WARNER FINANCIAL, INC

Form ADV Part 2A – Firm Brochure Item 1 – Cover Page Warner Financial, Inc. 4550 Montgomery Avenue, Suite 352N Bethesda, MD 20814 301-961-9505 www.warner-financial.com Date of Brochure: March 4, 2025 Barbara Warner Chief Compliance Officer _ _ _ This brochure provides information about the qualifications and business practices of Warner Financial, Inc. If you have any questions about the contents of this brochure, please contact us at 301-961-9505. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about Warner Financial, Inc. is also available on the Internet at www.adviserinfo.sec.gov. You can view the firm’s information on this website by searching for Warner Financial (SEC#:801-64223). You may search for information by using Warner Financial’s name or by using Warner Financial’s CRD number. The CRD number for Warner Financial is 135303. *Registration as an investment advisor does not imply a certain level of skill or training. Warner Financial, Inc. Disclosure Brochure  Item 2 – Material Changes There have been no material amendments since the filing of our last annual amendment on March 20, 2024. ANY QUESTIONS: Warner Financial’s Chief Compliance Officer, Barbara Warner, remains available to address any questions regarding this Part 2A, including the disclosure additions and enhancements below. 2 Warner Financial, Inc. Disclosure Brochure  Item 3 – Table of Contents Item 1 – Cover Page ....................................................................................................................................... 1 Item 2 – Material Changes .............................................................................................................................. 2 Item 3 – Table of Contents .............................................................................................................................. 3 Item 4 – Advisory Business ............................................................................................................................. 4 Item 5 – Fees and Compensation ................................................................................................................... 8 Item 6 – Performance-Based Fees and Side-By-Side Management ............................................................ 10 Item 7 – Types of Clients .............................................................................................................................. 10 Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss ....................................................... 10 Item 9 – Disciplinary Information ................................................................................................................... 12 Item 10 – Other Financial Industry Activities and Affiliations ........................................................................ 12 Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading ................................. 12 Item 12 – Brokerage Practices ...................................................................................................................... 13 Item 13 – Review of Accounts....................................................................................................................... 15 Item 14 – Client Referrals and Other Compensation .................................................................................... 16 Item 15 – Custody ......................................................................................................................................... 16 Item 16 – Investment Discretion ................................................................................................................... 16 Item 17 – Voting Client Securities ................................................................................................................. 17 Item 18 – Financial Information ..................................................................................................................... 17 3 Warner Financial, Inc. Disclosure Brochure  Item 4 – Advisory Business A. Warner Financial, Inc. (“Warner Financial”) is an investment advisor registered with the United States Securities and Exchange Commission (“SEC”). Our company is a corporation formed under the laws of the State of Delaware and located in Bethesda, Maryland and has been registered as an investment adviser since April, 2005 • The firm is owned by Barbara Warner and Christopher Warner. • We provide fee-based investment advisory services through Warner Financial. The nature and extent of the specific services provided to clients, including you, will always depend on each client’s financial status, objectives and needs, time horizons, concerns, expectations and risk tolerance. B. General Description of Primary Advisory Services The following are brief descriptions of Warner Financial’s primary services. A detailed description of our services is provided in Item 5 – Fees and Compensation so that clients and prospective clients can review the services and fees. Financial Planning: To the extent requested to do so, we offer to provide financial planning and related consulting services to clients, which services are generally offered in connection with our asset management services. Financial planning services do not involve the active management of client accounts, but instead focus on a client’s overall financial situation. Financial planning can be described as helping individuals determine and set their long-term financial goals, through investments, tax planning, asset allocation, risk management, retirement planning, and other areas. The role of a financial planner is to find ways to help the client understand his/her overall financial situation and help the client set financial objectives. Asset Management Services: This is the primary service we offer and most clients receiving this Disclosure Brochure will be retaining us for Asset Management Services. The service involves providing clients with continuous and on-going supervision over investment accounts. This means that we will continuously monitor a client’s account and make trades in client accounts when necessary. The client can determine to engage to receive discretionary and/or non-discretionary investment advisory services on a fee-only basis. Unless the client and Warner Financial agree to a fixed-fee arrangement, Warner Financial’s annual investment advisory fee is based upon a percentage (%) of the market value of the assets placed under Warner Financial’s management. Prior to engaging to provide investment advisory services, clients are required to enter into an Investment Advisory Agreement with Warner Financial setting forth the terms and conditions of the engagement (including termination), describing the scope of the services to be provided, and the fee that is due from the client. Warner Financial provides investment advisory services specific to the needs of each client. Before providing investment advisory services, an investment adviser representative will ascertain each client’s investment objectives. Thereafter, Warner Financial will allocate and/or recommend that the client allocate investment assets consistent with the designated investment objectives. Once allocated, Warner Financial provides ongoing monitoring and review of account performance and asset allocation as compared to client investment objectives. When providing Asset Management Services, we typically construct each client’s account holdings using no-load mutual funds and ETFs to build diversified portfolios. We do not typically attempt to time the market but we may increase cash holdings modestly as deemed appropriate, based on your risk tolerance and our expectations of market behavior. In addition to our investment advisory fees and transaction and/or custodial fees discussed below, clients will also incur, relative to all mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g. management fees and other fund expenses). 4 Warner Financial, Inc. Disclosure Brochure  Retirement Rollovers-Potential for Conflict of Interest: A client or prospective client leaving an employer typically has four options regarding an existing retirement plan (and may engage in a combination of these options): (i) leave the money in the former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s plan, if one is available and rollovers are permitted, (iii) roll over to an Individual Retirement Account (“IRA”), or (iv) cash out the account value (which could, depending upon the client’s age, result in adverse tax consequences). If we recommend that a client roll over their retirement plan assets into an account to be managed by us, such a recommendation creates a conflict of interest if we will earn new (or increase our current) compensation as a result of the rollover. If Warner Financial provides a recommendation as to whether a client should engage in a rollover or not (whether it is from an employer’s plan or an existing IRA), Warner Financial is acting as a fiduciary within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts. No client is under any obligation to roll over retirement plan assets to an account managed by us, whether it is from an employer’s plan or an existing IRA . Our Chief Compliance Officer, Barbara Warner, remains available to address any questions that a client or prospective client may have regarding the potential for conflict of interest presented by such rollover recommendation. Limitations of Financial Planning and Non-Investment Consulting/Implementation Services: To the extent requested, Warner Financial will generally provide limited planning and consulting services regarding non-investment related matters, such as tax and estate planning, insurance, etc. The services will be provided inclusive of its advisory fee set forth at Item 5 below. Exceptions to the stated advisory fee may occur based upon assets under management, advanced planning needs, preparation of a comprehensive financial plan, special projects, etc. for which Warner Financial can charge a mutually agreeable additional fee and/or enter into stand-alone financial planning engagement. Warner Financial believes that it is important for the client to address financial planning issues on an ongoing basis. Warner’s advisory fee, as set forth at Item 5 below, will remain the same regardless of whether or not the client determines to address financial planning issues with Warner Financial. Warner Financial does not serve as an attorney, accountant, or insurance agent, and no portion of our services should be construed as same. Accordingly, Warner Financial does not prepare estate planning or any other type of legal documents, prepare tax returns, or sell insurance products. To the extent requested by a client, we may recommend the services of other professionals for certain non-investment implementation purposes (i.e. attorneys, accountants, insurance agents, etc.). The client is under no obligation to engage the services of any such recommended professional. The client retains absolute discretion over all such implementation decisions and is free to accept or reject any of our recommendations. Neither Warner Financial, nor its investment adviser representatives, assist clients with the implementation of any financial plan, unless they have agreed to do so in writing. In addition, Warner Financial does not monitor a client’s financial plan, and it is the client’s responsibility to revisit the financial plan with Warner Financial, if desired. If the client engages any recommended unaffiliated professional, and a dispute arises thereafter relative to such engagement, the client agrees to seek recourse exclusively from and against the engaged professional. If, and when Warner Financial is involved in a specific matter (i.e. estate planning, insurance, accounting-related engagement, etc.), it is the engaged licensed professionals (i.e. attorney, accountant, insurance agent, etc.), and not Warner Financial, that is responsible for the quality and competency of the services provided. Our Chief Compliance Officer, Barbara Warner, remains available to address any questions that a client or prospective client may have regarding the above conflict of interest. Cash Positions. Warner Financial continues to treat cash as an asset class. As such, unless determined to the contrary by Warner Financial, all cash positions (money markets, etc.) shall continue to be included as part of assets under management for purposes of calculating Warner Financial’s advisory fee. At any specific point in time, depending upon perceived or anticipated market conditions/events (there being no guarantee that such anticipated market conditions/events will occur), Warner Financial may maintain cash positions for defensive purposes. In addition, while assets are maintained in cash, such amounts could miss market advances. Depending upon current yields, at any point in time, Warner Financial’s advisory fee could exceed the interest paid by the client’s money market fund. 5 Warner Financial, Inc. Disclosure Brochure  Charles Schwab & Co., Inc.: As discussed below at Item 12, unless the client directs otherwise, Warner Financial shall generally recommend that Charles Schwab & Co., Inc. (“Schwab”) serve as the broker- dealer/custodian for client investment management assets. Broker-dealers such as Schwab charge brokerage commissions, transaction, and/or other type fees for effecting certain types of securities transactions (i.e., including transaction fees for certain mutual funds, dealer spreads and mark-ups and mark-downs charged for fixed income transactions, etc.). The types of securities for which transaction fees, commissions, and/or other type fees (as well as the amount of those fees) shall differ depending upon the broker-dealer/custodian (while certain custodians, including Schwab, do not currently charge fees on individual equity transactions, others do). Broker-dealers such as Schwab charge transaction fees for effecting some mutual fund transactions. In addition to Warner Financial’s investment management fee as described at Item 5 below, and transaction fees, clients will also incur, relative to all mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g. management fees and other fund expenses). Warner Financial does not receive any portion of these fees/charges. However, Schwab (as do its primary competitors that provide similar pricing arrangements) require that cash proceeds to be automatically swept into a Schwab proprietary or affiliated money market mutual funds or cash sweeps accounts, which proprietary/affiliated Schwab funds/accounts do not provide the highest return available. Cybersecurity Risk. The information technology systems and networks that Warner Financial and its third- party service providers use to provide services to Warner Financial’s clients employ various controls that are designed to prevent cybersecurity incidents stemming from intentional or unintentional actions that could cause significant interruptions in Warner Financial’s operations and/or result in the unauthorized acquisition or use of clients’ confidential or non-public personal information. In accordance with Regulation S-P, Warner Financial is committed to protecting the privacy and security of its clients' non-public personal information by implementing appropriate administrative, technical, and physical safeguards. Warner Financial has established processes to mitigate the risks of cybersecurity incidents, including the requirement to restrict access to such sensitive data and to monitor its systems for potential breaches. Clients and Warner Financial are nonetheless subject to the risk of cybersecurity incidents that could ultimately cause them to incur financial losses and/or other adverse consequences. Although Warner Financial has established processes to reduce the risk of cybersecurity incidents, there is no guarantee that these efforts will always be successful, especially considering that Warner Financial does not control the cybersecurity measures and policies employed by third-party service providers, issuers of securities, broker-dealers, qualified custodians, governmental and other regulatory authorities, exchanges, and other financial market operators and providers. In compliance with Regulation S-P, Warner Financial will notify clients in the event of a data breach involving their non-public personal information as required by applicable state and federal laws. Borrowing Against Assets/Risks. A client who has a need to borrow money could determine to do so by using: • Margin-The account custodian or broker-dealer lends money to the client. The custodian charges the client interest for the right to borrow money, and uses the assets in the client’s brokerage account as collateral; and, Pledged Assets Loan- In consideration for a lender (i.e., a bank, etc.) to make a loan to the client, the client pledges investment assets held at the account custodian as collateral These above-described collateralized loans are generally utilized because they typically provide more favorable interest rates than standard commercial loans. These types of collateralized loans can assist with a pending home purchase, permit the retirement of more expensive debt, or enable borrowing in lieu of liquidating existing account positions and incurring capital gains taxes. However, such loans are not without potential material risk to the client’s investment assets. The lender (i.e. custodian, bank, etc.) will have recourse against the client’s investment assets in the event of loan default or if the assets fall below a certain level. For this reason, Warner Financial does not recommend such borrowing unless it is for specific short-term purposes (i.e. a bridge loan to purchase a new residence). Warner Financial does not 6 Warner Financial, Inc. Disclosure Brochure  recommend such borrowing for investment purposes (i.e. to invest borrowed funds in the market). Regardless, if the client were to decide to utilize margin or a pledged assets loan, Warner Financial would receive an economic benefit because we would continue to earn a fee on the pledged assets Socially Responsible (ESG) Investing Limitations. Socially Responsible Investing involves the incorporation of Environmental, Social and Governance (“ESG”) considerations into the investment due diligence process. ESG investing incorporates a set of criteria/factors used in evaluating potential investments: Environmental (i.e., considers how a company safeguards the environment); Social (i.e., the manner in which a company manages relationships with its employees, customers, and the communities in which it operates); and Governance (i.e., company management considerations). The number of companies that meet an acceptable ESG mandate can be limited when compared to those that do not, and could underperform broad market indices. Investors must accept these limitations, including potential for underperformance. Correspondingly, the number of ESG mutual funds and exchange-traded funds are limited when compared to those that do not maintain such a mandate. As with any type of investment (including any investment and/or investment strategies recommended and/or undertaken by Warner Financial), there can be no assurance that investment in ESG securities or funds will be profitable, or prove successful. Warner Financial does not maintain or advocate an ESG investment strategy, but will seek to employ ESG if directed by a client to do so. If implemented, Warner Financial shall rely upon the assessments undertaken by the unaffiliated mutual fund, exchange traded fund or separate account portfolio manager to determine that the fund’s or portfolio’s underlying company securities meet a socially responsible mandate Bitcoin, Cryptocurrency, and Digital Assets: . For clients who have indicated to Warner Financial that they want exposure to Bitcoin, cryptocurrencies, or digital assets, the Registrant, will advise the client to consider a potential investment in corresponding exchange traded securities, or an allocation to separate account managers and/or private funds that provide cryptocurrency exposure. Bitcoin and cryptocurrencies are digital assets that can be used for various purposes, including transactions, decentralized applications, and speculative investments. Most digital assets use blockchain technology, an advanced cryptographic digital ledger to secure transactions and validate asset ownership. Unlike conventional currencies issued and regulated by monetary authorities, cryptocurrencies generally operate without centralized control, and their value is determined by market supply and demand. While regulatory oversight of digital assets has evolved significantly since their inception, they remain subject to variable regulatory treatment globally, which may impact their risk profile and liquidity. Given that cryptocurrency investments are speculative and subject to extreme price volatility, liquidity constraints, and the potential for total loss of principal, Warner Financial does not exercise discretionary authority to purchase cryptocurrency investments for client accounts. Any investment in cryptocurrencies must be expressly authorized by the client. Warner Financial does not recommend or advocate for the purchase of, or investment in, Bitcoin, cryptocurrencies, or digital assets. Such investments are considered speculative and carry significant risk. Clients who authorize the purchase of a cryptocurrency investment must be prepared for the potential for liquidity constraints, extreme price volatility, regulatory risk, technological risk, security and custody risk, and complete loss of principal. Cash Sweep Accounts. Certain account custodians can require that cash proceeds from account transactions or new deposits, be swept to and/or initially maintained in a specific custodian designated sweep account. The yield on the sweep account will generally be lower than those available for other money market accounts. When this occurs, to help mitigate the corresponding yield dispersion, Warner Financial shall generally (with exceptions) purchase a higher yielding money market fund (or other type security) available on the custodian’s platform, unless Warner Financial reasonably anticipates that it will utilize the cash proceeds in the near future to purchase additional investments for the client’s account. Exceptions and/or modifications can and will occur with respect to all or a portion of the cash balances for various reasons, including, but not limited to the amount of dispersion between the sweep account and a money market fund, the size of the cash balance, an indication from the client of an imminent need for such cash, or the client has a demonstrated history of writing checks from the account. The client shall remain exclusively responsible for yield dispersion/cash balance decisions and corresponding transactions for cash balances maintained in any Warner Financial unmanaged accounts. Non-Discretionary Service Limitations: Clients that determine to engage Warner Financial on a non- 7 Warner Financial, Inc. Disclosure Brochure  discretionary investment advisory basis acknowledge that Warner Financial cannot effect any account transactions without obtaining prior consent to any such transaction(s) from the client. Thus, in the event that Warner Financial would like to make a transaction for a client's account (including in the event of an individual holding or general market correction), and the client is unavailable, Warner Financial will be unable to effect the account transaction(s) (as it would for its discretionary clients) without first obtaining the client’s consent. Client Obligations: In performing its services, Warner Financial shall not be required to verify any information received from the client or from the client’s other professionals, and is expressly authorized to rely thereon. Moreover, each client is advised that it remains their responsibility to promptly notify Warner Financial if there is ever any change in his/her/its financial situation or investment objectives for the purpose of reviewing, evaluating, or revising Warner Financial’s previous recommendations and/or services. Disclosure Statement: A copy of Warner Financial’s written Brochure as set forth on Part 2 of Form ADV, along with Form CRS, shall be provided to each client prior to, or contemporaneously with, the execution of the applicable form of agreement between Warner Financial and the client. Portfolio Activity: Warner Financial has a fiduciary duty to provide services consistent with the client’s best interest. As part of its investment advisory services, Warner Financial will review client portfolios on an ongoing basis to determine if any changes are necessary based upon various factors, including, but not limited to, investment performance, fund manager tenure, style drift, account additions/withdrawals, and/or a change in the client’s investment objective. Based upon these factors, there may be extended periods of time when Warner Financial determines that changes to a client’s portfolio are neither necessary nor prudent. Of course, as indicated below at Item 8, there can be no assurance that investment decisions made by Warner Financial will be profitable or equal any specific performance level(s). Clients nonetheless remain subject to the fees described in Item 5 below during periods of account inactivity. Trustee-Directed Plans: Warner Financial may be engaged to provide discretionary investment advisory services to ERISA retirement plans, whereby the Firm shall manage Plan assets consistent with the investment objective designated by the Plan trustees. In such engagements, Warner Financial will serve as an investment fiduciary as that term is defined under The Employee Retirement Income Security Act of 1974 (“ERISA”). Warner Financial will generally provide services on an “assets under management” fee basis per the terms and conditions of an Investment Advisory Agreement between the Plan and the Firm. . C. Tailor Advisory Services to Individual Needs of Clients Our services are always provided based on the individual needs of the individual client. You are able to impose restrictions on your accounts including specific investment selections and sectors. We work with you on a one-on-one basis through interviews and meetings to determine your investment objectives and suitability information. If you transfer a portfolio to us that has existing assets and tax consequences if those are sold, we will take that into account in the construction of your portfolio. D. Warner Financial does not participate in any wrap programs. E. Client Assets Managed by Warner Financial The amount of clients’ assets managed by our firm totaled $745,317,324 as of December 31, 2024. $735,303,257 is managed on a discretionary basis and $10,014,067 is managed on a non-discretionary basis (please refer to Item 16 – Investment Discretion for more details regarding discretionary and non- discretionary services). Item 5 – Fees and Compensation 8 Warner Financial, Inc. Disclosure Brochure  In addition to the information provided in Item 4 – Advisory Business, this section provides details regarding our services along with descriptions of each service’s fees and compensation arrangements. A. Description of Compensation 1. Asset Management Services Warner Financial provides discretionary investment or non-discretionary advisory services on a fee- only basis, including ongoing advice, management and performance reporting on a specified portfolio of assets. These services are typically provided for fees based on a percentage of assets under management. Annual fees are divided and billed quarterly. Fees are negotiable. Our advice is based upon the financial objectives and risk tolerance of the client, following thorough interviews by our employees. Because we are always striving to help clients achieve their personal objectives, we will also devote attention to financial planning issues that arise over the course of our engagement at the client’s request, covered by the asset management fee. Warner Financial will be granted trading authorization over the client’s account(s) on either a discretionary or non-discretionary basis. See Item 16 of this Brochure for more information regarding our policy related to discretion. As discussed below, unless the client directs otherwise or an individual client’s circumstances require, Warner Financial shall generally recommend that Charles Schwab serve as the broker- dealer/custodian for client investment management assets. Broker-dealers such as Schwab charge transaction fees for effecting certain securities transactions (i.e. transaction fees are charged for certain no-load mutual funds). In addition to Warner Financial’s investment management fee, and transaction fees, clients will also incur, relative to all mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g. management fees and other fund expenses). Fees payable for investment management services will be a percentage of the total value of the account. The maximum fee schedule is as follows: • 0.90% of the first $250,000 • 0.85% of the next $750,000 • 0.75% from $1 million to $3 million • 0.65% from $3-million to $5 million • 0.50% above $5 million Fee Dispersion: Warner Financial’s investment advisory fee is negotiable at its discretion, depending upon objective and subjective factors including but not limited to: the amount of assets to be managed; portfolio composition; the scope and complexity of the engagement; the anticipated number of meetings and servicing needs; related accounts; future earning capacity; anticipated future additional assets; prior relationships with Warner Financial and/or its representatives, competition, and negotiations with the client. As a result of these factors, similarly situated clients could pay different fees, the services to be provided by Warner Financial to any particular client could be available from other advisers at lower fees, and certain clients may have fees different than those specifically set forth above. Warner Financial’s Chief Compliance Officer, Barbara Warner, remains available to address any questions that a client or prospective client may have regarding the above fee determination. B. Ongoing quarterly fees are payable in advance. The fee for the first quarter shall be based on the market value on the date the asset management agreement is signed. Fees will be calculated quarterly based on the market value of the assets under management at the end of the preceding quarter. No pro-rata adjustments are made for assets added to or withdrawn from the account during a quarter, unless the client consents. Upon termination of the account a refund of fees will be pro-rated based on the number of days remaining during the quarter after the date of effective termination. 9 Warner Financial, Inc. Disclosure Brochure  Fees are deducted directly from the client’s account. Clients must provide the custodian with written authorization to have fees deducted from the account and paid to Warner Financial. The custodian will send client statements, at least quarterly, showing all disbursements for the account including the amount of the advisory fee, if deducted directly from the account. Schwab will assist Warner Financial with the automatic deduction of the quarterly fee. It is Warner Financial and client’s responsibility to verify the accuracy of Warner Financial’s fee and the qualified custodian will not determine whether the fee has been properly calculated. Upon approval from Warner Financial, clients may pay fees via direct invoice. For clients paying via invoice, fees shall be due upon client’s receipt of the invoice. C. Client accounts will also be charged all applicable transaction costs charged by Schwab. Management fees charged by Warner Financial are separate and distinct from the fees and expenses charged by investment company securities that may be recommended to clients. A description of these fees and expenses are available in each investment company security’s prospectus. D. Any investment management agreement may be terminated by the client without penalty upon delivery of written notification to Warner Financial within five business days after the date of the client’s execution of the agreement. After this initial five-day period has elapsed, either party may terminate the contract upon 30 days’ written notice. All fees paid by the client will be promptly refunded if the investment management agreement is terminated during the initial five-day period. After the initial five-day period, any unearned portion of pre-paid advisory fees will be refunded to the client within 60 days of the receipt of that notice. E. Neither Warner Financial, nor its representatives accept compensation from the sale of securities or other investment products. Item 6 – Performance-Based Fees and Side-By-Side Management Item 6 of the Form ADV Part 2 instructions is not applicable to Warner Financial’s brochure because we never charge or accept performance-based fees. Performance-based fees are defined as fees based on a share of capital gains on or capital appreciation of the assets held within a client’s account. Item 7 – Types of Clients Warner Financial generally provides investment advice to the following types of clients. Individuals (including Trusts and Estates) • • High-Net Worth Individuals • Pension and profit sharing plans • Charitable Organizations All clients are required to execute an agreement for services in order to establish a client arrangement with Warner Financial. Minimum Investment Amounts Required: Warner Financial typically requires an initial minimum investment amount of $1,000,000 for its Asset Management Services. Warner Financial, in its sole discretion, may waive its portfolio minimum, charge a lesser investment advisory fee and/or charge a flat fee based upon certain criteria (i.e. anticipated future earning capacity, anticipated future additional assets, dollar amount of assets to be managed, related accounts, account composition, competition, negotiations with client, etc.). As result of the above, similarly situated clients could pay different fees. In addition, similar advisory services may be available from other investment advisers for similar or lower fees. ANY QUESTIONS: Warner Financial’s Chief Compliance Officer, Barbara Warner, remains available to address any questions that a client or prospective client may have regarding advisory fees. Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss 10 Warner Financial, Inc. Disclosure Brochure  A. As investment advisors with a fiduciary responsibility to put clients’ interests above our own, our approach is to provide investment advice that is independent, objective, skillful and customized. Using a top-down approach and our understanding of the relationship between asset classes, the economic environment and market cycles, we develop portfolios that are (1) intended to achieve a client’s objectives, and (2) diversified to accommodate our perception of the client’s tolerance for risk. Using research supplied by institutional managers and economists, academic and professional journals, software programs that statistically model future returns, and rating services such as Morningstar, we recommend an appropriate allocation of assets for a client, and then select particular securities to satisfy the allocation. We incorporate variables into the analysis such as clients’ ages, capacity to accumulate assets, proximity to retirement (or to other goals such as college education), spending patterns, liquidity or illiquidity of assets, likelihood of inheritance or, conversely, chance that assets will need to be devoted to care of other family members. When possible, we try to assess how clients behaved in prior market downturns, and discern whether they are knowledgeable about asset classes, expected returns and market cycles. We construct portfolios that are diversified as to the types, maturity and quality of fixed income funds, and we choose equities of varying market capitalizations, valuations styles (value and growth), developed and emerging global locations, and management style (passive funds and actively managed funds.) We are highly attentive to the cost of our portfolios and the tax consequences of the activity in our accounts, and attempt to produce the highest quality portfolios at reasonable cost. We measure the success of our portfolios according to whether they allow clients to achieve particular objectives. We do not claim to be able to “beat the market,” but rather to develop and monitor portfolios that allow clients to be successful without taking unnecessary risks. A properly diversified portfolio is often unlikely to beat a single benchmark, such as the commonly used S&P 500 Index. Some assets in a portfolio, whose characteristics are unlike the large cap S&P stocks, will produce returns that are better or worse than the S&P, so clients have the risk that the average annual return of a complex portfolio will be very different from a single benchmark. We also do not “time” the market, nor make predictions about the directions of stock and bond markets, so a client runs the risk that the portfolio may be invested during a downturn in the markets. Depending on economic changes or periods of unusual volatility, we may adjust and rebalance a client’s portfolio to attempt to protect the account from losses, but those results cannot be assured. We avoid short-term trading in the accounts, and construct the portfolios with the client’s own time horizon in mind, which is generally for long periods of time. In some cases, clients ask us to develop a portfolio with a specific objective (i.e., a growth portfolio that is fully invested in equities.) Concentrated portfolios are generally subject to more volatility than fully diversified portfolios, and these investors must accept the risk that these accounts may not achieve their high-growth objective, and may lose value. B. Risk of Loss Clients must understand that past performance is not indicative of future results. Therefore, current and prospective clients should never assume that future performance of any specific investment or investment strategy will be profitable. Investing in securities (including stocks, mutual funds, and bonds) involves risk of loss. Further, depending on the different types of investments there may be varying degrees of risk. Clients and prospective clients should be prepared to bear investment loss including loss of original principal. 11 Warner Financial, Inc. Disclosure Brochure  Because of the inherent risk of loss associated with investing, our firm is unable to represent, guarantee, or even imply that our services and methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate you from losses due to market corrections or declines. There are certain additional risks associated when investing in securities through our investment management program. • Mutual Fund and ETF Risk – We primarily select mutual funds when managing client accounts. When investing in a mutual fund or ETF, the investor will bear additional expenses based on its pro rata share of the mutual fund or ETF’s operating expenses, including the potential duplication of management fees. The risk of owning a mutual fund or ETF generally reflects the risks of owning the underlying securities the mutual fund or ETF. Clients may also incur brokerage costs when purchasing ETFs and mutual funds. • Equity (stock) market risk – Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. If you held common stock, of any given issuer, you would generally be exposed to greater risk than if you held preferred stocks and debt obligations of the issuer. • Company Risk. When investing in stock positions, there is always a certain level of company or industry specific risk that is inherent in each investment. This is also referred to as unsystematic risk and can be reduced through appropriate diversification. There is the risk that the company will perform poorly or have its value reduced based on factors specific to the company or its industry. For example, if a company’s employees go on strike or the company receives unfavorable media attention for its actions, the value of the company may be reduced. • Fixed Income Risk. When investing in bonds, there is the risk that issuer will default on the bond and be unable to make payments. Further, individuals who depend on set amounts of periodically paid income face the risk that inflation will erode their spending power. Fixed-income investors receive set, regular payments that face the same inflation risk. Furthermore, bonds are subject to risk when interest rates rise because the market values of bonds will fall as rates rise. • Management Risk – Your investment with our firm varies with the success and failure of our investment strategies, research, analysis and determination of portfolio securities. If our investment strategies do not produce the expected returns, the value of the investment will decrease. Item 9 – Disciplinary Information This item is not applicable to our brochure because there are no legal or disciplinary events listed at Item 9 of the Form ADV Part 2 instructions that are material to a client’s or prospective client’s evaluation of our business or the integrity of the firm’s management (i.e. Barbara and Christopher Warner). Item 10 – Other Financial Industry Activities and Affiliations Neither Warner Financial, nor its representatives, are registered or have an application pending to register, as a broker-dealer or a registered representative of a broker-dealer. Neither Warner Financial, nor its representatives, are registered or have an application pending to register, as a futures commission merchant, commodity pool operator, a commodity trading advisor, or a representative of the foregoing. Warner Financial is not and does not have a related financial institution or company that requires disclosure at Item 10. Warner Financial does not receive, directly or indirectly, compensation from investment advisors that it recommends or selects for its clients. Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading 12 Warner Financial, Inc. Disclosure Brochure  Code of Ethics Summary: Warner Financial has established a Code of Ethics that will apply to all of its employees. An investment advisor is considered a fiduciary according to the Investment Advisers Act of 1940. As a fiduciary, it is an investment advisor’s responsibility to provide fair and full disclosure of all material facts and to act solely in the best interest of each of our clients at all times. Warner Financial has a fiduciary duty to all clients. This fiduciary duty is considered the core underlying principle for the advisor’s Code of Ethics which also covers its Insider Trading and Personal Securities Transactions Policies and Procedures. Warner Financial requires all of its employees to conduct business with the highest level of ethical standards and to comply with all federal and state securities laws at all times. Upon employment or affiliation and when changes occur, all employees will sign an acknowledgement that they have read, understand and agree to comply with the advisor’s Code of Ethics. Warner Financial has the responsibility to make sure that the interests of all clients are placed ahead of Warner Financial’s or its supervised persons’ own investment interest. Full disclosure of all material facts and potential conflicts of interest will be provided to clients prior to any services being conducted. Warner Financial and its employees must conduct business in an honest, ethical and fair manner and avoid all circumstances that might negatively affect or appear to affect our duty of complete loyalty to all clients. The preceding is intended to be a summary of our Code of Ethics. You can contact our office to request a complete copy of our Code of Ethics. Please refer to the Cover Page of this brochure for our contact information. Affiliate and Employee Personal Securities Transactions Disclosure: Our employees may buy and sell for themselves the same types of securities we recommended to clients. Although this could potentially create a conflict of interest, securities that our employees may personally own that are also recommended to clients will be widely held stock, bonds or mutual funds. The total market value of these holdings by our staff is relatively small and we do not have any expectation that actions taken by our personnel will have an impact upon the market value of the particular securities. We have established procedures under our Code of Ethics requiring all employees to report their personal securities holdings and transactions to the Firm. Item 12 – Brokerage Practices This section provides information about our brokerage practices in addition to the information detailed in Item 5 – Fees and Compensation. A. In the event that the client requests that Warner Financial recommend a broker-dealer/custodian for execution and/or custodial services, Warner Financial recommends that investment management accounts be maintained at Schwab which is a SEC and FINRA-registered broker-dealer, member SIPC, as the qualified custodian. Prior to engaging Warner Financial to provide investment management services, the client will be required to enter into a formal Investment Advisory Agreement with Warner Financial setting forth the terms and conditions under which Warner Financial will provide investment advisory services, and a separate custodial/clearing agreement with the designated broker- dealer/custodian. Warner Financial does not maintain custody of your assets (although we may be deemed to have custody of your accounts if you give us authority to withdraw assets from your account -see Item 15-Custody, below). We are independently owned and operated and not affiliated with Schwab. Schwab will hold your assets in a brokerage account and buy and sell securities when we instruct them to. We seek to recommend a custodian/broker who will hold your assets and execute transactions on terms that are overall most advantageous when compared with other available providers and their services. Factors that Warner Financial may consider in recommending Schwab (or any other broker- dealer/custodian to clients) include, among others: • • • combination of transaction execution services along with asset custody services (generally without a separate fee for custody); capability to execute, clear and settle trades (buy and sell securities for clients’ accounts); capabilities to facilitate transfers and payments to and from accounts (wire transfers, check requests, 13 Warner Financial, Inc. Disclosure Brochure  bill payment, etc.); • breadth of investment products made available (stocks, bonds, mutual funds, exchange traded funds, etc.); • availability of investment research and tools that assist Warner Financial in making investment decisions; • quality of services; • • • competitiveness of the price of those services (commission rates, margin interest rates, other fees, etc.) and willingness to negotiate them; reputation, financial strength and stability of the provider; their prior service to Warner Financial and Warner Financial’s other clients; and availability of other products and services that benefit Warner Financial, as discussed below. For our clients’ accounts that it maintains, Schwab generally does not charge you separately for custody services, but is compensated by charging you commissions or other fees on trades that it executes or that settle in your Schwab account. To the extent that a transaction fee will be payable by the client to Schwab, the transaction fee shall be in addition to Warner Financial’s investment advisory fee referenced in Item 5 above. To the extent that a transaction fee is payable, Warner Financial shall have a duty to obtain best execution for such transaction. However, that does not mean that the client will not pay a transaction fee that is higher than another qualified broker-dealer might charge to effect the same transaction where Warner Financial determines, in good faith, that the transaction fee is reasonable. In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represents the best qualitative execution, taking into consideration the full range of a broker-dealer’s services, including the value of research provided, execution capability, transaction rates, and responsiveness. 1. Research and Additional Benefits Although not a material consideration when determining whether to recommend that a client utilize the services of a particular broker-dealer/custodian, Warner Financial may receive from Schwab (or product/fund sponsor) without cost (and/or at a discount) support services and/or products, certain of which assist Warner Financial to better monitor and service client accounts maintained at such institutions. The support services that Warner Financial may obtain could include: investment-related research, pricing information and market data, software and other technology that provide access to client account data, compliance and/or practice management-related publications, discounted or gratis consulting services, discounted and/or gratis travel and attendance at conferences, meetings, and other educational and/or social events, marketing support, computer hardware and/or software and/or other products used by Warner Financial in furtherance of its investment advisory business operations. Warner Financial’s clients do not pay more for investment transactions effected and/or assets maintained at Schwab as a result of this arrangement. There is no corresponding commitment made by Warner Financial to Schwab or any other entity to invest any specific amount or percentage of client assets in any specific mutual funds, securities or other investment products as a result of the above arrangement. Warner Financial’s Chief Compliance Officer, Barbara Warner, is available to address any questions that a client or prospective client may have regarding the above arrangements and the corresponding conflict of interest presented by such arrangements. 2. Warner Financial does not receive referrals from broker-dealers. B. Directed Brokerage: Warner Financial does not accept directed brokerage arrangements (when a client requires that account transactions be effected through a specific broker-dealer). Trading Policy: Our trading policy is to implement all client orders on an individual basis. Therefore, 14 Warner Financial, Inc. Disclosure Brochure  we do not aggregate or “block” client transactions. Considering the types of investments we hold in advisory client accounts, we do not believe clients are hindered in any way because we trade accounts individually. The investments we are responsible for trading in client accounts are typically limited to mutual funds, and other broadly traded positions. Our strategies are primarily developed for the long-term and minor differences in price execution are not material to our overall investment strategy. Trade Error Policy: Warner Financial has implemented procedures designed to prevent trade errors; however, trade errors in client accounts cannot always be avoided. Consistent with its fiduciary duty, it is the policy of Warner Financial to correct trade errors in a manner that is in the best interest of the client. In cases where the client causes the trade error, the client will be responsible for any loss resulting from the correction. Depending on the specific circumstances of the trade error, the client may not be able to receive any gains generated as a result of the error correction. In all situations where the client does not cause the trade error, the client will be made whole and any loss resulting from the trade error will be absorbed by Warner Financial if the error was caused by Warner Financial. If the error is caused by the broker-dealer, the broker- dealer will be responsible for covering all trade error costs. If an investment gain results from the correcting trade, the gain will remain in the client’s account unless it is not permissible for clients to retain the gain. Warner Financial may also confer with clients to determine if the client should forego the gain (e.g., due to tax reasons). Warner Financial will never retain any portion of any gains made as a result of trade error corrections or profit in any way from trade errors. Further, our personnel are not permitted to make payments to clients or to client accounts. Item 13 – Review of Accounts Account Reviews and Reviewers: The principal planners and investment advisor representatives of the firm, Barbara Warner CFP®, David Warner CFA, Christopher Warner CFA, CFP® and Kevin Jarcho, CFP® review all accounts. They have experience in security analysis, financial planning, and offer advice on financial issues and investment planning that is unique to each client's situation. For Financial Planning clients, reviews are performed on an intermittent basis as requested by the client or as recommended (usually annually) by the planner. Reviews are intended to examine a client's progress toward goals and to update plan recommendations, if warranted by changes in client's circumstances. For Asset Management clients, portfolios are generally reviewed annually for rebalancing purposes, and performance reports are monitored on a quarterly basis. More frequent reviews may be performed if warranted by the client’s situation. Statements and Reports: Warner Financial provides written performance reports to the clients that have contracted with Warner Financial for Asset Management Services. Performance reports detail the client’s portfolio performance over relevant time periods. You are urged to compare the reports provided by Warner Financial against the account statements you receive directly from your account custodian. The custodian for the individual client’s account also provides the client with an account statement at least quarterly and the client may be able to view the account online. For clients whose funds are held directly with mutual fund companies, separate from Schwab, the periodic account statements will be sent directly from the fund companies. 15 Warner Financial, Inc. Disclosure Brochure  Item 14 – Client Referrals and Other Compensation A. As indicated at Item 12 above, Warner Financial receives from Schwab without cost (and/or at a discount), support services and/or products. Warner Financial’s clients do not pay more for investment transactions effected and/or assets maintained at Schwab (or any other institution) as result of this arrangement. There is no corresponding commitment made by Warner Financial to Schwab, or to any other entity, to invest any specific amount or percentage of client assets in any specific mutual funds, securities or other investment products as a result of the above arrangement. ANY QUESTIONS: Warner Financial’s Chief Compliance Officer, Barbara Warner, remains available to address any questions that a client or prospective client may have regarding the above arrangements and the corresponding conflict of interest presented by such arrangements. B. Warner Financial does not maintain solicitor arrangements. Warner Financial does not compensate third parties for client introductions. Item 15 – Custody Custody, as it applies to investment advisors, has been defined by regulators as having access or control over client funds and/or securities. In other words, custody is not limited to physically holding client funds and securities. If an investment advisor has the ability to access or control client funds or securities, the investment advisor is deemed to have custody and must ensure proper procedures are implemented. Warner Financial has implemented policies and procedures designed to avoid being deemed to have custody. It should be noted that authorization to trade in client accounts is not deemed by regulators to be custody. Custody Situations: Warner Financial engages in other practices and/or services on behalf of its clients that require disclosure at ADV Part 1, Item 9. Certain clients have established asset transfer authorizations which permit the qualified custodian to rely upon instructions from Warner Financial to transfer client funds or securities to third parties. These arrangements are disclosed at ADV Part 1, Item 9, but in accordance with the guidance provided in the SEC’s February 21, 2017 Investment Adviser Association No-Action Letter, the affected accounts are not subject to an annual surprise CPA examination. Although Warner Financial does not have custody of its client accounts, we have established procedures to ensure all client funds and securities are held at a qualified custodian (Schwab) in a separate account for each client under that client’s name. Clients, or an independent representative of the client, will direct, in writing, the establishment of all accounts and therefore are aware of the qualified custodian’s name, address and the manner in which the funds or securities are maintained. Finally, account statements are delivered directly from the qualified custodian to each client, or the client’s independent representative, at least quarterly. Clients should carefully review those statements and are urged to compare the statements against reports received from Warner Financial. When clients have questions about their account statements, they should contact Warner Financial or the qualified custodian preparing the statement. Item 16 – Investment Discretion Asset Management Services: Through our asset management program, we will maintain trading authorization over client accounts. Upon receiving written authorization from the client, we may implement trades on a discretionary basis (as detailed in our agreement for services). When discretionary authority is granted by a client, we will have the authority to determine the type of securities and the amount of securities that can be bought or sold for the client’s portfolio without obtaining the client’s consent for each transaction. However, it is our policy to consult with the client prior to making significant changes in the account even when discretionary trading authority is granted by the client. If trading authorization is provided on a non-discretionary basis, we will be required to contact you prior to implementing changes in your account. Therefore, you will be contacted and required to accept or reject our investment recommendations including: 16 Warner Financial, Inc. Disclosure Brochure  • The security being recommended • The number of shares or units • Whether to buy or sell Once the above factors are agreed upon, we will be responsible for making decisions regarding the timing of buying or selling an investment and the price at which the investment is bought or sold. If your accounts are managed on a non-discretionary basis, you need to know that if you are not able to be reached or are slow to respond to our request, it can have an adverse impact on the timing of trade implementations and we may not achieve the optimal trading price. Item 17 – Voting Client Securities Warner Financial does not vote proxies on behalf of its clients. Therefore, it is the responsibility of Warner Financial clients to vote all proxies for securities held in their accounts. You will receive proxies directly from your custodian or transfer agent and such documents will not be delivered by or from Warner Financial. Although we do not vote client proxies, if you have a question about a particular proxy feel free to contact us. Item 18 – Financial Information This item is not applicable to Warner Financial’s brochure. We never require clients to prepay more than $1,200 in fees, six months or more in advance. Therefore, Warner Financial is not required to include a balance sheet for its most recent fiscal year. Warner Financial is not subject to a financial condition that is reasonably likely to impair its ability to meet contractual commitments to clients. Finally, we have not been the subject of a bankruptcy petition at any time. WARNER FINANCIAL PRIVACY POLICY As our client, you have trusted Warner Financial to help you achieve financial success and security. To maintain that trust, we are committed to protect the privacy and security of the personal information that we collect about our clients. This notice is intended to help you understand how we collect, handle, and safeguard that information. Warner Financial maintains physical, electronic, and procedural safeguards that comply with federal standards to protect its clients’ nonpublic personal information (“information”). Through this policy and its underlying procedures, Warner Financial attempts to secure the confidentiality of customer records and information and protect against anticipated threats or hazards to the security or integrity of customer records and information. We treat the personal information of our clients in a confidential manner. We do not ever provide any information to unrelated companies for the purpose of marketing their products or services to our customers. When you establish a relationship with us, you are requested to furnish personal and financial information to assist in assessing your financial objectives and goals. The information you share with us is private and confidential, and we are committed to protecting your privacy. It is our policy to restrict access to and/or the sharing of all current and former clients’ information (i.e., information and records pertaining to personal background [including social security number and address], investment objectives, financial situation, financial planning issues, tax information/returns, investment holdings, account numbers, account balances, etc.) to those employees and affiliated/nonaffiliated entities who need to know that information in furtherance of the client’s engagement with Warner Financial. In addition to the information collected, during the course of our relationship we may also collect a variety of nonpublic personal information from other sources. The confidential information we collect may include the following: a. b. Information we receive from you, such as your name, address, social security number, assets, income, investment objectives and other information as required by industry regulators. Information about your transactions, including balances, portfolio holdings, cash balances, 17 Warner Financial, Inc. Disclosure Brochure  c. margin balances, and customer statements. Also included may be portfolio evaluations. Information we receive from our broker/dealer/custodian Schwab and various fund sponsors, unaffiliated custodians and money managers, your accountant, attorney or other professionals retained by you. d. Medical or health information that you authorize us to receive from doctors or other health care providers and medical vendors in relation to the advice provided on a health, disability or life insurance policy. Warner Financial does not share client information with any third party other than those that are authorized by you, or that are required in order for us to provide services agreed upon by the client (including to unaffiliated service providers and vendors in furtherance of establishing, maintaining, and reporting on the your advisory relationship (i.e., broker-dealer, account custodian, record keeper, technology, performance reporting, customer relationship management software [CRM]), and to service an account, execute a transaction, or (if required to do so) by regulation or law. We may share information with Schwab, or other unaffiliated custodian as necessary to provide advisory services. Warner Financial has established policies to maintain physical, electronic, and procedural safeguards to maintain the confidentiality of the personal information of our clients. Appropriate measures are taken to ensure that access is available only to those individuals who need to know this information in order to provide proper services to our clients. ANY QUESTIONS: Warner Financial’s Chief Compliance Officer, Barbara Warner, remains available to address any questions regarding this Part 2A. 18 Warner Financial, Inc. Disclosure Brochure