Playbook Plus ROI Program Terms & Conditions
Last Updated October 6, 2023
The ROI Program is provided by Herring Sub RIA, LLC (doing business as “Playbook”). This program has been designed exclusively for Playbook Plus subscribers, with the aim of ensuring tax management equal to or exceeding the subscription cost.
1. Eligibility:
Only those subscribed to Playbook Plus are eligible for this program. Activation of the subscription and completion of the first payment are prerequisites for participation.
In addition, clients must open investment accounts with Playbook and maintain, in aggregate, an average daily balance (“ADB”) of $49,000 for the period in those same Playbook accounts. Eligible accounts include Taxable, Traditional IRA, and Roth IRA. ADB is calculated as the sum of each day’s ending balance, divided by 365. For days the US stock market is closed, Playbook will use the most recent available balance.
2. Calculation Period:
The Return on Investment (ROI) will be evaluated over a period of 365 days, starting from the date of the initial payment.
3. Tax Management Value Generation Tracking:
Value creation will be determined based on the advisory accounts held with Playbook. This includes Roth IRA, Traditional IRA, and Taxable brokerage accounts.
Aggregate ADB will consider balances across all Playbook investment accounts. For example, if a client deposits $6,500 into a Playbook IRA on January 1,2023 and $70,000 into a Playbook brokerage account on August 1, 2023, then the ADB is $35,842; thus, the client is ineligible for the ROI guarantee. This example assumes no change in balance due to market performance.
Conversely, if the client deposits $6,500 into a Playbook IRA on January 1,2023 and $70,000 into a Playbook brokerage account on May 15, 2023, then the ADB is $50,801; thus, the client is eligible for the ROI guarantee. This example assumes no change in balance due to market performance.
4.Tax Management Value Calculation (“Total Value”):
For Taxable Brokerage Accounts:
- Tax Loss Harvesting is calculatedas the aggregate of (short-term realized losses multiplied by the marginal income tax rate) and (long-term realized losses multiplied by the long-term capital gains tax rate).
- For example, a client may deposit $1,000 into a taxable brokerage account, which is further invested in adiversified portfolio of ETFs. After some time, as part of rebalancing the portfolio, Playbook may sell one position at a short-term loss of $100 and another position at a long-term loss of $200. Assuming a marginal income taxrate of 35% and a long-term capital gains tax rate of 15%, then the total value generated is ($100 x 35%) + ($200 x 15%) = $65 of tax deferrals through harvesting losses.
For Roth & Traditional IRA Accounts:
- Tax-Efficient Rebalancing is determined by adding (short-term realized gains multiplied by the marginal income tax rate) and (long-term realized gains multiplied by the long-term capital gains tax rate). This represents the savings in taxes from rebalancing within an IRA to meet the target allocation.
- For example, a client may deposit $1,000 into a Roth IRA, which is further invested in a diversified portfolio ofETFs. After some time, as part of rebalancing the portfolio, Playbook may sell one position at a short-term gain of $150 and another position at a long-term gain of $250. Roth IRAs are not taxable, but assuming a marginal income tax rate of 35% and a long-term capital gains tax rate of 15%, then the Total Value generated is ($150 x 35%) + ($250 x 15%) = $90 of taxes avoided by rebalancing the total portfolio using the assets solely located in the Roth IRA.
- Minimizing portfolio taxes represents savings on dividends and interest. It's derived from the sum of 1)non-qualified dividends multiplied by the client’s marginal income tax rate and 2) qualified dividends multiplied by the client’s qualified dividends tax rate.
- For example, a client may deposit $1,000 into a Roth IRA, which is further invested in a diversified portfolio of ETFs. After some time, the client received $20 of dividends from an ETF comprised of REITs, $28 of dividends from a corporate bond ETF and $15 from aUS Equity ETF. Assuming a marginal income tax rate of 35% and a qualified dividend tax rate of 15%, then the Total Value generated is ($20 x 35%) + ($28x 35%) + ($15 x 15%) = $19.05 of taxes avoided by receiving dividends on assets solely located in the Roth IRA. These dividends can then be reinvested into the portfolio dollar for dollar, as opposed to net of taxes in a taxable brokerage account.
5. Refund Eligibility:
If the ratio of Total Value to Fees paid is found to be less than two at the end of the 365 days, clients are deemed eligible for a refund.
For example, a client may sign up for Playbook Plus and pay the $348 annual fee. That would imply a minimum value creation threshold of ($348 x 2) = $696 for Playbook to deliver the client. Per the terms outlined in Part 4, if the Total Value is less than $696, then the client would be eligible for a refund, per the instructions outlined below.
6. Refund Calculation:
The refund amount is the difference between the fees incurred by clients and the "expected fee", which is half of the Total Value.
For example, using the methodology in Step 4, Playbook generates $800 of Total Value over a twelve-month period. The client subscribed for the annual plan of Playbook Plus, which cost $348 for the twelve months of service. At the end of the 365-day period, Playbook compares Total Value versus total cost. Since $800 is greater than ($348 x 2) = $696, then the client has received sufficient value and is not eligible for a refund.
On the other hand, say Playbook generates $400 of Total Value over a twelve-month period. The client subscribed for the annual plan of Playbook Plus, which cost $348 for the twelve months of service. At the end of the 365-day period, Playbook compares Total Value versus total cost. Since Total Value is less than ($348 x 2), the refund is calculated as $348 - ($400 / 2), resulting in a refund of $148 to the client. This would make the “adjusted fee” for the prior twelve-month period equal to $200, which equates to a 2.0 ratio between the Total Value and the fees paid by the client.
7. Refund Process:
Eligible refunds will be credited to the client's Taxable advisory account with Playbook within 30 days after the completion of the 365-day assessment period. If a client does not have a taxable account, opening one with Playbook is mandatory to receive the refund.
8. Data Protection:
Data protection measures have been rigorously established to ensure the security and confidentiality of client's financial and tax data, in compliance with relevant regulations.
9. Modifications & Termination:
Playbook reserves the right to modify or discontinue the ROI Program. Any modifications will be communicated to subscribers, ensuring those currently enrolled are not impacted in terms of ongoing refund calculations.
10. Queries and Communication:
For questions or concerns about the ROI Program, clients are encouraged to contact
hello@helloplaybook.com.
11. Consent:
Upon subscribing to Playbook Plus and opting into the ROI Program, clients agree to these terms and acknowledge that the refund methodology is predetermined. Modifications to this structure by individual clients are not permitted.
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