Special Considerations for the Programs client’s Baird Financial Advisor to do so. ALIGN, BairdNext Portfolios, Russell, SMA and UMA Clients In addition to the tax harvesting service described Selection of Investment Options above, a client with an ALIGN Strategic Program or ALIGN Custom Program Account may engage Baird solely determines the investment options Baird to employ a capital gain avoidance tax made available to a client under the ALIGN, strategy for the Account, whereby Baird will sell BairdNext Portfolios, Russell and UMA Programs. certain securities in the client’s Account deemed ALIGN, BairdNext Portfolios, Russell and UMA appropriate by Baird from time to time in order to Program Accounts will generally be invested in avoid the capital gain distribution. The proceeds mutual funds or ETPs, and, with respect to UMA from the sale of these securities will be invested Portfolios, SMA Strategies or Baird-Managed in cash until the capital gain distribution has been Portfolios. If Baird has discretion over a client’s paid, and then the securities will be purchased Account (or a portion thereof), Baird may invest again. If the securities were also sold at a loss, such Account (or such portion of an Account over then Baird may invest the proceeds in ETFs, which Baird has discretion) in any investment ETNs, or similar securities for the 30-day wash product it deems appropriate for the client’s sale period in order to avoid the capital gain Accounts participating in those Programs. distribution while recognizing the loss. Replacement of Investment Options The Overlay Manager offers an optional tax From time to time, Baird may remove mutual overlay service under the ALIGN UMA Select and funds, ETPs, SMA Strategies and Baird-Managed

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UAS Programs. Important information about the Generally, ALIGN, BairdNext Portfolios, Russell, Overlay Manager’s tax overlay services is and UMA Program Accounts are currently contained in the paperwork provided to clients rebalanced as follows: upon enrollment in the service and in the Overlay Manager’s Form ADV Part 2A Brochure, which is • ALIGN Elements Portfolios and BairdNext available upon request. The Overlay Manager Portfolios Program Accounts are automatically charges an additional fee for tax overlay services, rebalanced quarterly whenever an Account’s which will be included in the Program Fee. The allocation to an asset class drifts by 3% or more amount of the overlay fee will be disclosed to a from the target allocation if the Account has client prior to enrolling an Account in the service. been open for a year. All such Accounts no matter how long they have been opened will be Some investment managers participating in the rebalanced weekly if an asset class drifts by SMA and UMA Programs offer tax management more than 5% from the target. ALIGN Elements services and others do not. A client should consult and BairdNext Portfolios Program Accounts with the client’s Baird Financial Advisor or review the values of less than $10,000 will be rebalanced investment manager’s Form ADV Part 2A automatically when a deposit or withdrawal Brochure for specific information about a causes the cash allocation to drift by more than particular manager. 5% from the target, and Accounts with values of $10,000 or more will be rebalanced The performance of Accounts participating in a automatically when a deposit or withdrawal tax harvesting, capital gain avoidance, or tax- causes the cash allocation to drift by more than overlay service will vary from similarly-managed 3% from the target. Accounts that are not participating or enrolled in such a service, possibly in a materially negative • ALIGN Custom Portfolios, ALIGN Strategic manner. Portfolios and Russell Program Accounts are automatically rebalanced quarterly whenever an The offering of tax management services by Account’s allocation to an asset class drifts by Baird, the Overlay Manager or an investment 3% or more from the target allocation if the manager is done at their discretion, and there is Account has been open for a year. All such no guarantee they will continue to do so in the Accounts no matter how long they have been future. A client should discuss tax management opened will be rebalanced weekly if an asset needs and expectations with the client’s Financial class drifts by more than 5% from the target. Advisor and manager prior to investing. ALIGN Custom Portfolios, ALIGN Strategic Portfolios and Russell Program Accounts are The offering and performance of tax management also rebalanced automatically whenever a services to a client’s Account does not constitute deposit or withdrawal causes the cash allocation tax advice. Tax management services are to drift by more than 3% from the target. provided solely based upon the direction and information provided by a client. Before enrolling • ALIGN UMA Select Portfolios Program Accounts in a tax management service, a client should rebalance each time there is a change to the consult the client’s tax advisors about the tax model made by Baird or the manager, as consequences of doing so. applicable, if an investment in the Account drifts from the predetermined target weight Asset Allocation Changes and Rebalancing established by Baird for the investment by a certain amount, generally 1-3%, or whenever If a client’s Account participates in an ALIGN an Account’s allocation to cash drifts by 3% or Program, the BairdNext Portfolios Program, the more from the target allocation due to a deposit Russell Program, or a UMA Program, the client or withdrawal. Clients also have the option to authorizes Baird to rebalance the client’s Account have the Account rebalanced on an annual or assets to be consistent with the client’s chosen semiannual basis. Accounts will automatically target asset allocation strategy at any time rebalanced on an annual basis unless otherwise without prior notice to the client at such times directed by the client. and under such circumstances as Baird, in its discretion, deems appropriate.

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• UAS Portfolios are automatically rebalanced Overlay Manager when they are outside of their drift tolerance Under the ALIGN or UMA Programs, the tax initially either: annually (every 366 calendar management services, asset allocation changes, days) or semi-annually (every 188 calendar rebalancing, and other changes described above days) based on the anniversary date of an may be performed or implemented by the Overlay Account’s enrollment in the Program or Manager. whenever an Account’s allocation to cash drifts by 3% or more from the target allocation due to Third Party Information the deposit or withdrawal. Thereafter, those Program Accounts are automatically rebalanced When providing services to a client, Baird and its annually or semi-annually following the last Financial Advisors rely on information provided by time an Account was rebalanced or whenever third parties and other external sources believed an Account’s allocation to cash is less than to be reliable, including, but not limited to, 0.5% or drifts by 3% or more from the target information provided by investment managers. allocation due to the deposit or withdrawal. Baird and its Financial Advisors assume that all such information is accurate, complete and current. Baird and its Financial Advisors do not A client’s Financial Advisor may also rebalance the conduct an in-depth review of, or verify, such client’s Account enrolled in the ALIGN Custom information, and they do not guarantee the Portfolios or ALIGN Strategic Portfolios Program in accuracy of the information used. See “Portfolio accordance with rebalancing options that Baird Manager Selection and Evaluation—Performance makes available to Baird Financial Advisors. Calculation” and “Portfolio Manager Selection and Current rebalancing options for those Programs Evaluation—Methods of Analysis, Investment include rebalancing annually on the Account’s Strategies and Risk of Loss—Methods of Analysis” anniversary date, quarterly whenever the below for more information. Account’s allocation to an asset class drifts by 3% or more from the target allocation, or upon Financial Advisor Review after an Account’s Goal Management allocation to an asset class drifts by 3% or more Baird makes available to clients an optional goal from the target allocation. management service (“Goal Management”). Goal Management provides clients the ability to set a Baird will not rebalance an Account as described single, overall investment objective for all or a above, particularly during the fourth calendar portion of assets selected by the client with the quarter, to the extent doing so would be flexibility of using multiple, eligible Advisory inconsistent with its implementation of tax Accounts that may have different investment management services for the Account as strategies or objectives. If a client elects to have described above. Baird implement a plan of Goal Management (a “Goal Management Plan”) using two or more With respect to the ALIGN Strategic Portfolios eligible Advisory Accounts (“Goal Management Program, the BairdNext Portfolios Program, the Accounts”), the Goal Management Accounts, ALIGN UMA Select Portfolios Program, and the taken together, will be managed or advised by Russell Program, and with respect to Baird- Baird and client’s Financial Advisor in such a way Managed Models in the UAS Portfolios Program, so as to seek to achieve a single, overall goal or Baird may also change a client’s asset allocation investment objective (“Goal Management for any reason, which may include, but shall not Objective”) chosen by the client. Each individual be limited to, updates made by Baird to the target Account included in a Goal Management Plan will asset allocations of its model portfolio strategies also be managed or advised by Baird and client’s or changes in market conditions, Baird’s opinion Financial Advisor in accordance with the terms of on the future performance of particular asset the applicable Advisory Program and any classes or the client’s financial circumstances. investment strategy or objective applicable to the Account. However, to the extent consistent with Any rebalance of a client’s Account or other the terms applicable to an Account included in a change in asset allocation may result in taxable Goal Management Plan, each individual Account gains or losses. included in the Goal Management Plan may be managed or advised in any manner believed by Baird or the client’s Financial Advisor to be

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necessary or appropriate for the Goal Such enhanced risks include, without limitation, Management Accounts, taken together, to seek to market risks, investment objective and asset achieve the Goal Management Objective. allocation risks, capitalization risks, investment style risks, illiquid securities and liquidity risks, The Goal Management Objectives that Baird concentration risks, frequent trading and portfolio makes available to clients as part of Goal turnover risks, Non-Traditional Assets and Management include: (1) All Growth; (2) Capital Complex Strategies risks, and Complex Growth; (3) Growth with Income; (4) Income Investment Product risks. with Growth; (5) Conservative Income; and (6) Capital Preservation. A description of those A client should note, particularly if the client objectives is contained under the heading elects to include eligible Advisory Accounts in a “Portfolio Manager Selection and Evaluation— Household Goal Management Plan, that: if an Methods of Analysis, Investment Strategies and Account is removed from a Goal Management Risk of Loss—Investment Strategies and Methods Plan for any reason, including if the client ceases of Analysis—Investment Strategies—Asset to be a member of the same household, the Allocation Strategies” below. Program and strategy for the Account removed from the Goal Management Plan will remain In certain circumstances, clients that are part of unchanged unless a change is requested by the the same household may include their eligible client; further, the Account removed from the Advisory Accounts in the same Goal Management Goal Management Plan will not be allocated assets Plan (a “Household Goal Management Plan”). It is from other Accounts included in the Goal the client’s sole responsibility to notify Baird that Management Plan unless the client and all other the client is part of a household so that Baird is applicable clients, if any, consent and direct Baird aware of the client’s eligibility for a Household to do so and then only to the extent permitted by Goal Management Plan. It is also the client’s sole applicable law; and Baird will have no liability for responsibility to notify Baird whenever the client implementing a Goal Management Plan as ceases to be part of a household if an Account is requested by the client. part of a Household Goal Management Plan. Failure to do so could have a materially negative Investment Objectives impact on applicable Accounts. Generally, every Account will have one of the investment objectives described below. An Account will be removed from a Goal Management Plan: (1) upon request or consent of All Growth. An All Growth investment objective the client, (2) if the Account ceases to be an typically seeks to provide growth of capital. eligible Advisory Account, (3) in the event the Typically, an Account pursuing an All Growth Account is part of a Household Goal Management investment objective will experience high Plan, if the client notifies Baird that the client fluctuations in annual returns and overall market ceases to be a member of the applicable value. Under normal market conditions, such an household, or (4) upon written notice from Baird Account generally invests nearly all of its assets in that it is no longer able to manage the Account equity securities. Such an Account may also hold according to the Goal Management Plan. other types of investments.

Given the nature of Goal Management, a client Capital Growth. A Capital Growth investment enrolling Accounts in a Goal Management Plan objective typically seeks to provide growth of should understand that each Account enrolled in a capital. Typically, an Account pursuing a Capital Goal Management Plan may not be invested in a Growth investment objective will experience manner such that the individual Account alone moderately high fluctuations in annual returns would be able to achieve the Goal Management and overall market value. Generally, under Objective. It is likely that one or more Accounts normal market conditions, such an Account will included in a Goal Management Plan, taken alone, primarily invest in a mix of equity securities and will be managed or advised differently and will be fixed income securities, with a significantly higher subject to greater or enhanced risks than would allocation to equity securities. Such an Account be the case if the Account alone had the same may also hold other types of investments. objective as the Goal Management Objective.

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Growth with Income. A Growth with Income income by utilizing an active management style investment objective typically seeks to provide that shifts the percentage of assets held in moderate growth of capital and some current various categories to take advantage of market income. Typically, an Account pursuing a Growth pricing anomalies, strong market sectors, the with Income investment objective will experience current interest rate environment and/or other moderate fluctuations in annual returns and macro-economic trends to achieve growth while overall market value. Generally, under normal accounting for a client’s specific short, market conditions, such an Account will primarily intermediate and long term investment and/or invest in a mix of equity securities and fixed cash flow needs. Depending upon the investment income securities, with a bias towards equity strategy used, an Account pursuing an securities. Such an Account may also hold other Opportunistic investment objective could types of investments. experience high fluctuations in annual returns and overall market value. The types of investments in Income with Growth. An Income with Growth which such an Account may invest will also vary investment objective typically seeks to provide widely, depending upon the particular investment current income and some growth of capital. strategy used. Typically, an Account pursuing an Income with Growth investment objective will experience Goal. A Goal investment objective indicates that moderate fluctuations in annual returns and the Account is a Goal Management Account that is overall market value. Generally, under normal part of a Goal Management Plan and the Account market conditions, such an Account will primarily will be managed or advised in accordance with invest in a mix of fixed income securities and the applicable Goal Management Objective. equity securities, with a bias towards fixed income securities. Such an Account may also hold other For information about the risks associated with types of investments. the investment objectives described above, see the section of the Brochure entitled “Portfolio Conservative Income. A Conservative Income Manager Selection and Evaluation—Methods of investment objective typically seeks to provide Analysis, Investment Strategies and Risk of current income. Typically, an Account pursuing a Loss—Principal Risks—Risks Associated with Conservative Income investment objective will Certain Investment Objectives and Asset experience relatively small fluctuations in annual Allocation Strategies” below. returns and overall market value. Generally, under normal market conditions, such an Account Mutual Fund Share Class Policy will primarily invest in a mix of fixed income Most mutual funds offer different share classes. securities, cash and equity securities, with a While each share class of a given mutual fund has significantly higher allocation to fixed income the same underlying investments, those share securities. Such an Account may also hold other classes have different fees, costs and investment types of investments. minimums, and they provide different levels of compensation to Baird. In an effort to provide Capital Preservation. A Capital Preservation clients with appropriate low cost mutual fund investment objective typically seeks to preserve investment options for their fee-based investment capital while generating current income. Typically, advisory accounts, Baird has established a mutual an Account pursuing a Capital Preservation fund share class policy (“Share Class Policy”) for investment objective will experience relatively certain Baird Financial Advisor-directed Programs, small fluctuations in annual returns and overall including the Advisory Choice, PIM, ALIGN Custom market value. Under normal market conditions, and UAS Programs (the “Share Class Policy such an Account generally invests nearly all of its Programs”). Typically, only one share class of a assets in a mix of fixed income securities and given mutual fund family will be made available cash. Such an Account may also hold other types for purchase by clients in the Share Class Policy of investments. Programs pursuant to the Share Class Policy (the “Approved Share Class”). When selecting the Opportunistic. An Opportunistic investment Approved Share Class for a mutual fund family, objective typically seeks to provide long term Baird endeavors to select the share class with the growth through capital appreciation and/or lowest expense ratio, based upon the average

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expense ratio of the class across all mutual funds that Baird receives from certain mutual funds is in the mutual fund family, that are widely based upon share class purchased by clients, available for trading on the mutual fund trading Baird has a financial incentive to make available platform of Charles Schwab & Co., Inc. to clients those share classes that provide Baird (“Schwab”). In selecting the share class for a greater compensation, which, in many instances, mutual fund family to be made available for would cause clients investing in those share purchase by clients in the Share Class Policy classes to incur higher ongoing costs relative to Programs, Baird considers a number of factors, other share classes made available by the fund including the number of funds within the fund families. This presents a conflict of interest. Baird family that offer the share class, client positions addresses this conflict through the Share Class in and demand for those funds, and the Policy described above and through disclosure in availability of the share classes and funds for this Brochure. For more information about the purchase on the Schwab mutual fund trading compensation that Baird receives from mutual platform. Generally, share classes designed for funds, see “Additional Information—Code of retirement plans and those that pay a distribution Ethics, Participation or Interest in Client (12b-1) fee to Baird will not be permitted in those Transactions and Personal Trading—Participation Programs, or, if such share classes are permitted or Interest in Client Transactions—Investment and the client’s Account is subject to an asset- Product Selling and Servicing—Mutual Funds” based fee arrangement, Baird will either: (1) below. rebate the distribution (12b-1) fees to a client if the client is paying an asset-based Program Fee Shares of mutual funds held in client Accounts on such investment; or (2) exclude such fund that do not meet the requirements of the Share shares from the calculation of the client’s asset- Class Policy will generally be converted to the based Program Fee (sometimes referred to as applicable Approved Share Class subject to “unbillable assets”) for such period of time that certain restrictions. The Share Class Policy is Baird collects and retains the distribution (12b-1) subject to change at Baird’s discretion without fee as further described under the heading notice to clients. Additional information about the “Additional Information—Code of Ethics, Share Class Policy is available on Baird’s website Participation or Interest in Client Transactions and at bairdwealth.com/retailinvestor. Personal Trading—Participation or Interest in Client Transactions—Investment Product Selling Custody Services or Servicing—Mutual Funds” below. Clients should Each Program generally requires clients to note that the Approved Share Class for a mutual custody their Account assets at Baird. If Baird is fund family is based upon the average expense the custodian of a client’s assets, Baird will ratio for the class across all mutual funds in the provide certain custody services, including holding fund family and not on a fund-by-fund basis. the client’s Account assets, crediting contributions Further, the expenses of every mutual fund can and interest and dividends received on securities and will vary over time. Therefore, while Baird held in a client’s Account, and making or has endeavored to select the lowest cost share “debiting” distributions from the Account. classes as described above, in some instances, Information about account statements and the Approved Share Class is not the least performance reports, if any, that Baird provides expensive share class for a particular mutual to clients is contained under the heading fund. Clients may be able to obtain a less “Additional Information—Review of Accounts” expensive share class in other Programs or at below. another firm. As custodian, Baird may hold a client’s Account Baird receives certain compensation from mutual assets in nominee or “street” name, a practice fund families in the form of distribution (12b-1) that refers to securities and assets being fees, shareholder servicing fees, transfer agency registered in Baird’s name or in a name that Baird fees, networking fees, accounting fees, marketing designates, rather than in a client’s name directly. support payments, revenue sharing and Baird will be the holder of record in those administration fees. The amount of compensation instances. paid to Baird generally varies based upon the share class of the applicable mutual fund purchased by clients. Because the compensation

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Baird may utilize one or more subcustodians to from the client’s selected custodian. A client provide for the custody of a client’s assets in should carefully review those account statements certain circumstances. For instance, Baird utilizes and compare them with any statements provided subcustodians to maintain custody of certain by Baird. A client should note that the prices client securities that are traded on foreign shown on a client’s Account statements provided exchanges. by the custodian could be different from the prices shown on statements and reports provided Baird in its sole discretion may accept Held-Away by Baird due to a variety of factors, including the Assets into a client’s Account, including assets use of different valuation sources and accounting that are held by another custodian (a “third party methods (e.g., trade or settlement date custodian”). A client who uses a third party accounting) by the custodian and Baird. custodian to hold Account assets does so at the client’s risk. A client should understand that Baird Cash Sweep Program does not monitor, evaluate or review any third Baird maintains a Cash Sweep Program that is party custodian. The client should also understand intended for clients who want to earn interest and that the client will pay a custody fee to the third receive FDIC insurance protection on their cash party custodian in addition to the Program Fee. over short periods of time while awaiting Baird may also impose additional fees on investment. If a client participates in Baird’s Cash Accounts with assets held by a third party Sweep Program, uninvested cash in the client’s custodian due to the increase in resources needed accounts will be automatically deposited or swept to administer those Accounts. Further, such third into one or more FDIC-insured deposit accounts party custody arrangements may limit the at participating banks (the “Bank Sweep Feature”) Programs made available to the client. In or, under certain conditions, will be automatically addition, a client should understand that: (a) each invested in shares of a money market mutual third party custodian has exclusive control over fund that Baird makes available in the program the investment options made available to client (the “Money Market Fund Feature”), subject to Accounts on the custodian’s platform; (b) Baird the terms and conditions of the program. By using has no authority or ability to add to, or remove multiple participating banks as opposed to a from, a custodian’s platform any investment single bank, the Bank Sweep Feature seeks to option; (c) any advice given by Baird or the provide FDIC insurance protection for a client’s client’s Financial Advisor with respect to the cash balances of up to an aggregate deposit limit Account is inherently limited by the options determined under the program (currently, available through a custodian’s platform; (d) $1,250,000 for most account types and Baird or the client’s Financial Advisor may have $2,500,000 for joint accounts). Each deposit provided different investment advice with respect account at a bank constitutes a direct obligation to the Account had they not been limited to the of the bank and is not directly or indirectly Baird’s investment options made available through the obligation. custodian’s platform; and (e) certain investments, such as mutual fund shares, could be more or less Any aggregate cash balances held by a client in expensive than if the investment was obtained excess of the applicable aggregate deposit limit from Baird or another firm. A client should further are automatically invested in shares of a money note that Baird generally does not provide market mutual fund that Baird makes available in performance review or reporting for Held-Away the Money Market Fund feature of the program. Assets. In addition, a client who uses a third party Cash held in employee benefit plan accounts, custodian is not eligible for cash sweep services employee health and welfare plan accounts, and offered by Baird. Clients using a third party SEP and SIMPLE IRAs will be automatically custodian are encouraged to establish appropriate invested or swept into a money market mutual cash sweep arrangements. fund that Baird makes available under the Money Market Fund Feature of the program. In addition, A client who uses a third party custodian clients with aggregate cash balances of $5 million authorizes Baird to give instructions to the client’s or more across all of their accounts with Baird custodian for all actions necessary or incidental to within the same household are eligible to have all the purchase, sale, exchange, and delivery of or any portion of their cash balances securities held in the client’s Account. Also, the automatically swept into a money market mutual client will receive account statements directly

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fund that Baird makes available under the Money or money market funds related to those assets, Market Fund Feature of the program. which compensates Baird for the services Baird provides to the banks and funds and for Baird’s The Bank Sweep Feature seeks to provide FDIC efforts in maintaining the Cash Sweep Program. insurance protection for a client’s cash balances The compensation that Baird receives from the up to an aggregate deposit limit determined Cash Sweep Program gives Baird a financial under the program. Any deposits, including CDs, incentive to recommend that a client participate in that a client maintains, directly or indirectly the Cash Sweep Program and maintain high levels through an intermediary (such as us or another of uninvested cash balances in the client’s broker), with a bank participating in the Cash accounts. Sweep Program in the same capacity with the bank will be aggregated with the client’s cash As an alternative to the Cash Sweep Program, balances deposited with the bank under the Cash Baird makes available other money market Sweep Program for purposes of calculating the mutual funds and other cash alternatives in which $250,000 FDIC insurance limit. Total deposits a client may invest, often at a higher yield, exceeding $250,000 at a bank may not be fully although these investments do not have an insured by the FDIC. A client is responsible for automatic sweep feature. In addition, instead of monitoring the total amount of other deposits that maintaining cash balances in an advisory Account, the client has with a bank outside the Cash Sweep a client has the option to maintain such cash Program in order to determine the extent of balances in a brokerage account that is not deposit insurance coverage available. Baird is not subject to an asset-based Program Fee. responsible for any insured or uninsured portion of a client’s deposits at a bank. Cash invested in a A client should understand that the Cash Sweep money market mutual fund under the Money Program is an ancillary account service and it is Market Fund Feature is not FDIC insured, but is not nor is it part of any advisory program or protected by Securities Investor Protection investment advisory service. Baird does not act as Corporation (“SIPC”) coverage up to applicable investment adviser or a fiduciary to a client in limits. connection with the Cash Sweep Program. However, a client should note that the amount of Baird receives compensation for the the client’s advisory Account dedicated to cash administrative, accounting and other services that and cash equivalents is part of the overall Baird provides under the program, which is paid investment allocation advice provided to the client out of the aggregate interest that is paid by the and thus the amount of such cash and cash participating banks on the aggregate client equivalents included in the calculation of the balances in the deposit accounts participating in Program Fee for the client’s advisory Account. the Bank Sweep Feature. Baird’s annual rate of compensation may be up to 2.00% of the More detailed information about the Cash Sweep aggregate client balances, although in a low Program and the compensation Baird receives is interest rate environment it is much lower. Baird available on Baird’s website at also receives an annual rate of compensation of www.rwbaird.com/cashsweeps. up to 0.50% of the aggregate client balances automatically invested into money market mutual Trust Services Arrangements funds under the Money Market Fund Feature. A Baird maintains an alliance with certain client should note that the client will be charged institutions, including Comerica Bank & Trust, the asset-based Program Fee on the value of all National Association, that provide trust services, of the assets in the client’s Accounts, including including trust administration, custody, tax cash that is swept into a bank deposit account or reporting and recordkeeping. Baird Financial invested into a money market mutual fund under Advisors at times refer clients seeking trust the Cash Sweep Program. As a result, Baird services to institutions that are members of the receives two layers of fees on a client’s assets alliance. swept or invested in the Cash Sweep Program: the Program Fee, which compensates Baird for Baird Financial Advisors may refer a client to HLT, the investment advice, trading and custody Baird’s affiliate. If a client enters into a services provided to the client related to those relationship with HLT, Baird and the client’s Baird assets, and the compensation paid by the banks

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Financial Advisor typically provide ongoing increases the asset-based fees Baird earns on a relationship management services. HLT generally client’s Accounts. A client should note that any provides compensation to Baird and the client’s margin balance (i.e., the outstanding amounts of Baird Financial Advisor for the referral and the margin loan the client owes to Baird) in the providing ongoing services, which may be up to client’s advisory Accounts will not be applied to 50% of the ongoing fees that a client pays to HLT, reduce the client’s billable account value in and which is credited to the client’s Baird calculating the client’s asset-based Program Fee, Financial Advisor for purposes of determining the which gives Baird and Baird Financial Advisors Financial Advisor’s compensation. The further incentive to recommend client use of compensation paid to Baird and a client’s Baird margin instead of liquidating assets to fund a cash Financial Advisor does not increase the fees that need. Because the interest Baird receives and the client pays to HLT. Due to Baird’s affiliation fees Baird earns on a client’s Accounts increase as with HLT and the compensation paid to Baird and the amount of the client’s margin loan increases, Baird Financial Advisors, Baird and Baird Financial Baird and Baird Financial Advisors also have an Advisors have a financial incentive to favor HLT incentive to recommend that the client continue over other trust companies. to maintain a margin loan balance with Baird at high levels. Baird has the right to lend the A client should understand that any such referral securities a client pledges as collateral for the for trust services made by Baird and its Financial client’s margin loan, and Baird receives additional Advisors is an ancillary account service and it is compensation for lending those securities, which not an, nor is it part of any, Advisory Program or provides Baird a further incentive to recommend investment advisory service. They do not act as margin to a client. investment adviser or a fiduciary to the client when making such a referral and they will not A client should note that Baird’s margin loan provide advice on or oversee any such trust program is generally intended to be used to fund services arrangement. additional purchases of securities. If a client wishes to obtain a loan for some other purpose, a Margin Loans client should instead consider whether the client Margin involves borrowing money from Baird, is eligible for Baird’s Securities-Based Lending including for the purpose of buying securities. If a Program, which involves clients obtaining loans client uses margin, the client will pay Baird from third-party lenders for general use purposes. interest on the amount the client borrows. The Baird and Baird Financial Advisors have a conflict rate of interest that a client pays on a margin loan to the extent they would recommend that a client will be at a base rate determined by Baird plus or use the Baird margin loan program instead of the minus a specified percentage that varies based on Securities-Based Lending Program because a the outstanding debit balance of the margin loan client pays interest and other fees to Baird and the client’s household account value. Interest instead of a third-party lender. rates are lower for larger debit balances and those with higher household account balances. As Additional important information about margin, a result, rates will vary. To determine the actual including the risks and margin interest rates that interest rate that may apply to a client’s margin apply, is set forth in the “Margin” section of loan, visit Baird’s website at Baird’s website at bairdwealth.com/retailinvestor. rwbaird.com/loanrates or contact a Baird Financial Advisor. Because a client will pay interest to Baird Securities-Based Lending Program on the outstanding balance of the client’s margin Baird offers clients an opportunity to borrow loan that is used to buy securities, Baird has an money from a third-party bank under Baird’s incentive to recommend that a client use margin. Securities-Based Lending Program. These loans, if Baird and Baird Financial Advisors also have an made, can be used for any personal or business incentive to recommend that a client use margin purpose other than to purchase, carry or trade to buy securities, because a margin loan allows a securities, or to repay margin debt. These loans client to make larger securities purchases and are secured by the investments and other assets retain assets in the client’s Accounts that pay an in the client’s accounts with Baird. A client will ongoing asset-based Program Fee instead of pay interest on the outstanding balance of the liquidating them to fund a cash need, which client’s loan. The rates of interest charged by the

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bank depends on many factors, such as the account service and it is not an, nor is it part of prevailing interest rate environment, the amount any, Advisory Program or investment advisory of the loan or line of credit, a client’s service. They do not act as investment adviser or creditworthiness, and the aggregate assets in a a fiduciary to the client when making such a client’s Baird accounts in the client’s household referral and they will not provide advice on or (“relationship size”). The interest rates are based oversee any such lending arrangement. on a benchmark rate (currently 30-day LIBOR), plus an applicable percentage that varies based Client Responsibilities on the approved loan amount and the relationship A client is responsible for providing information to size. Rates are generally higher for smaller loans Baird and the client’s Baird Financial Advisor and relationship sizes and lower for larger loans reasonably requested by them in order to provide and relationship sizes. The interest rate that will the services selected by the client. Baird, the apply to a client’s loan will be set forth in the loan client’s Baird Financial Advisor and investment agreement the client enters into with the bank. managers, if any, will rely on this information Baird receives an ongoing administrative fee from when providing services to the client. A client is the bank, at an annual rate of up to 2.50% of the also responsible for promptly informing the outstanding balance under a client’s loan, which is client’s Baird Financial Advisor of any significant paid by the bank out of the interest the client life changes (e.g., change in marital status, pays to the bank. A client’s Baird Financial Advisor significant health issue, or change in typically receives an ongoing referral fee at an employment) or if there is any change to the annual rate of up to 0.25% of the outstanding client’s investment objectives, risk tolerance, balance of the client’s loan, which is paid out of financial circumstances, investment needs, or Baird’s administrative fee. A client should note other circumstances that may affect the manner that Baird and Baird Financial Advisors will in which the client’s assets are invested. None of continue to receive compensation on assets held Baird, the client’s Baird Financial Advisor or any in the client’s accounts that serve as collateral for investment manager managing a client’s Account the client’s loans, including Program Fees. is responsible for any adverse consequence Because Baird receives an administrative fee and arising out of the client’s failure to promptly Baird Financial Advisors receive a referral fee if a inform the client’s Baird Financial Advisor of any client obtains a loan from a third party bank such changes. Since investment goals and under Baird’s Securities-Based Lending Program, financial circumstances change over time, a client Baird and Baird Financial Advisors have an should review the client’s participation in a incentive to recommend that a client obtain loans Program with the client’s Baird Financial Advisor under that program. Baird and Baird Financial at least annually. Advisors will continue to receive compensation on assets held in a client’s accounts that are Legal and Tax Considerations collateral for such loans, including Program Fees on such assets if those assets are in the client’s Baird and its associates do not provide legal or advisory Account. As a result, Baird and Baird tax advice to clients in connection with the Financial Advisors have a financial incentive to Programs. recommend that a client obtain a loan under the program to provide for the client’s needs instead Additional laws, regulations and other conditions of liquidating assets in the client’s accounts with apply to retirement accounts, which include Baird because a decline in the amounts the client employee pension benefit plan accounts that are has in the client’s accounts will result in lower subject to the Employee Retirement Income revenues to Baird and compensation paid to the Security Act of 1974, as amended (“ERISA”) and client’s Baird Financial Advisor. Additional individual retirement accounts (“IRAs”) that are important information about securities-based subject to the Internal Revenue Code of 1986, as lending is set forth in the “Securities-Based amended (“IRC”) (collectively, “Retirement Lending Program” section of Baird’s website at Accounts”). Each owner, trustee, named fiduciary, bairdwealth.com/retailinvestor. responsible plan fiduciary, or other fiduciary acting on behalf of a Retirement Account A client should understand that any referral made (“Retirement Account Fiduciary”) should by Baird and its Financial Advisors under the understand that Baird and its associates do not Securities-Based Lending Program is an ancillary provide legal advice regarding Retirement

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Accounts. A Retirement Account Fiduciary is urged of assets. Use of a tiered fee schedule will result to consult with his or her own legal advisor about in a blended asset-based fee rate. the laws and regulations that may apply to Retirement Accounts. Under a breakpoint fee schedule, the asset-based fee is determined by reference to the market The investment strategies used for a client’s value of the client’s Account assets, with the fee Account and transactions in a client’s Account, being equal or lower for accounts with higher including liquidations, redemptions, and levels of assets. The breakpoint fee, once rebalancing transactions, may cause the client to determined, is then applied to all of the assets in realize gains or losses for income tax purposes. In the client’s Account. addition, a client’s Account may be invested in investment products classified as partnerships for The typical asset-based fee varies depending U.S. federal income tax purposes, which may upon the Program and the fee option selected by result in unique tax treatment, including Schedule the client. Fee options and rates may also differ K-1 reporting. In addition, when held in a client’s among different Accounts held by the same client, Retirement Account under certain circumstances, depending on the Program and services selected such investments may produce unrelated for an Account. business taxable income which may result in a current-year income tax obligation to the client. All new client Accounts paying an asset-based fee Baird does not provide any tax advice in are generally subject to a unified advice fee connection with any of the Programs. A client arrangement (“Unified Advice Fee Arrangement”), should discuss the potential tax implications of which is described below. Some existing client the client’s investment strategies, investment accounts are subject to a legacy wrap fee products, and transactions with the client’s tax arrangement (“Legacy Wrap Fee Arrangement”) advisor. If a client wishes for Baird to implement described further below. a particular investment strategy for tax purposes, and Baird agrees to implement such strategy, Unified Advice Fee Arrangement Baird will not be responsible for the development, Under a Unified Advice Fee Arrangement, the evaluation or efficacy of any such strategy. asset-based Program Fee is comprised of an advice fee (“Advice Fee”) and, for some Program Fees Programs, an additional portfolio fee (“Portfolio Fee Options and Fee Schedules Fee”). The Advice Fee covers certain investment A client’s advisory agreement will set forth the advisory, brokerage and custody services actual compensation the client will pay to Baird. provided by Baird. The Portfolio Fee covers In most instances, a client pays an ongoing portfolio management and other services provided Program Fee based upon the value of assets in by Baird and the manager to the client’s Account, the client’s Account (an “asset-based fee”), which may include departments or affiliates of although other options, such as a flat fee, may be Baird. If a client has a Unified Advice Fee available. Arrangement, the client’s Program Fee rate will be equal to the sum of the applicable Advice Fee rate Asset-Based Fee Arrangements and the applicable Portfolio Fee rate, if any. Baird generally offers two types of asset-based fee arrangements: a tiered fee schedule and a Clients with a Unified Advice Fee Arrangement breakpoint fee schedule. may generally choose a tiered or breakpoint fee schedule for the Advice Fee portion of the Program Fee. Under a tiered fee schedule, the asset-based fee will vary for different segments of client assets, gradually decreasing as the Account balance Tiered Advice Fee Schedule increases. For example, a client with an Account The following fee schedule sets forth the value of $1,000,000 may pay one rate on the first maximum tiered Advice Fee rates for the $250,000 of assets in the Account, a lower rate Programs. on the next $250,000 of assets in the Account and a still lower rate on the remaining $500,000

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Tiered Advice Fee Schedule Portfolio Fee Schedule Value of Assets Annual Fee Rate Annual Fee Rate or Range of First $1,000,000 2.00% Program Rates Next $1,000,000 1.50% Baird Equity Asset Next $3,000,000 1.35% Management Portfolios Next $5,000,000 1.25% SAM Strategic Portfolios 0.38% - 0.50% Above $10,000,000 1.00% Other Portfolios 0.32% - 0.50%

Breakpoint Advice Fee Schedule Baird Recommended Managers The following fee schedule sets forth the Equity SMA Strategies 0.25% - 0.75% maximum breakpoint Advice Fee rates for the Balanced SMA Strategies 0.25% - 0.52% Programs. Fixed Income SMA Strategies 0.16% - 0.40% Breakpoint Advice Fee Schedule Global and International SMA 0.25% - 0.52% Strategies Value of Assets Annual Fee Rate Alternative SMA Strategies 0.35% - 0.60% $0 to $1,000,000 2.00% Baird SMA Network (BSN) $1,000,000 to $1,999,999 1.75% Equity SMA Strategies 0.27% - 0.77% $2,000,000 and above 1.50% Balanced SMA Strategies 0.22% - 0.60% Portfolio Fee Schedule Fixed Income SMA Strategies 0.12% - 0.40% The Portfolio Fee rate varies by Program, Global and International SMA 0.32% - 0.60% investment vehicle, and the type of investment Strategies strategy or style being pursued by the Account. Alternative SMA Strategies 0.32% - 0.60% The following fee schedule sets forth the Fund Strategist Portfolios 0.02% - 0.50% maximum Portfolio Fee rates or range of rates for HLT Strategies 0.35% - 0.45% the Programs. Dual Contract (DC) —* Portfolio Fee Schedule Private Investment 0.00% Annual Fee Rate Management (PIM) or Range of Riverfront Managed Portfolios 0.32% - 0.50% Program Rates Russell Model Strategies 0.00% ALIGN Custom Portfolios 0.00% Unified Advisory Select (UAS) ALIGN Elements Portfolios 0.00% Portfolios 0.25% - 0.52% ALIGN Strategic Portfolios 0.00% Equity SMA Strategies 0.25% - 0.52% ALIGN UMA Select Portfolios Balanced SMA Strategies 0.16% - 0.40% Equity SMA Strategies 0.25% - 0.52% Fixed Income SMA Strategies 0.25% - 0.60% Balanced SMA Strategies 0.25% - 0.52% Global and International SMA Strategies Fixed Income SMA Strategies 0.16% - 0.40% Alternative SMA Strategies 0.35% - 0.96% Global and International SMA 0.25% - 0.60% Riverfront SMA Strategies 0.32% - 0.50% Strategies 0.02% - 0.50% Alternative SMA Strategies 0.35% - 0.60% Fund Strategist Portfolios 0.00% Riverfront SMA Strategies 0.32% - 0.50% Mutual Funds 0.00% Mutual Funds 0.00% ETFs 0.00% ETFs 0.00% ALIGN Elements Portfolios 0.00% ALIGN Strategic Sleeve or 0.00% ALIGN Strategic Sleeve or Portfolio Portfolio 0.00% Baird Advisory Choice 0.00% AQA Portfolios 0.00% BairdNext Portfolios 0.00% Baird Recommended Portfolio

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Portfolio Fee Schedule Account, if any. For more specific information about the fee that applies to an existing Account, Annual Fee Rate a client should refer to the paperwork the client or Range of received when opening the Account or the client Program Rates may contact the client’s Baird Financial Advisor. Baird Rising Dividend Portfolio 0.00% Baird Equity Asset 0.32% -0.40% Overlay Manager Tax Overlay Services Management Portfolios The Overlay Manager charges an additional fee HLT Strategies 0.35% for tax overlay services, which will be included in the Program Fee. The amount of the fee will be * Fees charged by managers under the DC Program are disclosed to a client prior to enrolling an Account negotiated by each client pursuant to a separate in the service. agreement that does not include Baird. Baird, therefore, does not have the necessary information to provide a Flat Fee Arrangement definitive range of fees paid to managers under the DC Program. Under a flat fee arrangement, the applicable fee may be determined according to a fixed asset- based fee rate or may be a fixed dollar amount. The Portfolio Fee rates are current as of the date Specific services may each have their own, of this Brochure. A client’s actual Portfolio Fees separately stated flat fee, or several services may could be higher or lower than the amounts shown be grouped together under a single flat fee. Some above if Baird adds new investment managers to services may entail a flat fee per usage. Flat fees the Programs with higher or lower fees or if Baird are negotiable and vary by client. The details of and a manager renegotiate the amount of the flat fee arrangements, including fee amounts, the subadvisory fee. billing schedule, and the services covered, will be included in the client’s advisory agreement. Important Information about UMAs and Blended Rates. UMAs offer investments in different Program Account Minimums investment vehicles (such as mutual funds, ETFs, SMAs and Baird-Managed Portfolios) and asset The minimum asset value to open an Account in a classes (such as equity securities and fixed Program is set forth in the table below. income securities). Each investment vehicle and asset class may have a different Portfolio Fee Account Minimum rate, which is shown in the table above. For Program Asset Level purposes of calculating the Portfolio Fee for a UMA, the Portfolio Fee rate applicable to each ALIGN Custom Portfolios $25,000 investment vehicle or asset class will be applied ALIGN Elements Portfolios $5,000 to the value of assets invested in each such ALIGN Strategic Portfolios $25,000(1) investment vehicle or asset class in the Account. ALIGN UMA Select Portfolios $200,000(2) In other words, the overall Portfolio Fee rate for the UMA as a whole will be a blended rate. The Baird Advisory Choice $10,000 blended Portfolio Fee rate, and the actual Portfolio BairdNext Portfolios $5,000 Fee paid by a client, will vary over time due to Baird Equity Asset many factors, including market appreciation or Management Growth $250,000 depreciation of the assets in the Account and Portfolios Baird Equity Asset changes in allocations to different investment $250,000(3) vehicles or asset classes in the Account. Management SAM Portfolios Baird Equity Asset $100,000 Legacy Wrap Fee Arrangements Management Value Portfolios Baird Recommended Unlike a Unified Advice Fee Arrangement, under a $100,000(4) Managers Legacy Wrap Fee arrangement, the client pays (4) one Program Fee for investment advisory, Baird SMA Network $100,000 brokerage and custody services provided by Baird Dual Contract $100,000(4) and for portfolio management and other services Private Investment $50,000(5) provided by Baird and the manager to the client’s Management

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Account Minimum Calculation and Payment of Program Fees Program Asset Level Baird will calculate a client’s Program Fee by applying the applicable fee rate to the value of all Riverfront Managed Portfolios $200,000(6) of the assets in the client’s Accounts, including Riverfront Managed ETF cash and its equivalent and including all Held- $100,000 Portfolios Away Assets. Russell Model Strategies $10,000 Unified Advisory Select If requested by a client and approved by Baird, a $5,000(7) (UAS) Portfolios client’s Program Fee may be determined by also including the aggregate value of assets in certain (1) ALIGN Strategic Retirement Portfolios have a other Advisory accounts held by a client and minimum account requirement of $5,000. certain members of the client’s household or (2) Some ALIGN UMA Select Portfolios have an account family (a “household fee arrangement”). A client minimum of $400,000. should note that Retirement Accounts may not be included in a household fee arrangement to the (3) Baird Equity Asset Management’s SAM Strategic Portfolios have a minimum account requirement of extent a prohibited transaction under ERISA or $250,000 and its SAM Custom Portfolios have a the IRC may result. The terms of any such minimum account requirement of $1,000,000. household fee arrangement will be set forth in the (4) Investment managers typically have an account client’s advisory agreement. minimum of $100,000. However, each investment manager sets its own minimum account size A client should note that it is client’s sole requirements, which can range from $25,000 to responsibility to inform the client’s Financial more than $1,000,000. As a result, some Advisor that client’s household or family has two investment managers may not be available to or more Advisory accounts that are eligible for a clients with smaller accounts. household fee arrangement. Baird and its (5) PIM Accounts that use strategies that primarily Financial Advisors do not perform an independent invest in mutual funds or ETFs may have an analysis or determination as to whether any client account minimum of less than $50,000. Accounts are eligible for a household fee (6) Some Riverfront Managed Portfolios have an arrangement. By agreeing to a household fee account minimum of $250,000 . arrangement, each client subject to such (7) Account minimums vary depending upon the household fee arrangement consents to Baird investments that are selected for UAS Program providing to each other client subject to such Account and will be significantly higher if, for household fee arrangement, in Baird’s sole example, an SMA Strategy is selected. discretion, information about the aggregate level, or range, of household assets used for fee A client’s Account may also be subject to a calculation purposes. As a result, each such client minimum quarterly Program Fee that will be set should understand that the other clients included forth in the client’s advisory agreement regardless in the household fee arrangement may be able to of the value of the assets in the client’s Account. ascertain the amount of the client’s assets at In addition, if a third party custodian has custody Baird. of the client’s Account assets, Baird may impose Account requirements different than those set forth above, including but not limited to higher For purposes of calculating a client’s asset-based minimums, and it may impose additional fees due Program Fee, the value of a client’s assets is to the increase in resources needed to administer generally determined by Baird. Baird generally the Account. relies upon third party sources, such as third party pricing services when valuing Account assets. In some instances, such as when Baird is A client is encouraged to periodically review with unable to obtain a price for an asset from a the client’s Financial Advisor the client’s Program pricing service, Baird may obtain a price from its Fee and the services provided to determine if the trading desk or it may elect to not price the asset. services and fees continue to meet the client’s Obtaining a price from its trading desk may needs. present a conflict of interest. In some cases, Baird obtains prices from the issuers or sponsors of investment products in the client’s Account when

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prices are not otherwise readily available. This If a client maintains a debit balance in the client’s frequently occurs with respect to the valuation of margin account with Baird, such balance has no Complex Investment Products, as well as bearing on the asset-based Program Fees charged community bank stocks and private limited on client’s Account. In other words, the margin partnerships. If the assets in the client’s Account balance (i.e., the outstanding amounts of the are held by a custodian other than Baird, Baird margin loan a client owes to Baird) in client’s may also use valuation information provided by Account will not be applied to reduce the client’s the client’s third party custodian in determining billable Account value in calculating the Program the value of the assets in the client’s Account. Fee. For purposes of calculating the asset-based Program Fees imposed on an open short sale Baird does not conduct a review of valuation position, a client will be charged on the market information provided by third party pricing value of the underlying securities sold short services, issuers, sponsors, or custodians, and it rather than on the difference between the price at does not verify or guarantee the accuracy of such which the underlying securities were sold and the information. Baird does not accept responsibility current value of those securities. For purposes of for valuations provided by third parties that are calculating the asset-based Program Fees for an inaccurate unless Baird has a reason to believe option position, the value of the option will be that the source of such valuations is unreliable. excluded from the calculation, unless a margin Valuation data for investments, particularly account was required for the option transaction, Complex Investment Products, community bank in which instance the absolute value of the stocks and private limited partnerships, may not current market price of the option will be used be provided to Baird in a timely manner, resulting when calculating the Program Fee. in valuations that are not current. The prices obtained by Baird from third party pricing The Account value used for the Program Fee services, issuers, sponsors and custodians may calculation may differ from that shown on a differ from prices that could be obtained from client’s Account statement or performance report other sources. due to a variety of factors, including the client’s use of margin, options, short sales, and other Values used for fee-calculation purposes may vary considerations. If a client has assets held by a from prices received in actual transactions and third party custodian, the prices shown on a are not firm bids, offers or guarantees of any type client’s Account statements provided by the with respect to the value of assets in an Account, custodian could be different from the prices and the Program Fee for some securities may be shown on statements and reports provided by calculated based on values that are greater than Baird. See “Services, Fees and Compensation— the amount a client would receive if the securities Additional Program Information—Custody were actually sold from the client’s Account. Services” above for more information.

As mentioned above, Baird will include cash and A client’s Program Fees are payable in accordance cash equivalent balances in a client’s Account, with the terms of the client’s advisory agreement. including any excess cash collateral maintained in Typically, Program Fees are payable on a calendar the client’s margin account, when calculating a quarterly basis, in advance. The initial billing client’s asset-based Program Fee. Baird has period begins when the client’s advisory adopted internal policies that monitor the agreement is accepted by Baird and the Account percentage of cash or cash equivalents in an is opened by Baird (the “Opening Date”). The Account for sustained periods of time. These initial Program Fee payment will be adjusted for internal policies are designed to inform Baird the number of days remaining in the then current Financial Advisors and their clients who hold large quarter. The initial Program Fee will be based on cash balances in their Accounts for sustained the value of assets in the client’s Account on the periods that those Accounts are holding large Opening Date. The period which such payment cash balances and that there may be other covers shall run from the Opening Date through investment or account options for their cash and the last business day of the then current calendar that Baird receives direct compensation in quarterly billing period. Thereafter, the quarterly addition to the Program Fee from client balances Program Fees shall be calculated based upon the in the Cash Sweep Program. Account’s asset value on the last business day of the prior calendar quarter and shall become

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payable on the first business day of the then adjustment will be made. However, Baird, in its current calendar quarter. sole discretion, may make fee adjustments in response to asset fluctuations in a client’s Account A client’s Program Fees and other charges will be occurring during a billing period that result from automatically deducted from the client’s Account, contributions to, or withdrawals from, the client’s unless the client requests, and Baird agrees, to an Account. alternate arrangement, such as having Baird issue the client an invoice for the Program Fees (“direct Each Program may have a minimum asset value billing”). A client should understand that the in order to open an Account as further described client’s Program Fees and other charges relating under “Program Fees—Program Account to the client’s Account may be satisfied from free Minimums” above. A client’s Account may be credit balances and other assets in the client’s subject to a minimum Program Fee. The minimum Account. If free credit balances in a client’s Program Fee will be described in the client’s Account are insufficient to pay the Program Fees advisory agreement. Baird may waive the or other charges when due, Baird and any minimum Program Fee at its discretion. The investment manager managing the client’s minimum Program Fee is subject to change upon Account may sell investments from the client’s notice to the client. Account to the extent they deem necessary and appropriate, in their sole discretion, to pay the The Program Fee and minimum account value are client’s Program Fees and other charges. negotiable in certain instances and may vary based upon a number of factors, including but not If a client’s Account is subject to direct billing, the limited to the size and nature of the assets in the client is required to pay each bill within 30 days of client’s Account, the client’s particular investment the date of the invoice. Baird may automatically strategy or objective, and any particular services deduct a client’s Program Fees and other charges requested by the client. In some instances, clients from the client’s Account as described above in may pay a higher fee than indicated in the fee the event that Baird does not receive payment schedules above. The fees paid by a client may from the client within 30 days of the date of the differ from the fees paid by other clients based on invoice. Baird may rescind a direct billing a number of factors, including but not limited to arrangement with a client at any time. Direct the factors identified above. billing may not be available for Retirement Accounts. The fee schedules set forth above are the current fee schedules for the Programs. Each Program has To the extent permitted by applicable law, Baird had other fee schedules in effect, which may may modify a client’s existing fees and other reflect fees that are lower or higher, as the case charges or add additional fees or charges by may be, than those shown above. As new fee providing the client with 30 days’ prior written schedules are put into effect, they are made notice. applicable only to new clients, and fee schedules applicable to existing clients may not be affected. If either Baird or the client terminates the client’s Associates and affiliates of Baird may be eligible advisory agreement or the client’s participation in for reduced fees. Therefore, some clients may pay a Program, a pro-rated refund from the date of different fees than those shown above. termination through the end of the applicable billing period will generally be made to the client Obtaining Program Services Separately: in the client’s affected Accounts. Baird will not Brokerage or Advisory? Factors to Consider implement a decrease in the client’s fee rate Baird generally does not offer the Programs to during a billing period or otherwise reimburse or clients on an unbundled basis. In other words, the adjust Program Fees during any such period for Programs do not permit clients to pay for asset value appreciation or depreciation in a services, such as investment advice, trade client’s Account during such period. For example, execution, and custody separately. However, if a client’s Account is subject to a tiered or Baird offers brokerage accounts and other breakpoint fee schedule and the asset levels of services to clients, and certain services provided the Account move into a new tier or cross a to a client in connection with a particular Program breakpoint during such period, no rebate or fee may be available to a client outside of the

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Program separately. Thus, a client’s participation internal ongoing operating fees and expenses in a Program could cost the client more or less (e.g., Investment Funds). than if the client purchased each service separately. A number of factors bear upon the Additional important information about brokerage relative cost of each Program. In comparing the accounts and facts to consider when making Programs to brokerage accounts or other account type decisions is contained in the Client services, a client should consider a number of Relationship Details document, which should have factors, including, but not limited to: been delivered to the client and is available on Baird’s website at bairdwealth.com/retailinvestor. • whether a client prefers to have ongoing monitoring, investment advice or professional A client should review other account types and management of the client’s investments, which programs with the client’s Financial Advisor to are provided to Program Accounts, or whether determine whether they are more appropriate or the client does not want or need such services; should be used in addition to a Program.

• whether the types of investment strategies, Program Fee Payments to Baird, Financial products and solutions the client seeks are Advisors and Investment Managers available; Baird and its affiliates and associates benefit from the Program Fees and charges clients pay for the • whether there are limitations on the types of services described in this Brochure. securities and other investments available for purchase and whether those limitations are Baird retains the entire Program Fee paid by significant to the client; clients, except as further described below. With respect to the Baird Equity Asset Management • whether the nature and level of transaction Portfolios Program, Baird Recommended services, account performance reporting, or Managers Program, Baird SMA Network Program, other ancillary services the client wants are Dual Contract Program and Riverfront Managed available; Portfolios Program, and with respect to investment managers providing SMA Strategies • whether the client prefers to pay an ongoing under the UMA Programs, Baird pays the manager Program Fee for continuous advice or pay (including Implementation Managers, if any) a commissions and other fees on a transaction- subadvisory fee as compensation for the by-transaction basis; manager’s services as further described below.

• the relative costs and expenses of a Program For client Accounts subject to a Legacy Wrap Fee Account and a brokerage account, which will Arrangement, Baird pays the manager out of the vary depending upon: Program Fee paid by the client. The amount of the Program Fee paid to a particular manager varies o the fee or commission rate the client based upon, among other factors, the Program negotiates; selected by a client, the investment strategy and other services sought by a client, the subadvisory o the size of the client’s account; fee Baird negotiated with the manager, the manager’s investment style or strategy, the level o the level of trading activity and size of trade of services provided by the manager, and the size orders; of a client’s Account. The range of subadvisory fees paid to investment managers (which includes o applicable account fees and charges; amounts paid to an Implementation Manager, if any) out of the Program Fee is set forth in the o the client’s use of third party managers who table below. charge their own fees for managing accounts in addition to Baird’s Advice Fee; and

o the amount of the client’s account invested in investment products that have additional

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Legacy Wrap Fee Arrangements “Additional Information—Other Financial Industry Portion of Program Fee Paid to Investment Managers Activities and Affiliations” below. Given the nature of the Program Fee, Baird also has an incentive to Range of Annual recommend or select investment managers that Subadvisory trade less frequently with or that trade away from Investment Style or Strategy Fee Rates Baird because Baird will incur lower trading costs Equity Strategies 0.20% - 1.80% with respect to such managers and such Balanced Strategies 0.10% - 1.70% relationships will be more profitable to Baird. With respect to the UMAs subject to a Legacy Wrap Fee Fixed Income Strategies 0.12% - 1.25% Arrangement, Baird shares a portion of the Global and International 0.20% - 1.70% Program Fee with investment managers to the Strategies extent a UMA Portfolio contains an SMA Strategy, Alternative Strategies 0.20% - 0.96% but it retains the entire Program Fee to the extent a UMA Portfolio contains mutual funds, ETPs or The portion of Program Fees paid to investment Baird-Managed Portfolios. Thus, Baird has an managers could be higher or lower than the incentive to favor mutual funds, ETPs and Baird- amounts shown above if Baird adds new Managed Portfolios over SMA Strategies with investment managers to the Programs with higher respect to UMAs subject to a Legacy Wrap Fee or lower fees or if Baird and a manager Arrangement because it will be more profitable for renegotiate the amount of the subadvisory fee. Baird. Conversely, with respect to UMAs subject to a Unified Advice Fee Arrangement, Baird For client Accounts subject to a Unified Advice Fee retains a portion of the Portfolio Fee paid to Arrangement in which the Program Fee consists of certain managers as described above. Thus, Baird an Advice Fee and a separate Portfolio Fee, Baird has an incentive to favor SMA Strategies provided pays the manager out of the Portfolio Fee paid by by those managers over other SMA Strategies, the client. The Portfolio Fee rates are set forth mutual funds, ETPs and Baird-Managed Portfolios under “Fee Options and Fee Schedules—Unified with respect to UMAs subject to a Unified Advice Advice Fee Arrangement—Portfolio Fee” above. Fee Arrangement because it will be more The amount of the Portfolio Fee paid to a profitable for Baird. particular manager varies based upon the same factors described above for Legacy Wrap Fee A Baird Financial Advisor is primarily compensated Arrangements. However, Baird, in many on a monthly basis based upon a percentage of instances, retains a portion of the Portfolio Fee the Financial Advisor’s total production each when a client’s Account is managed by an month, which primarily consists of the total affiliated or unaffiliated investment manager. The advisory fees and transaction-based fees paid to maximum portion of the Portfolio Fee retained by Baird by the Financial Advisor’s clients and any Baird in those instances is equal to an annual rate other fees Baird earns on advisory and brokerage of 0.10% of the value of a client’s Account. Such accounts held by those clients, including trail fees amounts are retained by Baird for the services it paid by third parties. The percentage of the provides. Financial Advisor’s total production actually paid to the Financial Advisor will increase as the total As the portion of the Program Fee or Portfolio Fee amount of the Financial Advisor’s production paid to an investment manager increases, the increases, meaning that, as the total amount of portion of the Program Fee or Portfolio Fee that is the Financial Advisor’s production increases, the retained by Baird decreases. Thus, Baird (but not rate and amount of compensation that Baird pays its Financial Advisors) has an incentive to to the Financial Advisor also increase. Baird recommend or favor investment managers that Financial Advisors generally also receive deferred are paid less, because Baird will receive a higher compensation or bonuses based on various portion of the Program Fee or Portfolio Fee. criteria, including net new assets they gather, performing certain wealth management activities, In addition, Baird has an incentive to favor related such as financial planning, and their total managers over other investment managers production levels. Baird Financial Advisors who because the entire Program Fee is retained by achieve certain production thresholds are eligible Baird and affiliated investment managers. For for professional development conferences, more information about related managers, see business development coaching, reimbursements,

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awards and recognition trips to attractive compensation is paid in the form of an upfront destinations. Baird Financial Advisors are also bonus when the Baird Financial Advisor joins eligible for bonuses for achievement of Baird, and the remaining portion, if any, is paid in professional designations depending on a the form of back end bonuses generally in equal Financial Advisor’s total production level. Thus, installments on an annual basis thereafter for a Baird Financial Advisors have a general incentive certain number of years (generally from one to to generate financial and other plans and charge three years). Installment payments are generally higher fees for advisory accounts and recommend contingent upon the Baird Financial Advisor larger investments in advisory accounts. achieving annual production or client asset levels that exceed a significant percentage of the Given the structure of their compensation, they Financial Advisor’s annual production for the 1- also have an incentive to recommend that a client year period prior to joining Baird or the client transfer the client’s accounts to Baird, establish assets that the Financial Advisor had prior to new accounts with Baird (including IRA rollovers) joining Baird. The special compensation is and add more money into the client’s accounts. In intended to compensate Baird Financial Advisors addition, most Baird Financial Advisors are for the significant effort involved in transitioning shareholders of Baird Financial Group, Inc. their business from the prior firm. This (“BFG”), Baird’s parent company, and thus benefit compensation provides Baird Financial Advisors financially from Baird’s overall success. The who have left another firm additional incentive to number of shares of BFG stock that a Financial recommend that clients of the prior firm become Advisor may purchase is based in part on the Baird clients and to recommend investment Financial Advisor’s total production level. Baird products and services that increase their Financial Advisors generally receive compensation production, and thus presents a conflict of for referrals to certain affiliated managers and interest. The special compensation is generally products and for referrals to a limited number of structured in the form of a forgivable loan from other firms. More specific information is provided Baird to the Baird Financial Advisor. Under the under the headings “Additional Information— terms of the forgivable loan, Baird makes the Other Financial Industry Activities and Affiliations” upfront or installment payment to the Baird and “Additional Information—Code of Ethics, Financial Advisor in the form of a loan, and Baird Participation or Interest in Client Transactions and forgives a portion of the loan made to the Baird Personal Trading—Participation or Interest in Financial Advisor each month for so long as the Client Transactions” below. They also generally Baird Financial Advisor remains Baird’s employee. receive non-cash compensation and other benefits Should the Baird Financial Advisor cease to be from Baird and from sponsors of investment Baird’s employee prior to the maturity date of the products with which Baird does business. Such loan, the Baird Financial Advisor is required to non-cash compensation and other benefits may repay Baird the amount of the loan outstanding include invitations to attend conferences or and not forgiven by Baird. In other words, upon educational seminars, payment of related travel, leaving Baird, the Baird Financial Advisor would lodging and meal expenses, reimbursement for be required to repay to Baird a portion of the branch and client events, and receipt of gifts and special compensation that the Baird Financial entertainment. Receipt of such compensation and Advisor had received and that had not been benefits provides Baird Financial Advisors an forgiven. The amount of such repayment declines incentive to favor investment products and their over time in proportion to the time the Baird sponsors that provide the greatest levels of Financial Advisor remains Baird’s employee. compensation and benefits. Structuring this special compensation in the form of forgivable loans provides the Baird Financial Baird Financial Advisors generally receive Advisor added incentive to remain Baird’s recruitment bonuses and/or special compensation employee and to recommend that persons from Baird when they join Baird from another become and remain a Baird client. Additional firm. The amount of such special compensation is information about referral and non-cash typically based on the Baird Financial Advisor’s compensation and other financial incentives production at the prior firm for the 1-year period provided to Baird Financial Advisors is provided prior to joining Baird or on the level of the under the heading “Additional Information—Code Financial Advisor’s client assets at the prior firm. of Ethics, Participation or Interest in Client All or a substantial portion of the special

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Transactions and Personal Trading—Participation operating expenses are separate from, and in or Interest in Client Transactions” below. addition to, the Program Fees. As a result of making investments in these types of products, a Due to the manner in which Baird compensates its client should be aware that the client is paying Financial Advisors, a Financial Advisor generally multiple layers of fees and expenses on the will have a financial incentive to trade less for amount of the client’s assets so invested—the Baird Advisory Choice Accounts than traditional ongoing operating expenses and the Program Fee. brokerage accounts and to reduce trading or Additional important information about ongoing increase a client’s Program Fees if trading for a fees and expenses that apply to those types of client’s Advisory Choice Account exceeds certain investments is provided in Baird’s Client levels established by Baird. Also, the Relationship Details document and Baird’s website compensation paid to Baird Financial Advisors at bairdwealth.com/retailinvestor. A client can related to Accounts subject to a Legacy Wrap Fee find the actual ongoing fees and expenses of an Arrangement is inversely related to the amount of investment product that the client will pay or bear the Program Fee, if any, paid to other investment in the product’s prospectus or offering document. managers managing such Accounts. This creates an incentive for them to recommend or favor Additional Account Fees and Charges investment managers that are paid less, because If the client’s Account is custodied at Baird, the they will receive higher compensation. From time client is also responsible for all applicable account to time, Baird Financial Advisors outside of the fees and service charges Baird may impose in PIM Program may refer their clients to PIM connection with the client’s agreements with Managers. In those instances, the PIM Manager Baird. A schedule of fees and service charges is generally shares a portion of his or her available on Baird’s website at compensation with the referring Baird Financial bairdwealth.com/retailinvestor. Advisor. Other Fees and Charges Baird addresses these conflicts through disclosure In addition to the Program Fee described above, a in this Brochure and by adopting internal policies client will incur other fees and expenses. A client and procedures for Baird and its associates that is responsible for bearing or paying, in addition to require them to provide investment advice that is the Program Fee, the costs of all: suitable for advisory clients (based upon the information provided by such clients). • markups, markdowns, and spreads charged by Baird in a principal transaction with a client or Other Fees and Expenses charged by other broker-dealers that buy Cost and Expense Information for Certain securities from, or sell securities to, the client’s Investment Products Account (such costs are inherently reflected in A client should be aware that certain investment the price the client pays or receives for such products in which the client invests, such as securities); mutual funds and other Investment Funds, front-end or deferred sales charges, redemption annuities and other products, have their own • fees, or other commissions or charges ongoing management and other operating fees and expenses that are deducted from the assets associated with securities transferred into or from an Account; of the product (or income or gains generated by the product on its investments) and thus reduce • redemption fees, surrender charges or similar the value or return of the client’s investment in fees that an investment product or its sponsor the product. These fees and expenses may may impose; include investment management fees, distribution (12b-1) fees, shareholder servicing fees, transfer • underwriting discounts, dealer concessions or agency fees, networking fees, accounting fees, similar fees related to the public offering of marketing support payments, administration fees, investment products; custody fees, expense reimbursements, and • extra or special fees or expenses that may expenses associated with executing securities result from the execution of odd lot trade orders transactions for the investment product’s portfolio (i.e., “odd-lot differential”); (“ongoing operating expenses”). These ongoing

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• electronic fund fees, wire transfer fees, fees for If a client holds an Unsupervised Asset in the transferring an investment between firms, and client’s Account, the client may be charged a similar fees or expenses related to account commission, markup or markdown in connection transfers (including any such fees imposed by with its purchase or sale. The cash proceeds from Baird); the sale of an Unsupervised Asset that remain in a client’s Account are considered Permitted • currency conversions and transactions; Investments subject to the asset-based Program • securities conversions, including, without Fee. If an asset becomes an Unsupervised Asset limitation, the conversion of ADRs to or from during a quarterly billing period, that asset will be foreign ordinary shares; excluded for purposes of determining the asset- based Program Fee beginning at the start of the • interest, fees and other costs related to margin next quarterly billing period, and no portion of the accounts, short sales and options trades; asset-based Program Fee paid by a client in • fees related to the establishment, advance for the quarter will be refunded or administration or termination of Retirement rebated to the client. Additionally, Unsupervised Accounts, retirement or profit sharing plans, Assets in an Account are subject to any applicable trusts or any other legal entity, including, set-up, maintenance and administrative fees without limitation, the calculation and payment established by Baird. Baird may waive such fees of unrelated business income tax (“UBIT”); in its discretion.

• fees imposed by the SEC or securities markets, Clients who have Accounts may also have other including transaction fees imposed by electronic accounts with Baird under programs or services trading platforms, which fees may be imbedded not described in this Brochure. Those accounts in the price the client receives for the security; may be subject to fees, commissions or other and expenses that are entirely separate from the • taxes imposed upon or resulting from payment of Program Fees. transactions effected for a client’s Account, such as income, transfer or transaction taxes, foreign Compensation Received by Baird and Baird stamp duties, or any other costs or fees Financial Advisors mandated by law or regulation. The individual who recommends a Program to a Clients who use a custodian other than, or in client, including a Baird Financial Advisor, receives addition to, Baird will pay the other custodian’s compensation from Baird that is based upon the fees and expenses in addition to the Program Fee. amount of the Program Fee paid by the client. The In addition, if a third party custodian has custody amount of the compensation may be more than of the client’s Account assets, the Account is what the individual would receive if the client subject to all set-up, maintenance and participated in other Baird investment advisory administrative fees, if any, established by Baird. programs or paid separately for investment Baird may waive such fees in its discretion. advice, brokerage, and other services. Accordingly, the individual may have a financial incentive to recommend a Program over other In addition to the Program Fee, a client will be programs or services offered by Baird. However, responsible for paying the fees charged by each when providing investment advisory services to DC Manager selected by the client under the Dual clients, Baird and its Financial Advisors are Contract Program. If a client directs Baird to pay fiduciaries and are required to act solely in the the client’s DC Manager’s fee out of the client’s best interest of clients. Baird addresses this Account, and Baird agrees to do so, Baird will not conflict through disclosure in this Brochure and by be responsible for verifying the calculation or adopting internal policies and procedures for Baird accuracy of such fee. and its associates that require them to provide investment advice that is suitable for advisory A client may also be assessed other trading costs clients (based upon the information provided by in addition to the Program Fee if client trades are such clients). For more specific information about executed through another firm. Please see Baird’s compensation and other benefit “Services, Fee and Compensation—Additional arrangements and how Baird addresses the Program Information—Trading for Client potential conflicts of interest, please see the Accounts” above for more information.

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sections “Services, Fees and Compensation— will not become effective, and Baird will not Additional Program Information” and “Services, provide any advisory services to the client, until Fees and Compensation—Program Fees—Program such time that Baird has accepted the advisory Fee Payments to Baird, Financial Advisors and agreement. Baird may delay acceptance of the Investment Managers” above, and “Additional advisory agreement and the provision of advisory Information—Other Financial Industry Activities services to the client for various reasons, and Affiliations” and “Additional Information— including deficiencies in the client’s paperwork. Code of Ethics, Participation or Interest in Client Once it has become effective, the agreement shall Transactions and Personal Trading” below. continue until it is terminated in accordance with the terms described in the advisory agreement. Account Requirements and Types of Clients The terms of a client’s agreements and this Brochure apply to all Accounts that a client Opening an Account establishes with Baird, including any Accounts A client that wishes to participate in a Program that a client may open with Baird in the future. will enter into an advisory agreement with Baird. Some of the information in those documents may The client’s advisory agreement will contain the not apply to a client now, but may apply in the specific terms applicable to the services selected future if a client changes Programs or services or by the client, Program Fees payable by the client, establishes other Accounts with Baird. Baird will and other terms applicable to the client’s advisory generally not provide a client another copy of the relationship with Baird. agreements or this Brochure when a client changes Programs or services or establishes new In addition to the investment advisory services Accounts unless the client requests a copy from a that Baird provides in connection with each Financial Advisor. Therefore, a client should retain Program, Baird, in its capacity as broker-dealer, those documents for future reference as they also provides clients with trade execution, custody contain important information if a client changes and other standard brokerage services. For this Programs or services or establishes other reason, a client will also enter into a client Accounts with Baird. account agreement with Baird if the client has not already done so. The client account agreement is Certain Account Requirements a brokerage agreement that authorizes Baird to Minimum Account Size execute trades for, and perform related brokerage and custody services to, the client’s Account. Each Program has a minimum account size and may have a minimum Program Fee, which are Baird generally requires that assets in a client’s described in the section entitled “Services, Fees Account be held in a Baird account, for which and Compensation—Program Fees” above. Baird Baird acts as custodian. However, in certain may remove a client from a Program and limited circumstances when requested by a client, immediately terminate the advisory agreement Baird may permit a client to include Held-Away with respect to an Account upon written notice to Assets in the client’s Account. the client if the client fails to maintain the required minimum asset levels in an Account or if the client fails to otherwise abide by the terms of After a client has signed and delivered an a Program as determined by Baird in its sole advisory agreement to Baird, the agreement is discretion. subject to review and acceptance by the client’s Financial Advisor, his or her Branch Office Manager or PWM Supervision department Account Contributions and Withdrawals supervisor (or his or her respective designee), A client may fund an Account with cash and with and Baird PWM’s Home Office. The agreement and securities that Baird and the client’s investment Baird’s advisory relationship with a client will manager, if any, deem to be acceptable in their become effective when the client’s paperwork is sole discretion. Funds deposited or transferred to accepted by Baird PWM’s Home Office and a client’s SMAs or UMAs from another Baird following such acceptance Baird has delivered to account and funds deposited or transferred to a the client written confirmation of the Account’s client’s SMAs or UMAs from outside of Baird will enrollment in the applicable Program. A client not be available for investment by the client’s should understand that the advisory agreement investment manager until the next business day

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and therefore the investment of such funds, at manager and the replacement manager will the discretion of the manager, will occur no reinvest the cash proceeds of those sales. Any earlier than the next business day. such sale could result in adverse tax consequences for the client. A client should note Some Baird Financial Advisors will invest, or that securities transferred into an Account may be recommend investing, cash contributions made to subject to the Program Fee immediately upon its an Account over a period of time. This method of transfer into the Account, even if the client paid a investment is sometimes referred to dollar cost commission or front-end sales charge on the averaging (“DCA”). The goal of this method of security prior to its transfer into the Account. In investment is to reduce the risk of making large addition, if the securities are subject to deferred purchases of securities at an inopportune time or sales charges or redemption fees, the client will price. The Overlay Manager and certain be responsible for paying those charges and fees. investment managers also offer an optional DCA To the extent permitted by applicable law, certain service for Accounts they manage. Additional funding transactions may be handled by Baird on information will be provided to a client if the client a principal basis, and such transactions are not enrolls in a DCA service. A client should note that, considered investment advisory services of Baird if dollar cost averaging is used to invest cash in or the client’s investment manager. the client’s Account, the returns for the Account could, depending upon market and other If an asset transferred to an Account is an conditions, be lower than the returns that could Unpermitted Investment under the terms of the have been obtained had all the cash in the applicable Program, Baird, the client’s Financial Account been fully invested upon contribution to Advisor or the client’s investment manager may the Account. In addition, a client should note that, sell the asset or transfer it into a separate when dollar cost averaging is used, the amount of brokerage account. Alternatively, they may cash in the client’s Account will be included in the designate such asset as an Unsupervised Asset as value of the Account for fee calculation purposes. further described under “Services, Fees and Whenever assets are contributed to an Account, a Compensation—Additional Program Information— client should discuss with the client’s Baird Unsupervised Assets” above. Financial Advisor the timing of when the assets will be invested. If DCA will be used to invest the A client is responsible for notifying the client’s assets, a client should ask for more specific Financial Advisor and any investment manager information about how the assets will be invested managing the client’s Account of any and the associated timing for investing. contributions made into the Account and instructing the client’s Financial Advisor and any When a client funds an Account with securities, investment manager to liquidate positions in the including when a client changes Programs for an event the client wishes to withdraw assets from Account or changes investment managers for an the Account. Baird and its Financial Advisors have Account within the same Program, the client no responsibility to invest cash deposits (other should understand that Baird’s or the client’s than complying with a client’s cash sweep investment manager’s review of securities used to instructions) or liquidate positions with respect to fund the Account may delay investing. In an Account managed by an Other Manager, and addition, Baird or the client’s investment they are not responsible for any losses that may manager, if any, may determine that the result from a client’s failure to notify the client’s securities contributed to the Account may not be Financial Advisor and any investment manager appropriate for the client’s strategy, and Baird or managing the client’s Account regarding deposits the investment manager, if any, may sell, or or withdrawals. recommend the sale of, such securities. Further, an investment manager may be removed from A client may also incur additional expenses and the management of a client’s Account and a liabilities, including tax-related liabilities, when replacement investment manager may be transferring assets out of an Account or Baird’s appointed. In such event, Baird, at the direction custody. See “Termination of Accounts” below. of the client’s replacement manager, or the client’s replacement manager may sell all or a portion of the securities or other investments in the Account that were managed by the prior

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Liens and Use of Account Assets as Collateral A client should understand that Baird and its As security for the full and complete payment Financial Advisors will not provide advice on or when due of any debts and other obligations that oversee a securities-based lending or collateral a client owes to Baird, and to the extent arrangement and they will not act as investment permitted by applicable law or regulation, all adviser or a fiduciary to the client with respect to assets in a client’s Account held at Baird will be the liquidation of securities held in the client’s subject to a first priority security interest, lien and Account to meet a collateral call. Any such right of setoff in favor of Baird. Baird may sell liquidation will be executed in Baird’s capacity as assets in an Account to satisfy the lien. As a broker-dealer and may, as permitted by law, secured party, Baird may have interests that are result in executions on a principal basis. adverse to a client. Neither Baird nor its Financial Advisors will act as investment adviser to a client In some instances, Baird and its Financial with respect to such sale of assets held in an Advisors may refer a client to a third party lender Account. Any such sale of assets will be executed under its Securities-Based Lending Program that in Baird’s capacity as broker-dealer and creditor pays Baird and its Financial Advisors certain and may, as permitted by law, result in compensation. See “Services, Fees and executions on a principal basis. A client should Compensation—Additional Program Information— review the client’s agreements for more Securities-Based Lending Program” above for information. more information.

All of the assets in a client’s Account must be free Securities purchased on margin are used as and clear from any security interest, lien, charge Baird’s collateral for the margin loan. Clients that or other encumbrance (other than a security have a margin account should review the section interest, lien, charge or other encumbrance in “Services, Fees and Compensation—Additional favor of Baird) and must remain so for the Program Information—Complex Strategies and duration of the client’s relationship with Baird, Complex Investment Products” above for unless Baird otherwise specifically agrees in additional information. writing. Electronic Delivery of Documents If a client wishes to obtain loans secured by By signing an advisory agreement, a client assets in the client’s Account (commonly referred consents to the electronic delivery of documents to as “securities-based lending ”) and Baird that Baird may deliver to the client. The term of agrees to the arrangement, the client should the consent to electronic delivery is indefinite but understand that the lender may exercise certain a client may revoke the consent at any time by rights and powers over the assets in the Account, notifying the client’s Baird Financial Advisor. including the disposition and sale of any and all assets pledged as collateral for the loan to meet a Termination of Accounts collateral call, which may occur without prior The client’s advisory agreement will survive any notice to the client. A collateral call could have event that causes the client’s Financial Advisor to adverse tax consequences, disrupt a client’s be unable to provide services to the client (either investment strategy, and have an adverse impact on a temporary or permanent basis), including if on the Account’s performance. A client should be the client’s Financial Advisor ceases to be aware of these and other potential adverse effects employed by Baird. In any such event, Baird will of securities-based lending and collateralizing continue to provide services to the client and will Accounts before deciding to do so. as promptly as practicable assign another Financial Advisor to the client’s Accounts (either A client is required to disclose the terms of the on a temporary or permanent basis) and the client’s agreements with Baird to any lender client will be notified of any such change. seeking to use Account assets as collateral. A Similarly, if a client’s PIM Manager or UAS client must promptly notify Baird of any default or Manager ceases to participate in the PIM of UAS similar event under the client’s collateral Program or be employed by Baird, Baird may arrangements. assign the client’s PIM or UAS Account to another PIM Manager, UAS Manager or Financial Advisor, as applicable.

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Baird may remove an Account from a Program unavailable for purchase or holding outside of an and immediately close an Account upon written Account. For example, certain Investment Funds notice to a client if the client fails to abide by the held in an Account may only be available to a terms of the Program. Baird may also remove an client through a Baird Program or may not be held Account from a Program at any time upon written at another firm. If such restrictions apply and the notice to a client if the client fails to maintain the client terminates a Program or closes an Account, required minimum asset levels in such Account. the Client will be required to sell or redeem such Investment Funds or exchange them for other Upon the termination of an Account’s enrollment Investment Funds that may be more costly to the in a Program, Baird and, if relevant, any other client or have poorer performance. A client should investment manager managing such Account, consider restrictions applicable to investments shall have no obligation to act as investment carefully before participating in a Program. A adviser to such Account. If such Account is client should contact the client’s Financial Advisor custodied at Baird, the Account shall be converted for specific information as to how Account closure, to and designated as a brokerage account. Baird, termination of an agreement, or asset transfers and, if relevant, any other investment manager might impact the assets in the client’s Accounts. managing such Account, shall be under no obligation to recommend any action with regard Types of Clients to, or to liquidate the securities or other Baird offers the Programs to all types of current investments in, such Account. After an Account is or prospective clients, including, but not limited removed from a Program, it is the client’s to: individuals; trusts; estates; Retirement exclusive responsibility to issue instructions, in Accounts; pension and profit sharing plans; writing, regarding the management of any assets charitable organizations; and corporations or in such Account. other business entities.

If a client directs Baird to liquidate assets in Portfolio Manager Selection and connection with a closure of an Account, the client Evaluation should understand that Baird acts as broker- dealer, and not investment adviser, when The persons providing portfolio management processing such a liquidation request and that the services to clients vary by Program. Information client will generally be charged commissions, about how Baird may select and evaluate portfolio sales charges, sales “loads”, or other applicable managers is further described below. transaction-based fees in accordance with the applicable Baird fee schedule or other third-party Selection and Evaluation transaction-based fee schedule for the particular Baird Equity Asset Management Portfolios investment then in effect. Additional information Program about the compensation that a client pays to The process and standards that Baird uses for Baird for effecting brokerage transactions is determining whether to make SMA Strategies contained in Baird’s Client Relationship Details available under the Baird Equity Asset document, available on Baird’s website at Management Program are significantly less bairdwealth.com/retailinvestor. rigorous than those used in connection with other SMA Programs offered by Baird. Baird generally A client may incur significant expenses and makes available all SMA Strategies offered by liabilities, including tax-related liabilities for which Baird Equity Asset Management under the Baird the client will be solely liable, if the client closes Equity Asset Management Program, and Baird an Account, terminates an advisory agreement, or generally does not remove any of the Baird Equity transfers assets out of Baird’s custody. Baird will Asset Management SMA Strategies from the not be liable to a client in any way with respect to Program unless Baird Equity Asset Management the termination, closure, transfer or liquidation of ceases to offer the SMA Strategy. the client’s Accounts. Portfolio management services under the Baird Some of the investments offered in connection Equity Asset Management Portfolios Program may with the Programs contain restrictions that limit be provided by Baird Equity Asset Management or their use, and such investments may be Other Managers. In order to provide portfolio

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management services, Baird requires that Baird applicable laws or regulations, or for any other Equity Asset Management associates meet all matters involving or affecting the Other Manager. applicable requirements set forth by self- regulatory organizations. Baird Equity Asset Baird SMA Network, Dual Contract and Management also requires Baird Equity Asset Riverfront Managed Portfolios Programs Management portfolio managers to have an Clients participating in the BSN Program, the DC undergraduate degree. Furthermore, Baird Equity Program or the Riverfront Managed Portfolios Asset Management strongly encourages all Baird Program should note that the level of initial and Equity Asset Management portfolio managers to ongoing review performed by Baird on the pursue and work towards the attainment of the managers and their SMA Strategies made CFA designation or a relevant graduate level available under those Programs, including SMA degree. Baird may remove a Baird Equity Asset Strategies offered by any Baird department or Management portfolio manager from providing any manager affiliated with Baird, is significantly services under the Program if Baird deems less than that performed by Baird with respect to circumstances warrant removal. Potential causes managers and their strategies eligible for the for removal may include significant drift from Baird Recommended Managers Program. stated objectives, sustained underperformance in relation to peers, or other adverse changes BSN and DC Managers are subject to an initial affecting the manager. review by Baird that considers the manager’s assets under management, regulatory and Baird Recommended Managers Program compliance history, and certain other limited When selecting and removing BRM Strategies for qualitative and quantitative factors deemed the Baird Recommended Managers Program, relevant by Baird. The ongoing review is generally Baird uses the process described under the performed on an annual basis and is generally heading “Methods of Analysis, Investment limited to changes in the managers’ assets under Strategies and Risk of Loss—Investment management in the SMA Strategy and a review of Strategies and Methods of Analysis—Methods of the SMA strategy in comparison to a relevant peer Analysis—Certain Recommended Lists—Baird’s group or benchmark. Recommended Managers List” below. The BSN and DC Programs are designed to Using the BRM Strategies made available for the accommodate a client who wishes to Baird Recommended Managers Program, Baird independently select an investment manager not Financial Advisors will select or replace, or available in the Baird Recommended Managers recommend the selection or replacement of, a Program to manage the assets in the client’s particular BRM Strategy based upon the client’s Account. A client should note that Baird does not particular goals and circumstances. make any recommendation to clients regarding any BSN Strategy or DC Strategy or any If a Model-Traded Strategy offered through an representations regarding a BSN Manager’s or DC Implementation Manager is selected for a client’s Manager’s qualifications as an investment adviser Account, a client should note that Baird does not or abilities to manage client assets. monitor or ascertain whether a third party Implementation Manager is fully and faithfully The Overlay Manager may provide review and implementing the Model Portfolio on a continuous ongoing evaluations of certain BSN Managers that basis. it makes available through the BSN Program. Clients should review Overlay Manager’s Form A client assumes ultimate responsibility for ADV Part 2A Brochure for more information, which client’s selection of an Other Manager under the is available upon request, or contact their Baird Recommended Managers Program Financial Advisor for more information. (including any third party Implementation Manager). Baird assumes no responsibility for the Baird does not monitor or ascertain whether the client’s termination of an Other Manager Overlay Manager is fully and faithfully (including any third party Implementation implementing Model Portfolios under the BSN Manager), the Other Manager’s investment Program on a continuous basis. decisions, performance, compliance with

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SMA Strategies offered under the BSN and DC for any other matters involving or affecting the Programs are subject to certain risks. See Other Manager. “Portfolio Manager Selection and Evaluation— Methods of Analysis, Investment Strategies and Portfolio management services under the BSN and Risk of Loss—Principal Risks—Available DC Programs may be provided by Baird PWM’s Investment Product Risks” below for more home office investment professionals or an information. investment management department of Baird if the client selects a model portfolio or an SMA A client should only participate in the BSN or DC Strategy offered by them. In order to provide Programs if the client wishes to take more portfolio management services under those responsibility for monitoring the client’s Account, Programs, Baird requires that Baird associates the Baird Recommended Managers Program does meet all applicable requirements set forth by not contain an SMA Strategy that meets the applicable law and regulations of self-regulatory client’s particular needs, and the client organizations, such as the Financial Industry understands the risks of doing so. Regulatory Authority, Inc., exchanges, and governmental agencies. The process and standards that Baird uses for determining whether to make SMA Strategies ALIGN, BairdNext Portfolios, PIM and Russell available under the Riverfront Program are Programs significantly less rigorous than those used in Portfolio management services under the ALIGN, connection with other SMA Programs offered by BairdNext Portfolios, PIM and Russell Programs Baird. Baird only conducts a limited review of are provided by Baird PWM, Baird PWM’s home Riverfront, consisting solely of an annual office investment professionals, and Baird compliance questionnaire. Baird generally makes Financial Advisors. In order to provide portfolio available all SMA Strategies offered by Riverfront management services under the Programs, Baird under the Riverfront Program, and Baird generally requires that Baird associates meet all applicable does not remove any of the Riverfront SMA requirements set forth by applicable law and Strategies from the Program unless Riverfront regulations of self-regulatory organizations, such ceases to offer the SMA Strategy. as the Financial Industry Regulatory Authority, Inc., exchanges, and governmental agencies. A client should note that the client’s appointment and continued retention of an investment Typically, PIM Managers must also meet the manager to manage the client’s Account in following additional criteria: endorsement by his connection with the BSN, DC and Riverfront or her Branch Office Manager; completion of a Programs are based ultimately upon the client’s portfolio management course acceptable to Baird, independent review of the investment manager which may include a Chartered Financial Analyst and the investment manager’s services. Once (CFA), Certified Investment Management Analyst retained by the client, an investment manager will (CIMA) or Certified Portfolio Manager (CPM) only be removed from managing the client’s designation; and completion of an application to Account upon the investment manager’s the PIM Program, which typically requires the PIM withdrawal, removal from the Program, or the Manager to complete one or more investment client’s direction to do so. strategy or experience statements acceptable to Baird. Certain PIM Managers may have been A client assumes ultimate responsibility for admitted to the PIM Program using different client’s selection of an Other Manager under the qualifications than those currently in place. In BSN, DC or Riverfront Managed Portfolios some instances, Baird may waive certain eligibility Programs (including any third party requirements when it deems it appropriate to do Implementation Manager). Baird assumes no so, such as when a PIM Manager acted as a responsibility for the client’s termination of an portfolio manager (or in a similar capacity) at Other Manager under the BSN, DC or Riverfront another investment firm prior to joining Baird. Managed Portfolios Programs (including any third party Implementation Manager), the Other Potential causes for removing a PIM Manager Manager’s investment decisions, performance, from the PIM Program include operating outside compliance with applicable laws or regulations, or of the policies of the Program, a change in

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investment philosophy or style, significant drift The UMA Programs make available UMA from stated objectives, significant and sustained Recommended Funds and UMA Recommended performance issues over lengthy periods of time, SMA Strategies. The process Baird uses for or other adverse changes affecting the PIM selecting and removing UMA Recommended Funds Manager that in Baird’s opinion warrants removal. for the UMA Programs is substantially similar to the process Baird uses to select and remove UMA Programs mutual funds and ETPs in connection with the Portfolio management services under the UMA ALIGN Strategic Portfolios Program described Programs are provided by Baird PWM, Baird under “ALIGN Programs—ALIGN Strategic PWM’s home office investment professionals, Portfolios” below. The process Baird uses for investment management departments of Baird selecting and removing UMA Recommended SMA and Baird Financial Advisors. In order to provide Strategies for the UMA Programs is the same portfolio management services under the process used for selecting and removing BRM Programs, Baird requires that Baird associates Strategies, which is described under the heading meet all applicable requirements set forth by “Methods of Analysis, Investment Strategies and applicable law and regulations of self-regulatory Risk of Loss—Investment Strategies and Methods organizations, such as the Financial Industry of Analysis—Methods of Analysis—Certain Regulatory Authority, Inc., exchanges, and Recommended Lists—Baird’s Recommended governmental agencies. Managers List” below.

Typically, UAS Managers must also meet the In addition to the UAS Recommended Funds and following additional criteria: endorsement by his the UAS Recommended SMA Strategies, the UAS or her Branch Office Manager; completion of a Program also makes available UAS Available portfolio management course acceptable to Baird, Funds and UAS Available SMA Strategies. Clients which may include a CFA designation; and participating in the UAS Program should note that completion of an application to the UAS Program, the level of initial and ongoing review performed which typically requires the UAS Manager to by Baird on UAS Available Funds and UAS complete one or more investment strategy or Available SMA Strategies, including mutual funds experience statements acceptable to Baird. and ETPs affiliated with Baird and SMA Strategies Certain UAS Managers may have been admitted offered by any Baird department or any manager to the UAS Program using different qualifications affiliated with Baird, is significantly less than that than those currently in place. In some instances, performed by Baird with respect to UAS Baird may waive certain eligibility requirements Recommended Funds and UAS Recommended when it deems it appropriate to do so, such as SMA Strategies. when a UAS Manager acted as a portfolio manager (or in a similar capacity) at another UAS Available Funds are subject to an initial investment firm prior to joining Baird. review by Baird that considers the fund’s assets under management, regulatory and compliance Potential causes for removing a UAS Manager history, and certain other limited qualitative and from the UAS Program include operating outside quantitative factors deemed relevant by Baird. of the policies of the Program, a change in The ongoing review is generally performed on an investment philosophy or style, significant drift annual basis and is generally limited to changes in from stated objectives, significant and sustained the managers’ assets under management and a performance issues over lengthy periods of time, review of the fund strategy in comparison to a or other adverse changes affecting the UAS relevant peer group or benchmark. The process Manager that in Baird’s opinion warrants removal. Baird uses for selecting and removing UAS Available SMA Strategies and UAS Available Managers from the UAS Program is the same Under the UMA Programs, portfolio management process used for selecting and removing BSN services are also provided managers of mutual Strategies from the BSN Program, which is funds and ETPs, if those investments are part of a described under the heading “Portfolio Manager UMA Portfolio, and by Other Managers and the Selection and Evaluation—Selection and Overlay Manager, if an SMA Strategy is part of Evaluation—Baird SMA Network, Dual Contract the UMA Portfolio. and Riverfront Managed Portfolios Programs” above.

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If a client has not selected the discretionary a Baird recommended list for the client’s Account; management option of the UAS Program, the the client assumes ultimate responsibility for client should note that: (1) the UAS Available monitoring each UAS Available Fund and UAS Funds and UAS Available SMA Strategies are Available SMA Strategy and the manager’s made available to accommodate a client who performance; the client’s selection and continued wishes to independently select investments that holding of a UAS Available Fund or a UAS are not on a Baird recommended list for the Available SMA Strategy are based ultimately upon client’s Account: (2) Baird does not make any the client’s independent review of such recommendation to clients regarding any UAS investment; and once an investment is made by Available Fund or UAS Available SMA Strategy and the client, the investment will only be removed Baird does not select any investments for the from the client’s Account upon the manager’s client’s UAS Program Account: (3) Baird does not withdrawal, removal of the investment from the make any representation to clients regarding any Program, or the client’s direction to do so. UAS Available Manager’s qualifications as an investment adviser or abilities to manage client A client assumes ultimate responsibility for assets. client’s selection of an Other Manager under the UAS Program (including any third party The Overlay Manager may provide review and Implementation Manager). Baird assumes no ongoing evaluations of certain UAS Available responsibility for the client’s termination of an Managers that it makes available through the UAS Other Manager (including any third party Program. Clients should review Overlay Manager’s Implementation Manager), the Other Manager’s Form ADV Part 2A Brochure for more information, investment decisions, performance, compliance which is available upon request, or contact their with applicable laws or regulations, or for any Financial Advisor for more information. other matters involving or affecting the Other Manager. Baird does not monitor or ascertain whether the Overlay Manager is fully and faithfully Portfolio management services under the UMA implementing Model Portfolios under the UMA Programs may be provided by Baird PWM’s home Programs on a continuous basis. office investment professionals or an investment management department of Baird if the client UAS Available Funds and UAS Available SMA selects a model portfolio or an SMA Strategy Strategies are subject to certain risks. See offered by them. In order to provide portfolio “Portfolio Manager Selection and Evaluation— management services under the UMA Programs, Methods of Analysis, Investment Strategies and Baird requires that Baird associates meet all Risk of Loss—Principal Risks—Available applicable requirements set forth by applicable Investment Product Risks” below for more law and regulations of self-regulatory information. organizations, such as the Financial Industry Regulatory Authority, Inc., exchanges, and A client retaining discretion over the client’s UAS governmental agencies. Program Account should only select UAS Available Funds or UAS Available SMA Strategies if the Oversight of the Programs client wishes to take more responsibility for The Investment Advisory Oversight Committee managing and monitoring the client’s UAS (“IAOC”) of Baird, which includes members of Program Account, the UMA Recommended Funds Baird’s Asset Management, PWM Sales and UMA Recommended SMA Strategies do not Management, Investment Solutions, Asset meet the client’s particular needs, and the client Manager Research, Compliance, Legal, and Risk understands the risks of doing so. Management Departments, oversees the standards and implementation of the Programs. If a client has not selected the discretionary In addition, Baird Equity Asset Management’s management option of the UAS Program, it is Director also oversees the Baird Equity Asset important to note that: the UAS Available Funds Management portfolio managers. and UAS Available SMA Strategies are made available to accommodate a client who wishes to The IAOC delegates its day-to-day oversight independently select investments that are not on responsibilities to Baird’s PWM Supervision,

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Investment Solutions and Compliance • Current market value including accrued income Departments to monitor the Programs and the is used. performance of Baird associates providing • Trade date accounting is used in deriving portfolio management services under the ALIGN, valuations. BairdNext, PIM, Russell and ALIGN UMA Select Programs, and the discretionary management of • Monthly returns are calculated using the UAS Program Accounts by UAS Managers. Baird’s Modified Dietz calculation. Investment Solutions Department, along with the Compliance Department and other designees, • Returns for periods greater than a month are provide periodic review of the performance of calculated by geometrically linking the monthly Baird associates providing portfolio management returns. Returns for periods greater than one services under those Programs. Performance year are annualized. information is provided to the IAOC or a • Reporting is net of fees at the total portfolio, subcommittee thereof. but gross of fees for individual investment categories (e.g., equity or fixed income). Performance Calculation As part of Baird’s selection and evaluation of No independent third party reviews the composite portfolio managers, Baird calculates the performance information calculated by Baird to investment performance of: verify its accuracy or compliance with presentation standards. • Baird associates acting as portfolio managers under the ALIGN, BairdNext, PIM and ALIGN To the extent Baird selects or reviews other UMA Select Programs; portfolio managers participating in the Programs, Baird does not calculate investment performance • Recommended Managers that directly manage information for such managers. Baird obtains client accounts under a Manager-Traded investment performance information for those Strategy; and managers directly from the managers (including the Overlay Manager) or from other external • Model Portfolios provided by Recommended sources that Baird believes to be reliable. A client Managers. should understand that: Baird does not recalculate the performance provided by such When Baird calculates a manager’s investment managers or external sources; neither Baird nor performance, Baird generally uses composites of any independent third party reviews the the manager’s client accounts to calculate the performance information provided by such manager’s performance. A composite is an managers to verify its accuracy or compliance aggregation of client accounts managed by the with presentation standards unless otherwise manager that are representative of a particular stated in writing; those managers may not investment strategy, style, or objective. Examples calculate performance on a uniform or consistent of composites include large cap growth, all cap basis; and Baird does not guarantee the accuracy value, balanced (which includes equity and fixed of information provided by such managers or any income securities), and fixed income. Composites external source. may be further broken down to separate taxable and non-taxable portfolios. Fixed income A client should note that Baird does not generally composites may be categorized by portfolio present its investment performance calculations duration. to clients. The information that Baird provides to clients about portfolio managers from time to When calculating composite performance, Baird time may not be calculated by Baird but may be seeks to utilize calculation methods that adhere to calculated by the managers themselves or derived Global Investment Performance Standards from external sources. Baird does not audit or (GIPS®) recommendations. Baird calculates verify that investment performance information composite performance generally using the presented to clients that is calculated by following principles: managers or external sources is accurate. In addition, a client should note that such investment performance information may not be • A total return calculation is used in reporting.

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calculated on a uniform or consistent basis or investment managers that are affiliated with reviewed by any independent third party. A client Baird: ALIGN, BairdNext Portfolios, PIM, Russell, should ask the client’s Financial Advisor for more Baird Equity Asset Management, Riverfront and information. ALIGN UMA Select Programs and the UAS Program, if the client has selected the Portfolio Management by Baird and discretionary management option of the UAS Related Persons Program (“Affiliates-Only Programs”). Likewise, Portfolio management services under the ALIGN, the Baird-Managed Portfolios made available BairdNext Portfolios, Russell and UMA Programs under the UAS Program exclusively offer portfolio are provided by Baird and its PWM home office management by Baird. The processes, if any, investment professionals. Portfolio Management used by Baird for selecting and reviewing those under the UMA Programs may be also provided by portfolio managers is described under the an investment management department of Baird headings “Portfolio Manager Selection and or a manager affiliated with Baird if a client Evaluation—Selection and Evaluation” above and selects such a manager, and, if a client selects “Portfolio Manager Selection and Evaluation— the discretionary management option of the UAS Methods of Analysis, Investment Strategies and Program, portfolio management is also provided Risk of Loss—Investment Strategies and Methods by the client’s UAS Manager. Portfolio of Analysis” below. A client should note that the management services under the Baird Equity processes and standards used by Baird in Asset Management Portfolios Program are determining whether to make affiliated provided by Baird Equity Asset Management. investment options available under Affiliates-Only Portfolio management services under the PIM Programs or to make Baird-Managed Portfolios Program are provided by PIM Managers. Portfolio available under the UAS Program differ from management services under the Riverfront those processes and standards used by Baird in Managed Portfolios Program are provided by determining whether to make non-affiliated Riverfront. Portfolio management services under investment options available under other the Baird Recommended Managers Program, the Programs. Baird approves, and continues to make BSN Program or Dual Contract Program could be available, affiliated investment options under provided by Baird PWM’s home office investment Affiliates-Only Programs and Baird-Managed professionals, an investment management Portfolios that would not be approved for, or department of Baird or a manager affiliated with would have been removed from, such other Baird should a client select such a manager. Such Programs. For the Affiliates-Only Programs, this arrangements create a potential conflict of practice presents a conflict of interest because interest because Baird and its affiliates may Baird has a financial incentive to maximize the receive higher aggregate compensation if clients number of affiliated investment options it makes retain affiliated managers instead of retaining available under Affiliates-Only Programs due to unaffiliated managers. the fact that, by increasing investment options, Baird will likely attract more client assets and thereby increase Baird’s revenues. A client When Baird selects managers, or otherwise participating in an Affiliates-Only Program or determines manager availability or eligibility, for investing in a Baird-Managed Portfolio should the Baird Recommended Managers Program, BSN monitor the client’s Account performance and Program, the Dual Contract Program, or the UMA periodically discuss the performance of such Programs, affiliated investment managers are Account with the client’s Financial Advisor. subject to the same selection and review processes, if any, that Baird applies to unaffiliated investment managers participating in each When providing investment advisory services to respective Program, which processes are further clients, Baird and its Financial Advisors are described under the heading “Portfolio Manager fiduciaries and are required to act solely in the Selection and Evaluation—Selection and best interest of clients. Baird addresses the Evaluation” above. conflicts described above through disclosure in this Brochure and by adopting internal policies and procedures for Baird and its associates that The following programs exclusively offer portfolio require them to provide investment advice that is management by Baird, its associates, its suitable for advisory clients (based upon the investment management departments, or information provided by such clients). For more

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specific information about these potential conflicts programs. Baird receives a portion of the wrap fee and how Baird addresses them, please see the paid by clients for providing portfolio sections “Additional Information—Other Financial management services under those wrap fee Industry Activities and Affiliations” and “Additional programs. Information—Code of Ethics, Participation or Interest in Client Transactions and Personal As of December 31, 2020, Baird had Trading” below. approximately $231.5094 billion in regulatory assets under management, approximately Advisory Business $173.5711 billion of which was managed on a Baird is privately-held, employee-owned global discretionary basis and approximately $57.9383 investment and wealth management firm formed billion of which was managed on a non- in the State of Wisconsin in 1919. discretionary basis.

Baird is owned indirectly by its associates through Performance-Based Fees and Side-By-Side several holding companies. Baird is owned Management directly by Baird Financial Corporation (“BFC”). Baird advises client accounts not participating in BFC is, in turn, owned by Baird Financial Group, services described in this Brochure that are Inc. (“BFG”), which is the ultimate parent subject to performance-based fee arrangements. company of Baird. Associates of Baird own Performance-based fee arrangements involve the substantially all of the outstanding stock of BFG. payment of fees based upon the capital gains or capital appreciation of a client’s account. Any such Baird offers various investment advisory services fee arrangements are made in compliance with to clients, including services not described in this applicable provisions of Rule 205-3 under the Brochure. The investment advisory services Baird Advisers Act. Performance-based fee offers include: portfolio management and arrangements present a potential conflict of analysis; analysis and recommendations interest for Baird with respect to other client regarding asset allocation and investment accounts that are not subject to performance- strategies; research, analysis and based fee arrangements because such recommendations regarding investment managers arrangements give Baird an incentive to favor and individual securities; investment consulting; client accounts subject to performance-based fees financial planning; investment policy over client accounts that are not subject to development; and account performance performance-based fees. monitoring. Baird also offers clients execution of brokerage transactions and administrative In addition to complying with its fiduciary duties services, including maintaining custody of account by disclosing this conflict of interest to clients assets. Clients may also negotiate other services through this Brochure, Baird generally addresses with Baird. Baird offers its services separately or potential conflicts of interest posed by in combination with other services. Baird tailors performance-based fee arrangements by its advisory services to the individual needs of periodically monitoring the holdings and clients. For more information about the services performance of performance-based fee accounts offered by Baird, please see “Services, Fees and and comparing them to accounts not subject to a Compensation” above. performance fee that are also managed using a similar strategy in an attempt to detect any Subject to the agreement of Baird, a client may possible inequitable treatment. Baird also impose reasonable restrictions on the securities or attempts to minimize potential conflicts of interest types of securities to be held in the client’s posed by performance-based fee arrangements Account. Please see “Services, Fees and through internal trade allocation procedures that Compensation—Additional Program Information— are designed to make securities allocations to Investment Discretion” above for more discretionary client accounts in a manner such information. that all such clients receive fair and equitable treatment over time. Baird participates in wrap fee programs not described in this Brochure and it provides portfolio management services in connection with those

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Methods of Analysis, Investment Balanced Strategies Strategies and Risk of Loss Balanced strategies generally have one or more of Investment Strategies and Methods of the following objectives: (1) provide current Analysis income; (2) growth of capital/principal or income; Investment Strategies or (3) preservation of capital. These strategies primarily invest in a mix of equity, fixed income The investment styles, philosophies, strategies, securities and cash. Balanced strategies may techniques and methods of analysis that Baird invest in companies of all market capitalization PWM home office investment professionals, its ranges and in investments having any credit Financial Advisors and Other Managers use in rating, maturity or duration, or they may focus on formulating investment advice for clients vary specific capitalization ranges, credit ratings, widely by Program and the person providing the maturities or durations as described above. advice. A brief description of commonly used Balanced strategies may be combined with other strategies is provided below. strategies described below, such as economic industry or sector focused, international, global, Equity Strategies or geographic region or market focused Equity strategies generally have an objective to strategies. provide growth of capital and primarily invest in equity securities, such as common stocks. Value Strategies However, these strategies may also invest in A value strategy typically invests primarily in other types of investments, such as fixed income equity securities of value companies, which are securities and cash. Equity strategies may invest those that the investment manager believes are in companies of all market capitalization ranges or out of favor with investors, appear underpriced by may focus on any combination of specific the market relative to their earnings or intrinsic capitalization ranges, such as large cap, mid cap value, or have high dividend yields. This strategy or small cap companies. Equity strategies may be is subject to investment style risks. combined with other strategies described below, such as growth, value, income, economic industry Growth Strategies or sector focused, international, global, or geographic region or country focused strategies. A growth strategy typically invests primarily in equity securities of growth companies, which are Fixed Income or Bond Strategies those that the investment manager believes exhibit signs of above-average growth relative to Fixed income or bond strategies generally have peers or the market, even if the share price is one or more of the following objectives: (1) high relative to earnings or intrinsic value. This provide current income; or (2) preservation of strategy is subject to investment style risks. capital. These strategies primarily invest in fixed income securities, such as corporate bonds, Income Strategies municipal securities, mortgage-backed or asset- backed securities, or government or agency debt An income strategy typically invests primarily in obligations. However, these strategies may also income-producing securities, such as dividend- invest in other types of investments, such as paying equity securities and fixed income equity securities or cash. Fixed income strategies securities. This strategy may invest in a may invest in debt obligations having any credit combination of investment grade and high yield rating, maturity or duration, or they may focus on bonds. This type of strategy may also invest in specific credit ratings, maturities or durations, yield- or income-producing, Non-Traditional such as investment grade, non-rated, or high Assets. yield (“junk”) bonds, or bonds having short-term, intermediate-term or long-term maturities. Fixed Economic Industry or Sector Focused Strategies income strategies may be combined with other Economic industry or sector focused strategies strategies described below, such as economic primarily invest in companies in one or more industry or sector focused, international, global, economic industries or sectors, such as the or geographic region or country focused telecommunications, technology, industrial, strategies. materials, or financial sectors. These strategies alone generally are not intended to satisfy a

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client’s entire portfolio diversification needs. methodologies and typically involve These strategies are subject to concentration risks underweighting and overweighting account because they generally are not diversified or they allocations to certain asset classes or market may invest in a limited number of securities. sectors relative to an applicable long-term strategic asset allocation, benchmark index or the International Strategies market generally. These strategies often will be Generally, international strategies primarily invest focused or concentrated in one or more asset in securities issued by foreign companies, which classes or market sectors from time to time, and may include companies in developed and it is likely that they will have limited or no emerging markets. International strategies may exposure to one or more asset classes or market invest in companies of all market capitalization sectors. For that reason, tactical and rotation ranges and in investments having any credit strategies are often subject to concentration risk. rating, maturity or duration, or they may focus on Because the decision-making for tactical and specific capitalization ranges, industries or rotation strategies is based upon the manager’s sectors, geographic regions, credit ratings, short-term market outlook, accounts pursuing maturities or durations. these strategies often experience higher levels of trading and portfolio turnover relative to other strategies. Global Strategies Generally, global strategies invest in a mix of Alternative Strategies and Complex Strategies securities issued by U.S. and foreign companies, which may include companies in developed and Alternative Strategies and other Complex emerging markets. Global strategies may invest Strategies may invest in a wide range of in companies of all market capitalization ranges investments, which may include equity securities, and in investments having any credit rating, fixed income securities, Non-Traditional Assets, maturity or duration, or they may focus on Alternative Investment Products and cash. specific capitalization ranges, industries or Alternative Strategies and other Complex sectors, geographic regions, credit ratings, Strategies generally involve the use of margin, maturities or durations. leverage, short sales and derivative instruments. Many Alternative Strategies and other Complex Strategies have no substantive restrictions on the Geographic Region or Country Focused Strategies types of investments that may be used. Examples Geographic region or country focused strategies of Alternative Strategies and other Complex primarily invest in companies located a particular Strategies include the following. part of the world, such as Latin America, Europe or Asia, in a group of similarly-situated countries, • Relative Value Strategies. Relative value such as developed or emerging markets, or one strategies generally involve the purchase of or more specific countries. These strategies alone traditional assets, such as stocks and bonds, generally are not intended to satisfy a client’s and Non-Traditional Assets and the use of short entire portfolio diversification needs. These sales and derivative instruments in an attempt strategies are subject to concentration risks to exploit price differences among securities because they generally are not diversified or they that share similar economic or financial may invest in a limited number of securities. characteristics.

Tactical and Rotation Strategies • Long/Short Strategies. Long/short strategies Tactical strategies typically tactically and actively generally involve the purchase of securities adjust account allocations to different asset believed to be undervalued and selling short classes based upon the manager’s perception of securities believed to be overvalued. They may how those asset classes will perform in the short- also involve the use of Non-Traditional Assets, term. Similarly, rotation strategies typically leverage and derivative instruments. actively adjust account allocations to different market sectors based upon the manager’s • Market Neutral Strategies. Market neutral perception of how market sectors will perform in strategies generally involve the purchase of the short-term. Tactical and rotation strategies securities and selling securities short in similar are often driven by technical analysis or dollar amounts in an attempt to produce returns

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that are independent of general market • Event-Driven Strategies. Event-driven performance. They may also involve the use of strategies generally involve the use of Non- Non-Traditional Assets, leverage and derivative Traditional Assets, short sales and derivative instruments. instruments in an attempt to seek arbitrage opportunities, particularly those triggered by • Statistical Arbitrage Strategies. Statistical corporate events (such as mergers, Arbitrage is based on the theory that stocks restructurings, and liquidations). These have a tendency to return to a short-term trend strategies typically involve the assessment of if, line. This type of strategy typically involves the how and when an announced transaction will be “systematic” or automated trading of securities completed. based upon where a security is relative to its trend line. • Merger Arbitrage/Special Situations Strategies. Merger arbitrage strategies involve the • Convertible Arbitrage Strategies. Convertible purchase and sale of securities of companies arbitrage involves the purchase and short sale involved in corporate reorganizations and of multiple securities of the same company. The business combinations, such as mergers, strategy is implemented by purchasing exchange offers, cash tender offers, spin-offs, securities believed to be undervalued and leveraged buy-outs, restructurings and selling short securities believed to be liquidations. These strategies often involve overvalued. Often, the strategy involves the short selling, options trading, and the use of purchase of a convertible bond issued by a other derivative instruments. company and selling short that company’s common stock. This strategy may involve the • Distressed Strategies. Distressed strategies use of a wide range of derivative instruments. generally involve the purchase of securities in companies that are in financial distress, or • Fixed Income Arbitrage Strategies. Fixed companies that are entering into or are already income arbitrage strategies generally seek to in bankruptcy. They may also involve the use of profit from interest rate, credit spread and other short sales and derivative instruments. arbitrage opportunities by investing in fixed income securities, interest rate instruments and • Macro Strategies. Macro strategies generally derivative instruments. involve the purchase of traditional assets, such as stocks and bonds, and Non-Traditional Assets • Capital Structure Arbitrage Strategies. Capital and the use of short sales and derivative structure arbitrage generally involves investing instruments in an attempt to profit from in multiple levels of a single company’s capital anticipated changes in securities markets, structure, often taking long and short positions commodities markets, currency values, and/or in a company’s debt or equity in order to interest rates. capitalize on perceived mispricings resulting from market inefficiencies or different pricing • Discretionary and Systematic Trading assumptions. This type of strategy typically Strategies. Discretionary trading strategies involves the use of derivatives and structured generally attempt to identify and capitalize on products. patterns or trends in the markets. Systematic trading strategies generally rely on • Absolute Return, Total Return and Real Return computerized trading systems or models to Strategies. Absolute return, total return and identify and capitalize on those patterns or real return strategies generally involve the trends. These strategies often involve the use of purchase of traditional assets, such as stocks Non-Traditional Assets, short sales, derivative and bonds, and Non-Traditional Assets in an instruments and significant leverage. attempt to generate performance that has low correlation to the major equity markets over a • Private Investment Strategies. complete market cycle. They may also involve the use of derivative instruments. o Private Equity Strategies. Private equity strategies generally involve purchasing stock or securities convertible into stock in private

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transactions. Private equity strategies may Assets and Complex Strategies Risks” below for invest in companies of all market more information. capitalization ranges or may focus on any combination of specific capitalization ranges. Asset Allocation Strategies They may also focus on companies in one or Certain Programs, including the ALIGN, BairdNext more economic industries or sectors or Portfolios, PIM, Russell, Baird Equity Asset geographic regions. Some private equity Management SAM Portfolios, Riverfront Managed strategies focus on companies that are newly Portfolios and UMA Programs, make available formed, in financial distress or already in asset allocation strategies. Asset allocation bankruptcy. The securities purchased are strategies involve investing in one or more of the typically unregistered and illiquid. Private following categories of assets: equity strategies may also involve the use of leverage. • the equity securities asset category, which is comprised of certain asset classes, such as, o Private Debt or Private Credit Strategies. equity securities issued by: U.S. large cap Private debt (also known as private credit) growth companies; U.S. large cap value strategies invest in loans or debt instruments companies; U.S. large cap core companies; U.S. issued by companies in private transactions. mid cap growth companies; U.S. mid cap value The investments involved are typically companies; U.S. mid cap core companies; U.S. unrated or rated below investment grade and small cap growth companies; U.S. small cap are illiquid. Oftentimes, the interest rate paid value companies; U.S. small cap core by the companies is determined by a companies; foreign companies located in reference interest rate, such as the federal developed markets; foreign companies located funds rate, which is periodically reset. These in emerging markets; U.S. REITs; and foreign types of investments are sometimes referred REITs; to as floating rate corporate debt, floating rate loans or floating rate bank loans. Private • the fixed income securities asset category, debt strategies often involve the use of which is comprised of certain asset classes, leverage and may involve investment in such as: short-term taxable bonds; smaller capitalization, distressed or bankrupt intermediate term taxable bonds; long-term companies. taxable bonds; short-term tax-exempt bonds; intermediate term tax-exempt bonds; long-term • Leveraged Strategies. Leveraged strategies tax-exempt bonds; high yield fixed income generally involve the use of Non-Traditional securities; foreign fixed income securities; and Assets, leverage, short sales and derivative broad fixed income securities; instruments in an attempt to amplify returns or produce returns that are a multiple of a • the Non-Traditional Assets category, which is benchmark index. comprised of certain asset classes, such as: commodities and commodity-linked • Inverse Strategies. Inverse strategies generally instruments; and currencies and currency- involve the use of Non-Traditional Assets, linked instruments; leverage, short sales and derivative instruments in an attempt to produce returns that are the • the Alternative Investment Products category opposite of a benchmark index. which is comprised of certain asset classes, such as: hedge funds, private equity funds and Alternative Strategies and other Complex managed futures; and Strategies are not appropriate for some clients because they are subject to special risks. See • cash. “Services, Fees and Compensation—Additional Program Information—Complex Strategies and Asset allocation strategies have varying Complex Investment Products” above and investment objectives, ranging from growth of “Portfolio Manager Selection and Evaluation— capital to preservation of capital. Asset allocation Methods of Analysis, Investment Strategies and strategies also have varying investment Risk of Loss—Principal Risks—Non-Traditional strategies. Some asset allocation strategies use

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strategic investment strategies, which involve invest in other asset classes, such as fixed income investing accounts in accordance with a securities, Non-Traditional Assets and cash. This predetermined target allocation to different asset strategy may also invest in Alternative classes. Some asset allocation strategies use Investment Products or may involve the use of tactical investing, which typically involves leverage, short sales and derivative instruments. tactically and actively adjusting account allocations to different asset classes based upon Capital Growth Portfolio. A Capital Growth the manager’s perception of how those asset Portfolio typically seeks to provide growth of classes will perform in the short-term. Some asset capital. Typically, a Capital Growth Portfolio will allocation strategies involve the use of both experience moderately high fluctuations in annual strategic and tactical investment strategies, returns and overall market value. Generally, sometimes referred to as dynamic strategies. under normal market conditions, this strategy will primarily invest in a mix of equity securities and Asset allocation strategies may be implemented fixed income securities, with a significantly higher using a variety of investment types, such as allocation to equity securities. This strategy may individual securities, mutual funds and ETPs. The also invest in other asset classes, such as Non- amount allocated to an asset class or investment Traditional Assets and cash. This strategy may type varies by strategy, and some strategies may also invest in Alternative Investment Products or have little or no allocation to one or more asset may involve the use of leverage, short sales and classes or types of investments described above. derivative instruments. Generally, under normal market conditions, this strategy will have a Baird uses its Capital Market Assumptions in significantly higher allocation to equity securities developing its proprietary model asset allocation than fixed income securities. strategies, including those used in the ALIGN, BairdNext Portfolios and UMA Programs, and Growth with Income Portfolio. A Growth with those used by some PIM Managers. In Income Portfolio typically seeks to provide determining its Capital Market Assumptions, Baird moderate growth of capital and some current conducts an analysis of different asset classes and income. Typically, a Growth with Income Portfolio the different levels of risk associated with those will experience moderate fluctuations in annual investments. That analysis involves the returns and overall market value. Generally, consideration of past performance and the use of under normal market conditions, this strategy will forward-looking projections that are based upon primarily invest in a mix of equity securities and certain assumptions made by Baird about how fixed income securities, with a bias towards equity markets will perform in the future. There is no securities. This strategy may also invest in other assurance that asset classes or markets will asset classes, such as Non-Traditional Assets and perform in accordance with Baird’s projections or cash. This strategy may also invest in Alternative assumptions. For more information about Baird’s Investment Products or may involve the use of Capital Market Assumptions, a client should leverage, short sales and derivative instruments. contact the client’s Financial Advisor. Generally, under normal market conditions, this strategy will have a slightly higher allocation to Baird’s most common asset allocation strategies equity securities than fixed income securities. are described below. A client should note that the specific investments in an Account following a Income with Growth Portfolio. An Income with particular asset allocation strategy could vary Growth Portfolio typically seeks to provide current from the description below for a number of income and some growth of capital. Typically, an reasons, including market conditions. Income with Growth Portfolio will experience moderate fluctuations in annual returns and All Growth Portfolio. An All Growth Portfolio overall market value. Generally, under normal typically seeks to provide growth of capital. market conditions, this strategy will primarily Typically, an All Growth Portfolio will experience invest in a mix of fixed income securities and high fluctuations in annual returns and overall equity securities, with a bias towards fixed income market value. Under normal market conditions, securities. This strategy may also invest in other this strategy generally invests nearly all of its asset classes, such as Non-Traditional Assets and assets in equity securities. This strategy may also cash. This strategy may also invest in Alternative Investment Products or may involve the use of

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leverage, short sales and derivative instruments. For information about the risks associated with Generally, under normal market conditions, this the asset allocation strategies described above, strategy will have a slightly higher allocation to see the section of the Brochure entitled “Principal fixed income securities than equity securities. Risks—Risks Associated with Certain Investment Objectives and Asset Allocation Strategies” below. Conservative Income Portfolio. A Conservative Income Portfolio typically seeks to provide current Important Information about Implementation of income. Typically, a Conservative Income Investment Objectives and Investment Strategies Portfolio will experience relatively small A client should note that, to implement an fluctuations in annual returns and overall market investment strategy, a client’s Financial Advisor or value. Generally, under normal market conditions, investment manager may use or recommend this strategy will primarily invest in a mix of fixed mutual funds, ETPs or other Investment Funds income securities, cash and equity securities, with that primarily invest in particular types of a significantly higher allocation to fixed income securities instead of direct investment in those securities. This strategy may also invest in other types of securities. A client should also note that asset classes, such as Non-Traditional Assets. the client’s Financial Advisor or investment Generally, under normal market conditions, this manager may use a strategy not described above strategy will have a significantly higher allocation or they may use a strategy with the same or to fixed income securities and cash than equity similar name that is implemented differently. A securities. client should ask the client’s Financial Advisor or investment manager for more specific information Capital Preservation Portfolio. A Capital about the strategy being used for the client’s Preservation Portfolio typically seeks to preserve Account. capital while generating current income. Typically, a Capital Preservation Portfolio will experience A client’s Account is subject to the risks relatively small fluctuations in annual returns and associated with the Account’s particular strategies overall market value. Under normal market and investments. A client should review the risks conditions, this strategy generally invests nearly associated with those strategies and investments all of its assets in a mix of fixed income securities described under the heading “Principal Risks” and cash. This strategy may also invest in other below. asset classes, such as equity securities and Non- Traditional Assets. From time to time, the client’s Financial Advisor or investment manager will invest the client’s Some ALIGN Programs, UMA Programs, Baird Account, or recommend that the client invest the Financial Advisors and investment managers use Account, in a manner that is inconsistent with the asset allocation strategies that include target investment strategy or investment objective asset allocation percentages for equity and/or selected by the client for the Account when the fixed income investments in the names or client’s Financial Advisor or investment manager descriptions of the strategies (e.g., 80-20, 60-40, determines that it is appropriate to do so, such as 40-60, 20-80, etc.). A client should note that using defensive strategies in response to adverse those percentages are intended to be asset market or other conditions or engaging in tax allocation targets only. There is no guarantee that management. Similarly, a client’s Account may be Accounts following asset allocation strategies will invested in a manner inconsistent with the be invested strictly in accordance with target investment strategy or investment objective asset allocations. It is likely that the actual selected by the client for the Account in certain investments in Accounts following those strategies other circumstances, such as when the client’s will vary, sometimes significantly, from the target Account is transitioning to a new Program, asset allocations and may include other asset investment objective or investment strategy, or classes due to market conditions and Baird’s, the due to other factors, such as market appreciation Financial Advisor’s or investment manager’s or depreciation of the assets in the client’s assessment of how to best invest a client’s Account, deposits and withdrawals made by the Accounts. See “Important Information about client, and investment restrictions, if any, Implementation of Investment Objectives and imposed by the client. A client’s Account may not Investment Strategies” below for more be able to achieve its investment objectives information.

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during any such period of time and the Account various third party research information and may be subject to different or enhanced risks related tools to provide investment advice to than would be the case had the Account been clients. These sources of information and tools invested in a manner wholly consistent with the may include, among others, issuer-supplied investment objective or investment strategy literature (such as annual reports, press releases selected by the client. Clients are encouraged to and other information) and external market, discuss with their Financial Advisor on a regular economic, financial and investment data and basis how the Account is being managed or analyses provided by organizations not affiliated advised and whether any such conditions exist. with Baird. They may also employ the use of computers and third party software to more Methods of Analysis readily display information, assist with the Baird, its PWM home office investment evaluation and analysis, and create asset professionals, and its Financial Advisors may use allocation recommendations. Although they various forms of security analyses, including the generally use information and tools that Baird following: deems reliable, Baird does not independently verify or guarantee the accuracy of the information or tools used. • Fundamental Analysis. Fundamental analysis involves an approach to investing through a detailed analysis of specific companies, such as Baird and its Financial Advisors may also utilize their financial statements and financial ratios, research reports created by Baird. However, it management, competitive advantages and should be noted that Baird Financial Advisors are markets, in an attempt to determine the value not obligated to act in a manner consistent with of an investment. Fundamental analysis may Baird research reports and they may act in a include qualitative and quantitative analyses. manner that is contrary to those reports if they deem it to be consistent with the client’s investment objectives and in the client’s best • Qualitative Analysis. Qualitative analysis interest. involves the use of subjective judgment to analyze factors that may be difficult to quantify or measure objectively. As it pertains to When providing investment advice to clients, managers and investment products, qualitative Baird Financial Advisors may also use the model analysis may include review of the background portfolios or recommended or eligible product lists and experience of a manager or a mutual fund (described below) made available by Baird’s Asset company. Manager Research Department or other Baird departments, or they may use investment products that Baird has generally deemed to be • Quantitative Analysis. Quantitative analysis is a “available” for use in its advisory programs method of evaluating securities by analyzing a (“Available Investment Products”). The level of large amount of data through the use of initial and ongoing evaluation, monitoring and algorithms or models in an attempt to review that Baird and its Financial Advisors understand behavior, predict market events, perform on managers and on investment products market prices, etc., and generate an investment varies. Available Investment Products generally decision. As it pertains to managers and do not receive the same level of initial or ongoing investment products, quantitative analysis may evaluation, monitoring or review by Baird as include review of manager performance, those managers or products that are included in a investment style, style consistency, risk, and model portfolio or on a recommended or eligible risk-adjusted performance. product list. As a result, Available Investment Products are subject to certain risks. See • Technical Analysis. Technical analysis is a “Portfolio Manager Selection and Evaluation— method of analyzing past price and volume Methods of Analysis, Investment Strategies and patterns and trends in the trading markets to Risk of Loss—Principal Risks—Available attempt to predict the direction of both the Investment Product Risks” below for more overall market and specific investments. information.

Baird, its PWM home office investment More specific information about Baird model professionals, and its Financial Advisors use portfolios, recommended lists and eligible product

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lists is provided below. A client should note that variety of reasons such as valuation, a change in investment products recommended to the client company or industry fundamentals, or a change or selected for the client’s Account, including in industry sector weighting. The Portfolio is investment managers or products included on a intended as a long-term investment strategy. Baird recommended or eligible product list, are those which, in Baird’s professional judgment, Baird Rising Dividend Portfolio. The Baird Rising may be appropriate to help the client pursue the Dividend Portfolio, which is managed by Baird’s client’s financial goals. Baird and its Financial PWM Equity Research team, seeks to provide a Advisors do not represent or guarantee that such core equity strategy with a portfolio yield above investment managers or products are or will be that of the S&P 500 Index. The team’s top–down the best investment managers or products investment approach begins with macroeconomic available. and market outlooks from Baird’s Investment Strategy team. The 30–50 stocks in the portfolio Under certain circumstances when requested by a are primarily large cap stocks—as defined by a client, Baird may allow a client to select a market capitalization of $10 billion or greater at manager or investment product that is not on a the time of investment—and all are above $5 Baird recommended or eligible product list or that billion at the time of investment. The team looks is generally not made available to Baird clients. A for quality companies with strong fundamental client should note that Baird does not provide any characteristics and management, attractive initial or ongoing evaluation, monitoring or review dividend yields, and the ability to increase their of any such managers or investment products and dividends. Companies are screened for dividend that the client’s decision to select such a manager history and consistency, earnings growth or investment product is based solely upon the expectations, and balance sheet quality. Each client’s review of the manager or investment stock selected is assigned a weighting as a product. percentage of the portfolio. No single company stock will comprise more than the greater of 5% Certain Model Portfolios of the portfolio or 1.5 times the stock’s market Baird Recommended Portfolio. The Baird weight in the S&P 500 index. A position can be Recommended Portfolio, which is managed by reduced or removed due to changes in valuation, Baird’s PWM Equity Research team, seeks to company fundamentals or the perceived ability to outperform the S&P 500 Index by investing in a continue to raise its dividend in the future— diversified core portfolio of 35–50 stocks. The among a variety of other potential reasons for portfolio invests primarily in stocks with market portfolio changes including a change in industry capitalization greater than or equal to $10 billion sector weighting. The Portfolio is intended as a (large cap). The portfolio may also contain stocks long-term investment strategy. with market caps below $10 billion but these stocks generally will not represent more than AQA Portfolios. Baird makes available to clients 35% of the total portfolio. The team’s top–down certain Automated Quantitative Analysis (“AQA”) investment approach begins with macroeconomic Portfolios. AQA is an analytical tool that seeks to and market outlooks from Baird’s Investment identify stocks of companies that are undervalued Strategy team. This information is used to by calculating the intrinsic values for the stocks underweight or overweight particular industry and comparing the calculated values to current sectors compared to the S&P 500 Index. market prices. Focusing on a company’s past Individual stocks are selected with an emphasis financial performance, AQA analyzes fundamental on higher quality companies that the team ratios and trends of the most recent eight-year believes have strong fundamental characteristics history of a company and each company in its and management teams, attractive growth peer group, excluding estimates of future balance prospects, and reasonable price-appreciation sheet and income statement performance. The expectations. Each stock selected is assigned a analysis is quantitative and ignores certain weighting as a percentage of the portfolio. No qualitative information such as company-specific single company stock will comprise more than the material news and events. Stocks are ranked greater of 5% of the portfolio or 1.5 times the from the most undervalued to the most stock’s market weight in the S&P 500 index. overvalued based on the difference between the Stocks can be sold or positions reduced for a values calculated by AQA and current market prices. The stocks identified by AQA as being the

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most undervalued are then selected for its assets to equity securities and 30% of its investment. Baird offers the following four (4) assets to fixed income securities. AQA Portfolio strategies, each of which invest in undervalued stocks identified using AQA, (4) The HLT Core + Satellite 50/50 strategy excluding securities issued by banks, REITS and utilizes the HLT Large Cap Equity strategy insurance companies: (1) the AQA All Cap as the core allocation portion of the portfolio Strategy, which primarily invests in stocks across while providing exposure to satellite asset market capitalizations, generally those included in classes (such as mid cap and small cap the S&P 500®, S&P MidCap 400® or S&P companies) and fixed income securities SmallCap 600® Indices; (2) the AQA Large Cap through the use of ETFs that principally Strategy, which primarily invests in large cap invest in equity securities and fixed income stocks, generally those included in the S&P 500® securities. This strategy has a target Index; (3) the AQA Mid Cap Strategy, which allocation of 50% of its assets to equity primarily invests in mid cap stocks, generally securities and 50% of its assets to fixed those included in the S&P MidCap 400® Index; income securities. and (4) the AQA Small Cap Strategy, which primarily invests in small cap stocks, generally (5) The HLT Equity Income strategy primarily those included in the S&P SmallCap 600® Index. invests in dividend paying companies that HLT believes have the ability to consistently Hilliard Lyons Trust Strategies. Baird makes grow their dividend at attractive rates over available to clients five (5) portfolio strategies the long‐term. developed and maintained by HLT (“HLT Strategies”) described below. The HLT Strategies Hilliard Lyons Trust Custom Portfolio invest in a mix of equity securities and ETFs. Management. Baird makes available to clients HLT Custom Portfolio Management℠, which offers (1) The HLT Large Cap Equity strategy invests clients a customized approach to investing and in a fairly concentrated portfolio of large cap the ability to work directly with an in-house HLT equity securities. This strategy is intended Portfolio Manager. A client’s HLT Portfolio for clients seeking investment in large cap Manager and Financial Advisor will work closely companies as one part of their overall asset with a client to develop a diversified, customized allocation. This strategy is generally not investment portfolio, managed to fit a client’s intended to be a complete investment specific needs. The HLT Portfolio Manager will program. determine the investments for a client’s Account based on a comprehensive assessment process (2) The HLT Core + Satellite 100 strategy is a that includes the client’s investment objective, diversified portfolio with a 100% target time horizon, financial situation, and special equity allocation. The strategy uses the circumstances. Once the assessment is complete, HLT Large Cap Equity strategy as the core a client’s portfolio construction begins. HLT allocation of the portfolio while providing Custom Portfolio Management accounts typically exposure to satellite asset classes (such as invest in a mix of equity securities, fixed income mid cap and small cap companies) through securities, mutual funds and ETFs, depending the use of ETFs that principally invest in upon the needs of a particular client. HLT Custom equity securities. This model does not Portfolio Management is offered through the BSN include fixed income. Program.

(3) The HLT Core + Satellite 70/30 strategy Certain Recommended Lists utilizes the HLT Large Cap Equity strategy Baird’s Recommended Managers List. When as the core allocation of the portfolio while selecting managers and BRM Strategies for providing exposure to satellite asset classes Baird’s Recommended Managers List, Baird seeks (such as mid cap and small cap companies) registered investment advisory firms having and fixed income securities through the use portfolio managers with academic credentials of ETFs that principally invest in equity such as a master’s degree or participation or securities and fixed income securities. This completion of the Chartered Financial Analyst strategy has a target allocation of 70% of (“CFA”) program. Baird also looks for a portfolio

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manager with greater than three (3) years of List is subject to the approval of Baird’s investment experience focusing on the particular Investment Committee. investment style that is offered by the portfolio manager. Baird generally looks for portfolio Ongoing manager evaluation generally includes managers that have demonstrated success, that quarterly conference calls, performance have performance histories showing sufficient attribution and periodic onsite visits. Material ability to achieve returns in excess of their adverse changes affecting a manager may result respective benchmarks, and that have investment in the manager being placed on Baird’s “watch” processes, infrastructure, personnel and other list. Managers on the watch list are scrutinized to resources satisfactory to Baird. Baird also see if improvement or degradation is taking place. considers other qualitative and quantitative Potential causes for removal from Baird’s factors. Recommended Managers List include fundamental changes in the operations of the manager, Baird’s Asset Manager Research Department is turnover in key personnel, substantial changes in primarily responsible for selecting and evaluating management or ownership, a change in investment managers included on Baird’s investment philosophy or style, significant drift Recommended Managers List. In selecting from stated objectives, major legal, regulatory or investment managers, Baird’s Asset Manager compliance difficulties, impairment of financial Research Department utilizes quantitative and condition, sustained underperformance in relation qualitative measures to evaluate managers based to its peers, or other adverse changes affecting on the: the manager that in Baird’s opinion warrants the manager’s removal. • quality and stability of their organization If a Model-Traded BRM Strategy is selected for a • soundness and clarity of their investment client’s Account, it is important to note that philosophy Baird’s selection and ongoing evaluation of a BRM • reliability and consistency of their investment Strategy is based upon an assumption that the process Recommended Manager’s Model Portfolio will be fully and faithfully implemented by the Overlay • competitiveness of their investment Manager or Implementation Manager on a performance continuous basis. A client should understand that Baird’s Asset Manager Research Department may the Overlay Manager or Implementation Manager also employ the use of computers and third party has discretion over the client’s Account and may software to more readily display information and invest the client’s Account in a manner that differs assist with the evaluation and analysis. from the Model Portfolio. Baird does not monitor the Account’s performance nor does it ascertain Baird’s initial screening process begins with a whether the Overlay Manager or Implementation proprietary, multi-factor model that evaluates Manager is implementing the Model Portfolio as managers on different factors including risk- provided by the Recommended Manager. If the adjusted performance, consistency of returns and Overlay Manager or Implementation Manager, in downside protection. These factors are scored the exercise of its discretion, decides to over various time periods and relative to a implement the Model Portfolio differently, the specific peer group universe, narrowing the pool performance of a client’s Account could be of managers for further evaluation. Baird’s Asset negatively impacted. Baird is not monitoring, Manager Research Department then performs a evaluating or reviewing the Overlay Manager or more in-depth evaluation of managers that are Implementation Manager or the performance of a identified through the initial screening process, client’s Account under those circumstances. which generally includes a review of the following factors: stability of the firm/team, the robustness Certain investment strategies offered by Baird and repeatability of the investment process, the Equity Asset Management have been selected by portfolio’s past returns pattern and tax-efficiency, Baird for inclusion on Baird’s Recommended and how the manager adds value. The final Managers List. This presents a conflict of interest. determination of Baird’s Recommended Managers However, the criteria used by Baird in deciding to select affiliated managers for Baird’s

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Recommended Managers List are the same as diversifiers. Some FOHFs primarily use equity- those used for unaffiliated managers. oriented investment strategies, and classified as equity diversifiers. Other FOHFs use a Baird’s Recommended Mutual Fund List. Baird’s combination of credit- and equity-oriented Recommended Mutual Fund List is designed to strategies, which Baird views as balanced include mutual funds across numerous asset diversifiers. In certain circumstances, FOHFs may classes. When selecting funds for inclusion on the be an appropriate substitute for part of a client’s List, Baird generally seeks mutual funds that have allocation to traditional high yield fixed income or investment managers with tenure of at least three equity investments. (3) years and have underlying investments that adhere to the fund’s market capitalization policy To be added to Baird’s Recommended FOHF List, and are consistent with the manager’s stated a FOHF must generally meet the following investment process and philosophy. Baird requirements: Registered as an Investment generally looks for funds that are among the top- Adviser under the Investment Advisers Act of performing funds in a style category in terms of 1940, stable to growing assets under risk-adjusted returns or that are managed by management as determined by Baird, principals individuals or firms that have demonstrated with an appropriate level of hedge fund success in other, related asset classes; that have management experience and network of contacts performance histories showing sufficient ability to in the industry according to Baird, adequate achieve returns in excess of their respective style diversification by number of hedge funds and type index; and that have investment processes, of hedge fund strategy in Baird’s opinion, effective infrastructure, personnel and other resources risk management, and reputable service providers satisfactory to Baird. Baird’s Asset Manager (e.g., auditor, administrator, and legal counsel). Research Department is primarily responsible for Baird also seeks FOHFs that it believes possess assisting with selecting and evaluating mutual one or more unique attributes that may lead to funds included on the List. In selecting funds, favorable performance relative to their peers Baird’s Asset Manager Research Department going forward. utilizes a quantitative and qualitative evaluation process of the investment managers of such Before adding a prospective FOHF to the List, funds. The process Baird uses for selecting and Baird’s Asset Manager Research Department removing funds for the Baird Recommended Fund conducts an in-depth due diligence process. The List is similar to the process Baird uses to select process begins with a review of the FOHF’s and remove BRM Strategies described under responses to a due diligence questionnaire and of “Baird’s Recommended Managers List” above. marketing and legal documents (e.g., subscription Baird’s Investment Committee is ultimately documentation, limited partnership agreement, responsible for selecting funds included on the and offering memorandum, and the adviser’s List. The Baird Aggregate Bond Fund, Baird Form ADV Part 2A Brochures). This is followed by Quality Intermediate Municipal Bond Fund, Baird an onsite review, where Baird meets with one or Short-Term Bond Fund, and Baird MidCap Fund, more principals and analysts to assess how the mutual funds affiliated with Baird, have been FOHF identifies, hires, monitors, and terminates selected by Baird for inclusion in Baird’s individual hedge funds. Baird also evaluates how Recommended Mutual Fund List. This presents a the FOHF constructs its hedge fund portfolio and conflict of interest. However, the criteria used by manages risk. In addition, Baird undertakes a Baird in deciding to select affiliated mutual funds brief review of the FOHF’s third party service for Baird’s Recommended Mutual Fund List are providers. At the conclusion of the onsite review, the same as those used for unaffiliated mutual an investment thesis is presented to and funds. discussed with a Baird Investment Committee. The Committee votes on whether to add the FOHF Baird’s Recommended Funds of Hedge Fund List. to Baird’s Recommended Funds of Hedge Fund Baird’s Recommended Funds of Hedge Fund List List. In making that determination, the contains a variety of funds of hedge funds Committee considers the information presented, (“FOHFs”) that pursue various Alternative taking into account the merits of the individual Strategies or other Complex Strategies. Some FOHF, how that FOHF compares to other FOHFs FOHFs primarily use credit-oriented investment that Baird offers, and the level of expected strategies, which Baird classifies as fixed income demand for the particular FOHF.

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After a FOHF is added to Baird’s Recommended private debt management (including workout) Funds of Hedge Fund List, it is monitored each experience and network of contacts in the quarter, and subsequent onsite reviews industry according to Baird, effective risk periodically take place. As part of its quarterly management, and reputable service providers monitoring, Baird evaluates a FOHF’s assets under (e.g., auditor, administrator, and legal counsel). management and flows (subscriptions and Baird also seeks private debt funds that it redemptions), organizational changes (e.g., believes possess one or more unique attributes personnel changes or new offerings), recent that may lead to favorable performance relative changes made to the FOHF portfolio (e.g., hedge to their peers going forward. funds added or removed), and reasons for performance differences between the FOHF and Before adding a prospective private debt fund to its benchmark. Subsequent onsite reviews are the List, Baird’s Asset Manager Research similar in nature and scope to the initial on-site Department conducts an in-depth due diligence review. process. The process begins with a review of the private debt fund’s responses to a due diligence Baird may place a FOHF on “Watch” status if it questionnaire and of marketing and legal has experienced a material event that, in Baird’s documents (e.g., subscription documentation, opinion, may negatively affect the FOHF’s limited partnership agreement, offering performance going forward or possibly lead to the memorandum, and the adviser’s Form ADV Part departure of an important member(s) of the 2A Brochures). This is followed by an onsite FOHF. Examples include a large decline in assets review, where Baird meets with one or more under management, high rate of redemptions, principals and analysts to assess how the private notable change in the investment or compliance debt fund makes investment and liquidation teams, weakening performance, or regulatory decisions. Baird also evaluates how the private problems. Any firm that is placed on Watch is debt fund constructs its portfolio and manages evaluated more closely to determine if the risk. In addition, Baird undertakes a brief review problem is likely to be temporary or long-term, of the private debt fund’s third-party service and whether it can be remedied. Baird will providers. At the conclusion of the onsite review, remove a FOHF from Watch and return it to active an investment thesis is presented to and status if, in Baird’s opinion, the problem has been discussed with a Baird Investment Committee. or is in process of being adequately addressed. The Committee votes on whether to add the However, Baird will terminate a FOHF from the private debt fund to Baird’s Recommended Private List if it believes the issue is likely to be long-term Debt Fund List. In making that determination, the and adversely affect the FOHF’s future Committee considers the information presented, performance. taking into account the merits of the individual private debt fund, how that private debt fund Baird’s Recommended Private Debt Funds List. compares to other private debt funds that Baird Baird’s Recommended Private Debt Fund List offers, and the level of expected demand for the contains private debt funds (also known as particular private debt fund. private credit funds) that pursue certain Alternative Strategies or other Complex After a private debt fund is added to Baird’s Strategies. Private debt funds primarily pursue Recommended Private Debt Fund List, it is