Services, Fees and Compensation

El Menudo Cuenta LLC (“EMC” or “the Firm”) is an Investment Adviser, registered with the SEC under the Investment Advisers Act of 1940, intending to provide internet adviser services relying on rule 203(A)-2(e) under the Advisers Act. Investment adviser services will be provided to EMC’s clients through an EMC sponsored Wrap Fee Program.

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Our Form ADV Part 2A (Brochure) describes the Wrap Fee Program to be offered by EMC that bundles or “wraps” investment advisory services, brokerage, custody, clearing and settlement, as well as other administrative services together and charges a single inclusive advisory fee.

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The Firm is a Delaware limited liability company founded in 2023. The Firm’s principal owner is Xavier Serbia. The Firm’s headquarters is located in Miami, Florida.  We are organized as a limited liability company under the laws of the State of Delaware.

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Revised: June 2024

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The following paragraphs describe our services and fees. Please refer to the description of each investment advisory service listed below for information on how we tailor our advisory services to your needs. As used in this description, the words "we", "our" and "us" refer to EMC and the words "you", "your" and "Client" refer to you as either a Client or prospective client of our Firm. Also, you may see the term Associated Person throughout this description. As used in this description, our Associated Persons are our Firm's officers, employees, and all individuals providing investment advice on behalf of our Firm.

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1. Services: Investment opportunities to be provided by EMC are designed to encourage automated investments in non-retirement and retirement products. Note that EMC does not intend to provide overall financial planning, tax, accounting or legal advice.  EMC’s investment advisory services are provided exclusively through EMC’s mobile application and supporting website (together the “EMC App”).

EMC intends to offer investment accounts (“EMC Accounts”) reflecting a range of investment strategies, including Growth, Income, Cash Yield, Balanced, Christian Values, International Equities, and US Equities Portfolios.  Each of these strategies will be implemented through the use of model portfolios.  EMC’s model portfolios are designed to reflect target asset allocations across various asset classes, for example, stocks (equities) and bonds (fixed income).  The EMC model portfolios will also be designed to reflect investment outlooks and risk tolerances ranging from ‘conservative’ to ‘aggressive’.  EMC will design the portfolios and manage their target asset allocations using strategies based on modern portfolio theory.  EMC uses a proprietary computer software-based algorithm to match each client’s EMC Account(s) to the portfolio best suited to the client’s investment goals based on an investor profile (as described below) that each client creates and maintains through the EMC App.

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EMC’s software-based algorithm determines a client’s portfolio by selecting the best suited portfolio based on a client’s investor profile questionnaire, which incorporates a client’s financial situation, investment horizon, and risk profile, among other factors.  The EMC App will match the client’s investment profile with the strategy.  As a result, EMC recommends that clients ensure that their financial condition, risk tolerance and investment goals are kept current in their investor profile on the EMC App.

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As clients make deposits into, or withdrawals from, their EMC Accounts, the corresponding transactions executed by EMC are designed to rebalance the account toward the target allocation of the relevant portfolio.  Upon a client’s request to withdraw cash from an EMC Account, sales of securities held in such client’s portfolio are initiated in a manner designed to maintain the target allocation for the relevant portfolio.  EMC will initiate a rebalancing if an EMC Account’s holdings deviate significantly (e.g. by 5% or more) from the applicable portfolio’s target allocation.  In this way, EMC will seek to maintain the client’s target asset allocation through market fluctuations, withdrawals, deposits, and other events that could cause deviations, while seeking to minimize the transaction costs of frequent portfolio rebalancing.

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The rebalancing and reinvestment processes are automated. As a result, EMC’s investment models will sell over-concentrated securities and use the proceeds to buy under-concentrated securities to better reflect target allocations regardless of market or other dynamics. The risks and limitations of the automated process could result in the continued purchase of underperforming securities and the sale of better performing securities to achieve the targeted allocation. All transaction specific costs are covered under the subscription fee paid by the client, and the client incurs no additional transactional costs or fees. In some market conditions, this creates capital gains and potentially other tax liabilities.

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EMC intends to place all brokerage orders through independent third party broker(s) (“Independent Brokers”), to buy, rebalance, and sell as necessary to maintain the asset allocation of the portfolio that EMC has selected for each EMC Account. By bundling brokerage services through Independent Brokers with advisory services through EMC, EMC believes that it simplifies the investment process for its clients.

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The Independent Brokers will provide confirmations and statements to EMC clients through the EMC App. The Independent Brokers will also act as custodian to hold clients’ funds and EMC Account securities in safekeeping and as clearing broker to execute, clear, and settle securities trades on an omnibus basis.

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Since the Independent Broker(s) serves as broker for all EMC Accounts, clients may benefit from savings on execution costs that would not be available without volume trading discounts or batched orders. Additionally, there are instances where aggregating orders will be the only means of creating an order that is in whole shares. Conflicts of interest may exist with respect to aggregating orders of various clients. To mitigate any such conflicts of interest, all clients participating in the aggregated order receive an average share price with all other transaction costs shared on a pro-rata basis. EMC will require that the Independent Broker(s) aggregate transactions consistent with their duty to seek best execution and consistent with the terms of the EMC Wrap Program agreements. Under no circumstances will an advisory client be favored over any other advisory client.

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EMC does not engage in activities involving “soft dollars.”

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This information provided herein regarding the investment advisory services provided by EMC is qualified in its entirety by reference to the EMC Account documentation agreed to by each Client upon opening an EMC Account.

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1. 1. Costs: “Wrap arrangements,” “wrap fee programs,” and/or “wrap fee accounts” involve individually managed accounts for individual Clients. The wrap fee accounts are offered as part of a larger program by a “sponsor,” usually a brokerage, banking or investment advisory firm, and managed by one or more investment advisers. EMC will sponsor the EMC Wrap Fee Program through agreements with independent brokerage firm(s) where EMC acts as the sponsor and adviser to the wrap fee program.

EMC’s clients will pay a monthly subscription fee (“Subscription Fee”) to EMC for access to the EMC investment platform. The Subscription Fee covers the costs of trade execution, clearance, custody, account reporting, and, if applicable, the services of the IRA Custodian and Administrator. Subscription Fees are not negotiable. The amount of the Subscription Fee depends on the Subscription tier in which a client is enrolled/subscribed, as further described below.

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EMC intends to offer three tiers of Subscription Fees:

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• EMC Basic, a $3 monthly Subscription Fee tier, includes a single EMC Investment or Retirement Account, direct deposit functionality, and access to basic investment educational tools

• EMC Premium, a $5 monthly Subscription Fee tier, includes up to three (3) EMC Investment and/or Retirement Accounts, direct deposit functionality, trust accounts, access to more sophisticated educational tools

• EMC Family, an $8 monthly Subscription Fee tier, includes unlimited EMC Investment and Retirement Accounts, direct deposit functionality, trust accounts, unlimited access to EMC educational tools

EMC will reserve the right to change its Subscription Fee tiers from time to time, and, as a result, some clients are subject to legacy fee schedules which may be higher or lower than the current fee schedules described above. Current clients should refer to the Program Agreement entered into with EMC at the time of account opening or client-initiated subscription fee tier change.

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Clients should be aware that EMC is designed for individuals who make frequent recurring investments. The Fee Schedule is not appropriate for individuals looking to make few or infrequent small-dollar investments.

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The Subscription Fee is charged monthly and paid by a recurring monthly ACH debit and electronic funds transfer that deducts money from each client’s linked checking account or the client’s investment account at the broker-dealer custodian.

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Pursuant to the EMC Account documentation, to the extent clients do not have sufficient funds in their funding source to cover the Subscription Fee, or have broken the link to their funding source, EMC reserves the right to sell shares in such client’s EMC Account to pay such Subscription Fee.

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Clients are charged a single monthly wrap fee and all transaction costs are paid by EMC from the proceeds of the Subscription Fee. The costs incurred in delivering services to the Client will be impacted by a number of factors, including the both the cost and frequency of trading in the Client’s account, administrative and custody fees charged by the independent brokers selected by EMC to participate in the EMC Wrap Fee Program, and other costs inherent in managing the EMC Account(s).  The costs of advisory and other services that are reflected in the Subscription Fee may exceed the costs of similar services purchased separately.

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1. Additional Fees and Costs: As part of our investment advisory services to you, the EMC model investment portfolios may invest indicate that your EMC Account(s) should invest in mutual funds and exchange traded funds (ETFs). The Subscription Fee you pay to EMC for investment advisory services are separate and distinct from the fees and expenses charged by mutual funds or ETFs (described in each fund's prospectus) to their shareholders. These fees will generally include a management fee and other fund expenses that cover the underlying operating expenses, management fees, marketing costs, custodial fees and other fees of the ETF or mutual fund.  These fees are entirely separate and distinct from the Subscription Fees paid to EMC for the EMC Wrap Fee Program.  To fully understand the total cost you will incur, you should review all the fees charged by mutual funds, ETFs, our Firm, and others.

2. Referral Compensation: EMC may enter into arrangements with affiliate partners who, for compensation, will refer prospective clients to EMC. Each such arrangement will be governed by a written agreement between EMC and the affiliate partner and will be disclosed to the prospective client, as required by law.

Additionally, EMC may pay referral fees to existing clients in connection with client referrals of new clients (the “EMC Referral Program”). The Firm intends to provide additional information on the EMC Referral Program, through its application website.  EMC does not compensate salespersons or enter into professional solicitation service agreements.

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The amount of compensation paid to affiliate partners or clients under the EMC Referral Program may be more than if the client paid separately for investment adviser, brokerage, and other services from other investment advisers or if the client participated in another investment advisers wrap fee program.  Therefore, that referral person may have a financial incentive to recommend the EMC Wrap Fee Program over other programs or services that may be available to you.