Financial Services Guide The Motley Fool Australia Pty Limited ACN 146 988 052
AFSL No. 400691

Date: 23 August, 2023

What is a Financial Services Guide?

This Financial Services Guide (FSG) is an important document. You should read it carefully and make sure you understand it.

This FSG is designed to help you decide whether to use any of the services provided by us and is issued by The Motley Fool Australia Pty Limited ACN 146 988 052 (referred to as Motley Fool Australia, we, us or our).

This FSG includes information about:

• Motley Fool Australia and how we can be contacted;
• the financial services we are authorised under our Australian financial services licence to provide;
• who are our authorised representatives
• how we are paid;
• any relevant relationships or associations;
• how we deal with complaints that you may have about our services;
• information about internal and external dispute resolution systems and how you can access them; and
• the compensation arrangements that we have in place.

Who is Motley Fool Australia?

Motley Fool Australia provides investing information and commentary focusing on financial markets and solutions for an Australian audience. Our aim is to provide financial solutions for investors of every kind in the hopes of helping people taking control of their financial lives. Investment information and commentary is provided in a number of ways, including:

• articles, audio recordings and videos on the Motley Fool Australia website;
• subscription-based services;
• online discussion forums;
• occasional special reports;
• private email communicationgs; and
• periodic online chats hosted by Motley Fool Australia

Motley Fool Australia is a wholly owned subsidiary of The Motley Fool Global Ltd which is wholly-owned by The Motley Fool LLC (MF LLC). Since 1994, MF LCC has provided similar services to US based investors.

Our Authorised Representative

We have appointed Lakehouse Capital Pty Ltd ACN 614 957 603 (LHC) as our Authorised Representative. LHC is a wholly-owned subsidiary of Motley Fool Australia.

The financial services we are authorised to provide

Motley Fool Australia is authorised under its Australian financial services licence (AFSL No. 400691) to provide general financial product advice as well as to deal in financial products to retail and wholesale clients.

We are authorised to provide general financial product advice in the following classes of financial products:

• derivatives;
• debentures, stocks or bonds issued or proposed to be issued by a government;
• interest in a managed investment schemes including investor directed portfolio services;
• securities; and
• superannuation.

We are also authorised to deal in a financial product by applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of the following classes of products:

• deposit and payment products limited to basic deposit products;
• debentures, stocks or bonds issued or proposed to be issued by a government;
• interests in managed investment schemes, including investor directed portfolios; and
• securities

This FSG relates only to the provision of general financial product advice by Motley Fool Australia. All dealing and investment management services are provided by LHC, our Authorised Representative. Information on LHC and the services it provides can be found at lakehousecapital.com.au. Alternatively, you can write to LHC at GPO Box 498, Sydney NSW 2001.

General advice only – investment warning

All of our commentary, statements of opinion and recommendations in relation to financial products, whether in our publications or otherwise, contain only general advice. That is, those statements of opinion and recommendations have been prepared without taking into account your personal objectives, financial situation or needs. You should always consider the appropriateness of any general advice in our publications, having regard to your individual and financial circumstances before you act on the general advice.

You should also consider any product disclosure statement (PDS), prospectus or other disclosure document relevant to any financial product referred to in any Motley Fool Australia content before making any decision about whether to acquire any such product. To obtain such documents you would need to contact the issuer of the relevant financial product or a distributor of the product.

Except for this FSG, you will not receive any other documents from Motley Fool Australia. Motley Fool Australia will not provide Statements of Advice, as it does not deliver personal financial product advice.

How are any fees, commissions or other benefits calculated?

Services

The prices listed below are subject to change. Subscription fees are due in advance and unless otherwise specified in the product’s terms of service, are non-refundable. Paid subscriptions automatically renew, until you notify Motley Fool Australia of your decision to terminate your subscription.

On-line publications

Our articles and videos are available free of charge on our website.(fool.com.au). They may also be available on the websites of third parties that have licensed our content.

E-Letter

Our regular e-letter, Take Stock, is available free of charge for those investors who have provided us with a valid email address.

Special Free Reports

On occasion, we may offer special free reports to individuals who click on one of our adverts and provide us with a valid email address.

Motley Fool Share Advisor

Motley Fool Share Advisor is an online subscription-based service. The subscription provides members with monthly share recommendations and regular updates delivered via email as well as access to a subscriber-only website. The subscriber-only website includes features such as discussion forums, special reports and audio and video content. The standard cost of a one-year subscription is $299, payable at the time of subscription and may be purchased here. The subscription fee may change from time to time as a result of promotional offers.

Motley Fool Hidden Gems

Motley Fool Hidden Gems is an online subscription-based service that provides subscribers with buy or sell trade alerts via email. The subscription also provides members with weekly updates delivered via email and access to a subscriber-only website. The subscriber-only website includes features such as discussion forums, special reports and audio and video content. The standard cost of a one-year subscription is $999, payable at the time of subscription and may be purchased here. The subscription fee may change from time to time as a result of promotional offers.

Motley Fool Dividend Investor

Motley Fool Dividend Investor is an online subscription based service that focuses on dividend paying shares. The subscription provides members with monthly share recommendations and weekly updates delivered via email as well as access to a subscriber-only website. The subscriber-only website includes features such as discussion forums special reports, and audio and video content. The standard cost of a one-year subscription is $199, payable at the time of subscription and may be purchased here. The subscription fee may change from time to time as a result of promotional offers.

Motley Fool Extreme Opportunities

Motley Fool Extreme Opportunities is an online subscription based service that focuses on growth shares. The subscription provides members with monthly share recommendations and weekly updates delivered via email as well as access to a subscriber-only website. The subscriber-only website includes features such as special reports, and audio and video content. The standard cost of a one-year subscription is $399, payable at the time of subscribing. The subscription fee may change from time to time as a result of promotional offers.

Motley Fool 5G SuperCycle

Motley Fool 5G Supercycle is an online subscription based service that focuses on growth shares. The subscription provides members with bi-monthly share recommendations and monthly updates delivered via email as well as access to a subscriber-only website. The subscriber-only website includes features such as special reports, and audio and video content. The standard cost of a one-year subscription is $1,999, payable at the time of subscribing. The subscription fee may change from time to time as a result of promotional offers. Please note this service is closed to new memberships.

Motley Fool Maximum Upside

Motley Fool Maximum Upside is an online subscription-based service. The subscription provides members with monthly share recommendations and regular updates delivered via email as well as access to a subscriber-only website. The subscriber-only website includes features such as discussion forums, special reports and audio and video content. The standard cost of a one-year subscription is $1,999, payable at the time of subscription and may be purchased here. The subscription fee may change from time to time as a result of promotional offers. Please note this service is closed to new memberships.

Real Money Portfolio Services

Motley Fool Pro

Motley Fool Pro (referred to as the “Service“) is a subscription-based service that allow subscribers to follow the trades and actions of a real-money portfolio owned by Motley Fool Australia. Subscribers receive email alerts, informing them of the Service’s intentions before Motley Fool Pro makes a trade on its own behalf as well as weekly updates also delivered via email. The Service also has a subscriber-only website that includes discussion boards, multimedia content and special reports. The standard cost of a one-year subscription is $3,999, payable at the time of subscription. The subscription fee may change from time to time as a result of promotional efforts. Please note this service is closed to new memberships.

Motley Fool Pro 2.0

Motley Fool Pro 2.0 (referred to as the “Service“) is a subscription-based service that allow subscribers to follow the trades and actions of a real-money portfolio owned by Motley Fool Australia. Subscribers receive email alerts, informing them of the Service’s intentions before Motley Fool Pro 2.0 makes a trade on its own behalf as well as weekly updates also delivered via email. The Service also has a subscriber-only website that includes discussion boards and multimedia content. The standard cost of a one-year subscription is $3,999, payable at the time of subscription. The subscription fee may change from time to time as a result of promotional efforts. Please note this service is closed to new memberships.

Motley Fool Everlasting Income

Motley Fool Everlasting Income (“MFEI”) is a subscription-based service aimed at helping investors who are in, or nearing retirement generate consistent, tax-effective income. MFEI consists of a real-money portfolio owned by Motley Fool Australia of high-yielding dividend shares (most of which will be fully franked) that members can mirror in their own portfolio. MFEI also has a subscriber-only website that includes discussion boards, multimedia content and special reports. A lifetime membership to this Service (available for only a limited time) is $4,999 and this fee is non-refundable. There is a standard annual maintenance fee of $299 after the first year. Annual and multiyear subscriptions to the Service may also be available. The standard cost of a one-year subscription to the Service is $2,499, payable at the time of subscription. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time because of promotional offers. The Service opens to new subscribers intermittently and may not be readily available for purchase.

Motley Fool Odyssey Portfolio

Motley Fool Odyssey (referred to as the “Service“) is a subscription-based service that allows subscribers to follow the trades and actions of a real-money portfolio owned by Motley Fool Australia.

Subscribers receive email alerts, informing them of the Service’s intentions before Motley Fool Odyssey makes a trade on its own behalf as well as monthly portfolio updates also delivered via email. The Service also has a subscriber-only website that includes discussion boards, multimedia content and special reports. Fool Australia is exclusively funding the portfolio and consequently, any realised gains or losses will belong to Fool Australia.

Annual and multiyear subscriptions to this service may be available. A “trial” 6-month subscription may also be available. The standard cost of a one-year subscription to the Service is $1,499, payable at the time of subscription. This fee is not refundable. Multi year subscriptions may be sold at a discount. The subscription fee may change from time to time because of promotional offers. The Service opens to new subscribers intermittently and may not be readily available for purchase.

Your membership will automatically renew at the then-current rate, until you notify us of your decision to terminate your membership. Motley Fool Odyssey will renew for one-year terms, regardless of the offer under which that subscription started. We will email you about the length and price for your renewal before we charge you.

Motley Fool Stars and Stripes

Motley Fool Stars & Stripes (previously named Shooting Stars) is an investment advisory service that seeks to build a strong, long term focused portfolio from the highest quality companies listed on the NASDAQ and NYSE, when they’re available at reasonable prices.

The investing philosophy of the service is first focused on finding high quality businesses – which we determine based upon our own set of quality criteria. We also seek to pay a ‘reasonable price’ by finding investments which we think a reasonably conservative set of assumptions can still reap a strong return.

Stars & Stripes has a subscriber-only website. The product includes detailed write ups of each stock in the portfolio, reports and quarterly updates on the portfolio and companies contained therein. If a company is taken private or another unanticipated event takes place, the Stars & Stripes team may make additional updates.

This is a service which is focused on the long term, and accordingly its value is likely to be demonstrated through the economic and market cycles. While our service will be growth-oriented, our primary focus will be on quality and we won’t chase growth for growth’s sake, nor will we try to guess what the market might do next.

Although the goal is to hold investments for ten (10) years, the portfolio advisors reserve the right to make a sell recommendation. In that event, subscribers would be notified at least 1 market day before the portfolio would transact. Fool Australia is exclusively funding the portfolio and consequently, any realised gains or losses will belong to Fool Australia.

Annual and multiyear subscriptions to this service may be available. A “trial” 6-month subscription may also be available. The standard cost of a one-year subscription to the Service is $2,999, payable at the time of subscription. This fee is not refundable. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time because of promotional offers. The Service opens to new subscribers intermittently and may not be readily available for purchase.

This product will renew as per the initial term. A two-year membership will renew for two years. A twelve-month membership will renew for twelve months. Your membership will automatically renew at the then-current rate, until you notify us of your decision to terminate your membership. We will email you about the length and price for your renewal before we charge you.

Motley Fool Rising Stars

Motley Fool Rising Stars is a one time, annual model portfolio aimed at helping investors who are interested in micro- cap investing (“mico-cap” for the purposes of this portfolio is defined as a market capitalisation of ideally less than $500 million AUD). MFRS consists of a real-money portfolio owned by Motley Fool Australia of micro cap shares that members can mirror in their own portfolio. MFRS also has a subscriber-only website. The product includes detailed write ups of each stock in the portfolio and monthly updates during the first year on the portfolio and companies contained therein. If a company is taken private or another unanticipated event takes place, the MFRS team may make additional updates. After the first year, the MFRS will provide portfolio updates every six months.

This product is no longer available for new subscribers, and any current members as of October 2021 will receive entitlement to the new Motley Fool Microcaps and Rising Stars as long as their subscription to Rising Stars remains active. Subscribers who renew their Rising Stars subscription will renew annually into the Motley Fool Microcaps offering and acknowledge they will be subject to the terms and conditions of that service going forward. Members who do not wish to renew their Rising Stars subscription will lose entitlement to Rising Stars and Motley Fool Microcaps upon expiration of their current Rising Stars subscription.

Your membership will automatically renew at the then-current rate, until you notify us of your decision to terminate your membership. MFRS will renew for one-year terms, regardless of the offer under which that subscription started. Of course, we will email you about the length and price for your renewal before we charge you.

Motley Fool Microcaps

Motley Fool Microcaps is an annual model portfolio service aimed at helping investors who are interested in micro-cap growth investing.

The service features a model real-money portfolio each year owned by Motley Fool Australia of micro cap ASX shares, sourced from the Fool Australia team, that members can mirror in their own portfolio.

Microcaps has a subscriber-only website. The product includes detailed write ups of each stock in the portfolio, report(s) and regular updates on the portfolio and companies contained therein. If a company is taken private or another unanticipated event takes place, the Microcaps team may make additional updates.

Although the goal is to hold investments for a three (3) to five (5) years, the portfolio advisors reserve the right to make a sell recommendation. In that event, subscribers would be notified at least 1 market day before the portfolio would transact. Fool Australia is exclusively funding the portfolio and consequently, any realised gains or losses will belong to Fool Australia. Annual and multiyear subscriptions to this service may be available. A “trial” 6-month subscription may also be available. The standard cost of a one-year subscription to the Service is $2,499, payable at the time of subscription. This fee is not refundable. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time because of promotional offers. Please note this service is closed to new memberships.

This product will renew annually. The “trial” 6-month subscription will renew into an annual subscription at the end of the initial 6-month term.

Your membership will automatically renew at the then-current rate, until you notify us of your decision to terminate your membership. Microcaps will renew for one-year terms, regardless of the offer under which that that subscription started. Of course, we will email you about the length and price for your renewal before we charge you.

Motley Fool Cloud Disruptors

Motley Fool Cloud Disruptors is a subscription-based service aimed at helping investors who are interested in small-mid cap ASX and USD cloud based stocks. The service allow subscribers to follow the trades and actions of a real-money portfolio owned by Motley Fool Australia. Subscribers receive email alerts, informing them of the Service’s intentions before Motley Fool

Cloud Disruptors makes a trade on its own behalf as well as monthly updates, also delivered via email. The service has a subscriber-only website that includes detailed write ups of each stock in the portfolio, monthly updates on the portfolio and companies contained therein and special reports. If a company is taken private or another unanticipated event takes place, the Cloud Disruptors team may make additional updates. The standard cost of a one-year subscription to the Service is $1,999, payable at the time of subscription. This fee is not refundable. The subscription fee may change from time to time because of promotional offers. Please note this service is closed to new memberships.

Motley Fool Ultimate Growth Portfolio

Motley Fool Ultimate Growth is an annual model portfolio service aimed at helping investors who are interested in small cap growth investing.

The service features a model real-money portfolio each year owned by Motley Fool Australia of small cap ASX shares, sourced from the Fool Australia team, that members can mirror in their own portfolio.

Ultimate Growth has a subscriber-only website. The product includes detailed write ups of each stock in the portfolio, report(s) and weekly updates on the portfolio and companies contained therein. If a company is taken private or another unanticipated event takes place, the Ultimate Growth team may make additional updates.

Although the goal is to hold investments for a minimum five (5) years, the portfolio advisors reserve the right to make a sell recommendation. In that event, subscribers would be notified at least 1 market day before the portfolio would transact. Fool Australia is exclusively funding the portfolio and consequently, any realised gains or losses will belong to Fool Australia.

Annual and multiyear subscriptions to this service may be available. A “trial” 6-month subscription may also be available. The standard cost of a one-year subscription to the Service is $2,499, payable at the time of subscription. This fee is not refundable. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time because of promotional offers. The Service opens to new subscribers intermittently and may not be readily available for purchase.

This product will renew annually into the Motley Fool Ultimate Growth 20## offering for that year. The “trial” 6-month subscription will renew into a one-year subscription at the end of the initial 6-month term, which will in turn renew annually into the Motley Fool Ultimate Growth 20## offering for that year.

Your membership will automatically renew at the then-current rate, until you notify us of your decision to terminate your membership. Ultimate Growth will renew for one-year terms, regardless of the offer under which that that subscription started. Of course, we will email you about the length and price for your renewal before we charge you.

Motley Fool Ultimate Innovation Portfolio

Motley Fool Ultimate Innovation is an annual model portfolio service aimed at helping investors who are interested in disruptive tech and innovation investing.

The service features a model real-money portfolio each year owned by Motley Fool Australia of disruptive tech and innovation ASX shares, sourced from the Fool Australia team, that members can mirror in their own portfolio.

Ultimate Innovation has a subscriber-only website. The product includes detailed write ups of each stock in the portfolio, report(s) and regular updates on the portfolio and companies contained therein. If a company is taken private or another unanticipated event takes place, the Ultimate Innovation team may make additional updates.

Although the goal is to hold investments for a three (3) to five (5) years, the portfolio advisors reserve the right to make a sell recommendation. In that event, subscribers would be notified at least 1 market day before the portfolio would transact. Fool Australia is exclusively funding the portfolio and consequently, any realised gains or losses will belong to Fool Australia. Annual and multiyear subscriptions to this service may be available. A “trial” 6-month subscription may also be available. The standard cost of a one-year subscription to the Service is $2,499, payable at the time of subscription. This fee is not refundable. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time because of promotional offers. Please note this service is closed to new memberships.

This product will renew annually. The “trial” 6-month subscription will renew into an annual subscription at the end of the initial 6-month term. Your membership will automatically renew at the then-current rate, until you notify us of your decision to terminate your membership. Ultimate Innovation will renew for one-year terms, regardless of the offer under which that that subscription started. Of course, we will email you about the length and price for your renewal before we charge you.

Combination Services

Gold Pass

Gold Pass (Gold) is an online subscription-based service that allow subscribers to access the ETF Investor, Share Advisor, Dividend Investor, Hidden Gems and Extreme Opportunities newsletter services.

Members of Gold Pass may from time to time join during promotions that offer special reports or other materials as incentives. These materials are limited to the members joining during that promotion and are not primary entitlements to Gold Pass.

Subscribers receive trade alerts, recommendations and reports via email. Subscribers also receive regular updates and have access to a subscriber-only website. The newsletter services may feature discussion boards, multimedia content and other information. The standard cost of a one-year subscription is $1,999, payable at the time of subscribing. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time as a result of promotional offers. The Service opens to new subscribers intermittently and may not be readily available for purchase.

Motley Fool Platinum

Motley Fool Platinum (Platinum) is an online subscription-based service that allows subscribers to access all services published by The Motley Fool Australia. In addition, subscribers to Platinum will receive access to exclusive articles, a concierge to facilitate questions relating to membership and quarterly invitations to in person events across Australia, which will be streamed if in person attendance is not possible. Subscribers receive trade alerts, recommendations and reports via email. Subscribers also receive regular updates and have access to a subscriber-only website. These premium services features discussion boards, multimedia content and other information. The standard cost of a one-year subscription is $9,999, payable at the time of subscribing. Multiyear subscriptions may be sold at a discount. The subscription fee may change from time to time as a result of promotional offers. These fees are NOT refundable. The Service opens to new subscribers intermittently and may not be readily available for purchase.

Employee Remuneration

Motley Fool Australia does not receive any other fees, commissions or benefits for the services it provides.

Employees of Motley Fool Australia who prepare research and provide other advice are remunerated by salary. They may also be entitled to a bonus based on the financial performance of The Motley Fool group. Motley Fool Australia accepts submissions from freelance contributors who are paid a flat fee per article.

You may request particulars of the remuneration or other benefits received by Motley Fool Australia, any other member of The Motley Fool group, or their respective directors, employee or associates in relation to the provision of a financial service by Motley Fool Australia to you. Such a request must be made within a reasonable time after you have received a copy of this FSG and before any financial services identified in this FSG have been provided to you.

What relationships or associations do we have that might influence our advice?

Motley Fool Australia and its associated entities, and their respective directors, associates, connected parties and/or employees may from time to time deal in or otherwise have a financial interest in equities and other financial products referred to in its publications or other general financial advice it provides. Any individual who provides advice on behalf of Motley Fool Australia or contributes articles to our website must disclose if they have a financial interest or position in any share mentioned or discussed. Similarly, it will be disclosed to you if Motley Fool Australia has a beneficial interest or position in any share mentioned or discussed. You should review any disclosures made in particular publications as to interests Motley Fool Australia and its representatives may have in the financial products referred to in the publication.

Our subsidiary and Authorised Representative, LHC, is in the funds management business. LHC may deal in shares that we have recommended or mentioned in our publications (both now or in the future). Motley Fool Australia has no non-public knowledge of LHC’s fund holdings or its planned transactions and therefore, LHC’s fund holdings are not disclosed.

Similarly, our parent company and other affiliates may have positions in the securities mentioned in our publications. Because we have no non-public knowledge of our parent and affiliates’ holdings, such interests are not disclosed.

All employees of Motley Fool Australia including those who prepare research and other advice are subject to a code of conduct and rules for their personal trading activities. Our major trading rules are:

• Employees cannot trade based on advance knowledge of information that will be published or broadcast by any member of The Motley Fool group;
• Employees must hold any shares that they own for at least 10 full market days;
• Employees cannot write about a company in the period of 2 full market business days before to 2 market business days after trading in the company’s shares; and
• Employees must first preclear their trades and then report their transactions to our compliance department within 24 hours of executing a transaction.

Freelance contributors must agree to similar disclosure and trading rules.

With respect to its real money portfolio services, Motley Fool Australia will wait at least one full market day after a trade alert has been issued to transact in the security.

Neither Motley Fool Australia, nor any other member of The Motley Fool group, has otherwise any associations or relationships with the issuers of any products that might reasonably be expected to be capable of influencing Motley Fool Australia in the advice it gives.

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In order to investigate a complaint effectively you should provide to us your contact details and any relevant documents and other information that may support your complaint and its resolution.

Written complaints should be sent to: The Motley Fool Australia Pty, Ltd
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The length of time we will take to resolve your complaint will depend on the nature and complexity of the issue you have raised, and the extent of the enquiries required to enable those issues to be addressed. We will endeavour to resolve the majority of complaints within 10 business days of receiving a complaint. For complaints that require further investigation or additional information from you or for any reason there is a delay in resolving the complaint, we will notify you within 10 business days of the date we receive the complaint and deliver you an indication of when we will resolve the complaint.

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External complaints may be submitted to the Australian Financial Complaints Authority (AFCA). AFCA provides fair and independent financial services complaint resolution that is free to consumers.

If you feel that your complaint was not dealt with to your satisfaction, you can contact AFCA on their free call line at 1800 931 678.

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For further information

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Shyam Pradheep is the General Manager of Zogo and currently lives in Austin, Texas.

While there are many standard employee benefits that new hires look forward to, new types of benefits are shifting priorities for employees. Financial wellness programs are now the number one most-wanted benefit among employees, leading over mental health and time-off programming. This isn’t just a desired benefit but an expected one as nine in 10 employees (registration required) expect employers to provide financial wellness resources.

As the general manager of a financial literacy company, I’ve seen firsthand how life-changing these financial wellness resources can be for employees and understand why it’s needed so desperately.

The Financial Literacy Crisis

As new hires enter the workforce, there is a certain expectation for employees to understand principal financial skills. They must make decisions on 401k plans, enroll in health and dental insurance, and even choose stock options. Financial literacy is the backbone of an employee’s ability to make informed, responsible financial decisions on these matters. Without it, they’re more likely to make mistakes or miss opportunities to achieve their financial goals.

The reality is that Americans have low levels of financial literacy across all generations, making it difficult to navigate employee benefit decisions. The annual P-FIN Index report indicates America's financial literacy rates are not only remaining low, but gradually falling. Surprisingly, employees tend to fare worse than the general population—only 13% of employees are considered to have basic financial skills.

People are not learning financial education via traditional methods, such as in the classroom or even at home. According to Next Gen Personal Finance, only about 25% of students will take a personal finance course before they graduate high school, given that education requirements vary greatly on a state-by-state basis. When financial education is unavailable in the classroom, students must find it elsewhere. This usually means less reliable sources, such as social media or word of mouth.

The bottom line is that financial education is not being prioritized before people enter the workforce. This missed opportunity to educate Americans early on needs to be reconciled somewhere else, which opens the door for employers to become a trusted source of financial programming.

Leveling Up Financial Education In The Workplace

While simply offering access to financial education is a step in the right direction, assessing which programs can maximize learning potential is critical to truly improving financial wellness in your employees’ lives. To make financial education engaging and exciting, employers must work with modern offerings to understand how to connect with employees.

Digital, mobile-first HR programming has expanded over the past few years. As 85% of Americans now own a smartphone, opting for mobile-first solutions makes learning accessible across generations.

Digital programming aims to help close financial literacy gaps, allowing anyone, regardless of demographic or socioeconomic factors, to engage in learning. Mobile-first HR tools can also put control in the hands of employees, allowing them to pick and choose when they would like to learn. Freedom over when and where they can utilize their financial programming gives employees autonomy over their financial education. In a world where flexibility in the workplace is valued as much as a 10% pay raise, digital financial programs will hold more weight with employees.

Another critical aspect of financial education programming is engaging with short-form content. The rise in popularity of short-form content may be stemming from shortened attention spans—Millennials average a 12-second attention span with Gen Zers falling to a shocking 8 seconds. With attention spans decreasing, short-form content works to make learning digestible and achievable. Especially when breaking down financial jargon, bite-sized learning methods help make intimidating subjects feel more manageable to understand.

To truly make learning fun, introducing methods of gamification can increase enthusiasm and enhance learning outcomes. Gamification can incentivize users to continue learning and promote goal-setting skills. When transforming dense financial educational content into easy-to-understand material, gamifying content can achieve higher engagement levels than traditional learning methods.

Best Practices

If you're looking to get started implementing mobile-first education tools as an employee benefit, there are a couple of things to consider first.

How will we roll this out to employees?

For existing employees, making an announcement about adding financial education tools to your employee offerings is a perfect opportunity to reaffirm your commitment to your employees' holistic wellness. Instead of announcing it simply as a new HR tool, frame it as a new opportunity for employees to invest in their long-term success with support from their employer. You can also use some of the engagement tips in the next section to drive a successful kickoff. For new hires, emphasize this benefit upfront in their orientation or onboarding to start making it a habit to use it as a resource throughout the term of their employment.

How do we get employees to engage with this tech?

While many employees are already hungry for a tool like this, there may be some who are less interested. To maximize employee engagement, utilize the gamification features that mobile-first tools allow. For example, you can incentivize usage by instituting leaderboards for the company and offering rewards for those who come in the top three spots for learning the most. Offering competition-style campaigns drives employees to both engage with the tool as well as engage with fellow employees.

Advantages For Your Organization

All in all, developing fun, productive financial education programming is an essential employee benefit. Employees are more likely to stay longer at their current job if their employer offers them financial wellness benefits. Financial wellness training has also been shown to Boost job satisfaction. Optimizing financial wellness programming can result in wins for everyone and allows employees to be better prepared to achieve their financial goals.

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As we have noted in our previous report, environmental, social and governance (ESG) issues have garnered significant attention from a variety of stakeholders, resulting in increased reporting by many companies. While much of the focus regarding ESG reporting in the U.S. has been on public companies, and indeed there is not yet clear consensus on what “ESG” encompasses, ESG risks and opportunities can affect private companies as well, and there are several reasons why a private company might decide to report ESG data or undertake ESG-related initiatives in a manner similar to a public company. This overview explores some of the key factors that late-stage private companies should consider in deciding whether to initiate an organized ESG program (i.e., one that may with development over time evolve into a program similar to those in place at many public companies) and/or start preparation for ESG reporting. In addition, the overview outlines some steps that such a private company can take to begin its ESG journey.

To be clear, for many private companies, ESG considerations—however the particular company defines ESG—inform the core purpose, values and day-to-day operations of the business, often from the venture’s founding stage, and consideration of ESG in that context is of course beyond the scope of this overview. Rather, the goal here is to assist private companies that have been less focused on these subjects as they encounter or consider ESG as their business develops.

Legislation and Regulation

Federal Rulemaking

Currently in the U.S., there are relatively few ESG disclosure requirements; however, under the Biden administration, the Securities and Exchange Commission (SEC) and other agencies have played an active role in proposing rules that would increase the amount of ESG disclosures that companies must provide.

For example, in March 2022, the SEC proposed extensive disclosure rules regarding climate risk (see alert) and in July 2023, the SEC adopted final rules regarding the disclosure of cybersecurity risks (see alert), both important ESG topics. The SEC has also indicated that it intends to propose additional ESG-related disclosure rules regarding human capital management and board diversity. While the SEC’s proposed rules target public companies, including those going public, as discussed below, they may indirectly affect private companies who may be asked or expected to provide similar information to their stakeholders. In addition to the SEC’s proposed regulations, other regulations may have a more direct impact on certain private companies.

Private companies that provide goods or services to the U.S. federal government could be subject to climate risk reporting. In November 2022, the Biden administration proposed the Federal provider Climate Risks and Resilience Rule, which would require businesses with significant federal contracts to disclose climate-related data and to set targets to reduce greenhouse gas (GHG) emissions. As we describe further in our alert, if the rule is adopted, subject companies would also have to provide disclosures that are consistent with the Taskforce on Climate-related Financial Disclosures (TCFD) framework, which could present a substantial burden, particularly for smaller private companies that may have limited resources to track and report such data.

California Climate Legislation

Private companies operating in California could also be subject to proposed climate reporting rules. In January 2023, a California lawmaker introduced the Climate Corporate Data Accountability Act (S.B. 253), which would require all U.S. companies and other business entities doing business in California with annual revenues in excess of $1 billion to publicly report their Scopes 1, 2 and 3 GHG emissions on an annual basis beginning in 2026. If the bill is adopted, it would apply to many large private companies in the U.S., forcing such companies to gather and report greenhouse gas (GHG) emissions data. Another proposed California bill, the Climate-Related Financial Risk Act (S.B. 261), would similarly require all U.S. entities doing business in California with annual revenues exceeding $500 million to prepare an annual report disclosing their climate-related financial risks in line with the recommendations of the TCFD framework and measures adopted to reduce and adapt to those risks. In May 2023, both bills passed the California State Senate. While neither bill has been finally approved, the adoption of either could significantly impact many large private companies.

International Regulations

Private companies with significant business operations in the European Union (EU) may also be subject to extensive ESG reporting under the Corporate Sustainability Reporting Directive (CSRD). The CSRD, which was adopted in November 2022, requires non-EU companies, including private companies, with net turnover (i.e., revenue) generated in the EU exceeding €150 million for two consecutive financial years and either a large EU or EU-listed subsidiary or a branch generating more than €40 million in net turnover in the EU to produce a sustainability report that would cover a range of ESG subjects such as climate change, biodiversity, worker conditions and human rights. The specific reporting standards that would apply to non-EU companies are still being developed and such companies would not have to comply until 2029 (with respect to fiscal year 2028).

The EU has also proposed the Corporate Sustainability Due Diligence Directive (CSDDD), which would require certain large EU companies, non-EU companies with significant business in the EU and certain companies generating 50% of their turnover from “high impact” sectors to adopt policies and procedures to mitigate sustainability risks (e.g., climate change, human rights) in their businesses, including those in their value chain. Companies subject to the CSDDD would be required to conduct due diligence not only on their own practices but also on the practices of their suppliers and others in their value chain to satisfy the directive’s requirements. This may cause in-scope companies to reevaluate business relationships or pressure suppliers that are not directly subject to the CSDDD to put ESG measures in place as a condition for further business. The directive is expected to be adopted in 2024.

Private companies that could be subject to any of these proposed regulations, or impacted indirectly, should take stock of their current ESG programs and disclosures and the feasibility of developing plans and the reporting infrastructure for compliance. Companies that are public benefit corporations or Certified B Corps are subject to their own compliance and periodic reporting requirements, which are also beyond the scope of this overview.

The Role of Stakeholders

Support for ESG by a private company’s key stakeholders may also inform whether it determines to voluntarily report ESG information. A company’s stakeholders, including shareholders, investors, customers, communities, regulators and employees, may not be willing to wait for disclosure mandates and may pressure a private company to take actions sooner. In situations like this, failure to address their need for ESG information may adversely impact a private company.

Employees and Consumers

A private company’s employees may express a preference for strong ESG policies. According to a survey by IBM, 68% of the respondents reported that they were more likely to apply for, and 69% more likely to accept, positions from environmentally sustainable companies. Companies that fail to demonstrate a commitment to environmental sustainability and other ESG initiatives may be disadvantaged in the competition to recruit or retain employees. The same survey revealed that 62% of consumers expressed willingness to change their purchasing behavior to help reduce negative impact on the environment.

Commercial Customer Considerations

Similarly, commercial customers may also seek ESG information or a commitment to certain ESG practices from their private company suppliers and vendors to ensure that they are satisfying legal requirements or meeting their own ESG goals. As noted above, regulatory requirements may force any large companies to report on or manage their ESG risks throughout their value chain. In the case of climate risk, such companies may have set goals to reduce the GHG emissions that are generated from assets that they do not own or control but that are in their value chain (referred to as Scope 3 emissions). In order to get this data, these large companies must seek information regarding the GHG emissions of their vendors and suppliers. As a result, a private company provider may be asked to provide GHG emissions data as a condition for doing business with that customer. Such requests are not just limited to environmental data.

There may be several other ESG issues for which a commercial customer may seek information or action from their suppliers. As an example, customers may ask suppliers to adopt a code of conduct ensuring proper treatment of their employees or provide information regarding their employee demographics. Companies that are unwilling or unable to provide this kind of ESG information or adopt certain ESG-related policies may lose out on business contracts or other opportunities, especially if they lack negotiating leverage.

Investors

Some investors also want their portfolio companies to show a commitment to managing ESG risks and opportunities or may require such information for their own reporting or compliance obligations. Many large institutional investors, like BlackRock, State Street and Vanguard, support board diversity and other ESG initiatives and expect their portfolio companies to disclose how their boards of directors manage ESG risks. This is increasingly the case with investors that invest in private companies.

A private company that aspires to become public should consider how a potential change in its shareholder base, which will likely include more institutional investors post-IPO, may lead to increased scrutiny of or demand for public ESG disclosures. As a public company, it will likely have to engage with its institutional investors on ESG matters on a continual basis. Accordingly, as such a company prepares for an IPO or initial listing, it should assess its ESG risks and opportunities and prepare for related disclosures and shareholder engagement.

Even private companies that do not plan to become public may face requests for ESG information from investors. Driven in part by the demands of their own limited partners, some private equity and venture capital funds may require their portfolio companies to have ESG policies in place and to provide reporting on ESG metrics or progress against ESG goals, even in early-stage rounds. Investors deciding whether to invest in a company may want to understand how that company manages its ESG risks and may favor those companies that demonstrate a strong commitment to ESG, particularly if it is the focus of an investment fund. Investment funds may also seek this information to comply with regulations such as the EU’s Sustainable Finance Disclosure Regulation (SFDR), which is intended to prevent greenwashing by mandating that financial market participants make certain disclosures regarding the sustainable nature of their investment products.

M&A

ESG is increasingly playing a role in merger and acquisition (M&A) transactions, and companies with stronger ESG practices may be relatively more attractive targets for certain acquirors. ESG information captures important nonfinancial risks that may potentially impact a target company’s attractiveness. As part of their due diligence process, acquirors may factor in these risks when negotiating the terms of a deal. A target company’s ESG profile may also affect post-deal integration. The target company’s ESG practices and initiatives could harm or help the acquiror’s own ESG goals and disclosure. For example, the acquisition of a target’s less-diverse employee base could dilute the acquiror’s overall employee diversity, potentially hampering the achievement of pre-acquisition employee diversity goals and metrics. Similarly, a target company with poor human resources practices (e.g., high turnover, low employee engagement) can negatively impact the acquiror’s own ESG disclosure post-acquisition if such issues aren’t addressed.

Accordingly, companies with strong ESG practices may be attractive to a broader range of potential acquirors and as a result may be able to command higher premiums in M&A transactions. Target companies can expect to receive more requests for ESG information, including with respect to GHG emissions, waste management, labor practices, employment policies and risk management practices, during the due diligence process so that acquirors can assess any ESG risks. A private company that is looking for a merger partner should consider how having a strong ESG program in place could enhance its M&A prospects and take steps to Boost its ESG disclosure.

Establishing an ESG Reporting Program

Given the commercial considerations, stakeholder demands and potential regulatory requirements discussed above, a private company that determines to begin or enhance its ESG reporting can take the steps outlined below.

Determine What ESG Information Is Most Important for Your Company

Disclosure subjects may be shaped by the aforementioned stakeholder demands, commercial considerations and regulations. There are also various voluntary frameworks and standards that companies can consult to help guide their ESG reporting. They include TCFD, the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), the International Sustainability Standards Boards (ISSB) and the United Nations Sustainable Development Goals (UNSDG). They provide qualitative subjects and quantitative metrics that are important to stakeholders and can provide a frame of reference for the ESG information that stakeholders will value.

In addition to looking at standards and frameworks, a company may also look to the disclosures provided by peer companies in their SEC filings or other public disclosures, such as corporate webpages or standalone corporate sustainability/ESG reports, to see the level and type of information that similar companies provide. Public peer companies and competitors are more likely to publicly disclose information than private companies. Armed with these various inputs, a company can conduct a “materiality” assessment to formulate its ESG reporting plan, which should be aligned with its long-term strategy.

Develop an Appropriate Infrastructure for Reporting

Once a company determines the information on which it will report, it should examine the processes, procedures and policies that it will need to gather, analyze, vet, assure and report on such data. As we more fully described in our guide, companies reporting ESG information, particularly where it may be provided in public reporting disclosure or in connection with fundraising activities, should have disclosure controls and procedures in place that are similar to those established for financial reporting. While a private company may not face the same liabilities under federal securities laws as a public company, it may still be subject to liability under federal and state anti-fraud statutes, and it may be required to provide public disclosure in the future. Accordingly, a private company may need to invest time and resources to ensure that adequate disclosure controls are in place sufficient for its particular circumstances and may have to evolve those controls as its circumstances change. This may involve looking at the company’s current disclosures and related systems to gather and verify data and providing for enhancements to capture new or more granular data to meet its ESG disclosure objectives.

For example, a private company may have historically captured information regarding employee turnover on electronic spreadsheets maintained by its human resources department. When the company decides to include this information as part of its ESG reporting program, it may adopt a written policy regarding the procedures for the human resources department to provide this data to the person or persons responsible for ESG reporting. That policy may also provide for the review and verification of the data by another individual or department and certification by a senior officer before the information is shared along with other ESG data in a draft report to be reviewed by the senior management and/or the board prior to public disclosure. In addition, the policy may subject the spreadsheet to technical access and modification controls and tracking. Over time, the company may migrate its employee turnover reporting process to a central, electronic reporting system that also includes its financial data. In that way, manual processes for gathering and entering ESG data may become more automated as the company matures and develops additional resources.

Implementing an ESG program will involve the participation of appropriate personnel and the direction and guidance of senior management. Toward that end, a company may form a cross-functional management committee of senior executives consisting of members of its finance, legal, audit, investor relations and risk management teams. Alternatively, companies with fewer resources or narrower initial ESG goals may assign responsibility for ESG reporting to an individual or small team of employees. More mature and better-resourced private companies with full-fledged, broad scope ESG programs may decide to hire or appoint a chief sustainability officer to oversee their ESG efforts. External consultants or advisors may guide and supplement management’s efforts. Regardless of the management oversight structure, the company’s board of directors, or one of its committees, should provide ultimate oversight of its ESG program, including by ensuring that it aligns with the company’s long-term strategy.

Deciding Where and How to Disclose

Because ESG disclosure is largely voluntary, most companies will have flexibility in deciding where and how to report their ESG information. Larger companies generally choose to provide their most extensive ESG disclosure in corporate sustainability reports (CSRs) or on their corporate websites, reserving more limited disclosure for their SEC filings. For example, as we disclosed in our report, among the Bloomberg Law – Fenwick Silicon Valley 150 (SV 150), the largest public technology and life sciences companies in Silicon Valley measured by revenue, 62% disclosed ESG information in CSRs in 2022. However, a smaller private company may lack the resources to produce its own CSR (in 2022, only 36% of the bottom 50 companies in the SV 150 published a CSR). Initially, such companies should consider voluntarily reporting their most important ESG information on a corporate website or may choose to publish a report just on a particular ESG topic, such as diversity or climate risk, instead of publishing a comprehensive CSR that addresses multiple ESG topics.

As a private company matures and develops greater capacity for data gathering and reporting, it may increase the ESG information that it provides and the number of platforms on which it reports, eventually developing more comprehensive and cohesive reporting. A company can provide more high-level public disclosure on its website, graduating over time to more detailed disclosures in a CSR. For example, for environmental topics, initially such disclosure may include qualitative descriptions of sustainability initiatives (e.g., recycling programs, environmental certifications) on a webpage. As the company tracks and produces more quantitative data, often dictated by a framework or standard (e.g., GHG emissions or energy usage), it may include such information in a standalone CSR that is available on its website. However, a company’s ESG reporting practices may be accelerated if certain regulations discussed above are adopted or if the company seeks to become public.

Many stakeholders rely on publicly disclosed information when assessing a company’s ESG profile. However, in some cases, the ESG information may be requested privately, such as in a commercial context or as part of a third-party rating or assessment process. Some investors and other stakeholders may rely on ESG ratings, which can be based on a company’s responses to the rater’s questionnaire. Whether the information is disclosed publicly or privately, the company should ensure that the information is accurate and consistent across disclosure platforms.

Conclusion

Although ESG is still rapidly evolving and disclosure may be costly and challenging to produce, it still may have support from a broad swath of stakeholders of many privately held companies. Development of an ESG program can be broken up into more readily addressable pieces and be expanded and deepened over time. Many believe that ESG information provides an appropriate means for analyzing a company’s critical nonfinancial risks and opportunities. As a result, despite some recent criticism of ESG, the demand for more ESG information remains strong. Stakeholder demands, commercial considerations and investor preference offer compelling reasons for private companies to weigh the costs and benefits of establishing an ESG reporting program sooner rather than later.

DALLAS, Aug. 22, 2023 /PRNewswire/ -- Leon Capital Group, a diversified holding company for a privately-owned group of entities based in Dallas, Texas, is pleased to announce the appointment of Doug Puckett as its Chief Administrative Officer. In this role, Doug will bring his extensive expertise in private equity, hedge funds, and family office advisory to further enhance the firm's strategic operations and client services. Doug will be responsible for helping grow various current and planned platforms of the firm including real estate and credit focused investment vehicles, and direct investments in diverse industries ranging from financial services to healthcare.

Prior to joining Leon Capital Group, Doug was the National Leader of the Private Equity Practice at Deloitte Tax. With a remarkable track record, Doug successfully collaborated with Deloitte's Private Equity, Hedge Fund, and Private Wealth national and global teams, consistently bringing innovative practices to investment management and high net worth clients across the United States and Europe. His strategic insights and commitment to excellence have made him a recognized leader in the industry.

Before his tenure at Deloitte, Doug served as global head of tax and deputy CFO at TPG Capital (TPG was previously known as Texas Pacific Group). In addition, earlier in his career he worked with the Bass Family in Fort Worth where he supported and advised their chief investment officer, the head of their real estate platform, the CFO, and the leader of their hedge fund/trading desk platform.

"Doug's work with family offices and renowned investors like the Bass Family and TPG, that had direct operational control over a broad swath of investments and deal structure, makes him invaluable to us," said Fernando De Leon, Founder and CEO of Leon Capital Group. "His view of tax and capital structure over the last 30 years aligns perfectly with my focus on compounding capital."

"I am honored to join Leon Capital Group and contribute to its ongoing success," said Doug. "I look forward to collaborating with the talented team at Leon Capital Group and further advancing the firm's strategic goals."

Doug holds a Master of Professional Accounting (MPA) degree and a Bachelor of Business Administration – Accounting degree from the University of Texas at Arlington. He is a Certified Public Accountant (CPA) and a Certified Financial Planner (CFP®). Doug is also an accomplished author, having authored or co-authored several Thomson-Reuters Tax and Accounting publications, including Guide to Mergers and Acquisitions, Guide to Practical Estate Planning, Guide to Buying and Selling Small Businesses, Practitioners 990 Deskbook, and Practitioners Tax Action Bulletins.

About Leon Capital Group:
Leon Capital Group (Leon) is a holding company that operates assets in the financial services, healthcare, real estate, and technology industries. Leon is not a private equity fund; it operates as a family holding company overseeing $10 billion of private capital. It takes the lead in conceiving, developing, owning, and operating businesses. Leon started as a modest privately-owned real estate development company in Texas, and has since evolved into a diverse holding company, capable of operating successfully across multiple geographies and industries. Learn more about Leon Capital Group at www.LeonCapitalGroup.com.

Media Contact:
Ann Obeney
Head of Communications
Leon Capital Group
aobeney@leoncapitalgroup.com

Note: This press release is for informational purposes only and does not constitute an offer or solicitation to buy or sell any securities or investment products. Any statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. genuine results may materially differ from those anticipated in any forward-looking statements. Readers are cautioned not to place undue reliance on any forward-looking statements.

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SOURCE Leon Capital Group