Concentric Innovation

ITEM 1 – COVER PAGE

March 31, 2025

Concentric Innovation, LLC

1333 N. California Blvd.

Suite 680

Walnut Creek, California 94596

888-265-2257

www.concentricinnovation.com

This brochure provides information about the qualifications and business practices of Advisor Partners II, LLC (“AP II”, “Advisor Partners” or “the firm”). If you have any questions about the contents of this Brochure, please contact us at info@advisorpartners.com or compliance@pathstone.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission (“SEC”) or by any state securities authority.

AP II is an SEC-registered investment adviser. Registration of an investment adviser does not imply any level of skill or training.

Additional information about AP II is also available on the SEC’s website at www.adviserinfo.sec.gov.

ITEM 2 – MATERIAL CHANGES

The Brochure contains important information about AP II’s business practices as well as a description of potential risks and conflicts of interest relating to the firm’s advisory business and investment activities that could affect a client’s account with us. This Item of the Brochure is a summary of certain material updates to this Brochure since Advisor Partner’s last annual amendment of Form ADV, dated March 28, 2024:

With respect to AP II’s affiliate, Pathstone Family Office, LLC (“Pathstone”), there have been some recent changes to Pathstone’s Legal and Compliance Team. Charles P. Keates, the former interim General Counsel and Chief Compliance Officer, has now been named Pathstone’s General Counsel. Additionally, Bliss Bernal, who served as a Senior Compliance Officer at Pathstone, has now been named Pathstone’s Chief Compliance Officer. Both the General Counsel and Chief Compliance Officer are members of the Pathstone Compliance Group (“PCG”), the compliance team that coordinates all compliance activities related to Pathstone and its affiliates.
Additionally, Douglas McCall, who serves as a Senior Compliance Officer of Pathstone, has now been named Chief Compliance Officer of AP II. Doug also serves as a member of PCG and coordinates AP II compliance activities with PCG and Pathstone’s other affiliates.

We encourage clients and prospective clients to review this Brochure carefully and to reach out to request further details on how we service our clients and/or any other topic described herein.

ITEM 3 – TABLE OF CONTENTS

Item 1 – Cover Page (page 1)

Item 2 – Material Changes (page 2)

Item 3 – Table of Contents (page 3)

Item 4 – Advisory Business (page 4)

Item 5 – Fees and Compensation (page 6)

Item 6 – Performance Based Fees and Side-by-Side Management (page 7)

Item 7 – Types of Clients (page 7)

Item 8 – Methods of Analysis, Investment Strategies, Risk of Loss (page 7)

Item 9 – Disciplinary Information (page 11)

Item 10 – Other Financial Industry Activities and Affiliations (page 11)

Item 11 – Code of Ethics, Participation or Interest in Client Transactions and Personal Trading (page 12)

Item 12 – Brokerage Practices (page 12)

Item 13 – Review of Accounts (page 15)

Item 14 – Client Referrals and Other Compensation (page 15)

Item 15 – Custody (page 15)

Item 16 – Investment Discretion (page 15)

Item 17 – Voting Client Securities (page 16)

Item 18 – Financial Information (page 16)

ITEM 4 – ADVISORY BUSINESS

1. General Description of the Company

Advisor Partners II, LLC (“AP II”, “Advisor Partners” or “the firm”) (CRD# 321633) succeeded to the advisory business of its predecessor Advisor Partners, LLC (CRD#114536) in June 2022 and does business under the name of Advisor Partners. The predecessor’s business was founded in 2001. The advisory services and management of AP II remain the same and AP II continues the advisory business of the prior adviser in all respects.

AP II is an affiliate of Pathstone Family Office, LLC (“Pathstone”). Pathstone is an integrated wealth management organization serving ultra-high-net-worth (“UHNW”) families, single family offices, endowments, foundations, and other clients. Pathstone provides a broad range of investment advisory and professional services to its clients. Pathstone is privately owned with partner participation through equity ownership being an important part of the firm’s culture and character and a significant driver of firm growth. Additionally, the firm’s equity ownership includes investment vehicles controlled by Kelso & Company (“Kelso”) and Lovell Minnick Partners, LLC (“LMP”), and certain Pathstone clients, in each case through intermediate subsidiaries. Please see Item 10 herein for additional information regarding ownership.

AP II provides discretionary sub-advisory services through two distinct investment programs: Separately Managed Accounts (“SMA”) and Unified Managed Accounts (“UMA”). AP II primarily provides sub-advisory services for the benefit of other registered investment advisers (“RIA”) and their underlying clients (“Underlying RIA Client” or “Client”) and other financial institutions. In certain circumstances, AP II manages accounts for individuals, family entities, or other clients directly. AP II also provides model portfolio construction services through its Model Portfolio Management (“MPM”) program.

It is important to note that AP II has a separate service agreement with Pathstone to cover certain services for its benefit such as shared compliance, financial reporting, human resources, and information technology resources, in part to provide better economies of scale and gain other efficiencies.

2. Summary of Advisor Partners’ Services

AP II builds customized portfolios for its clients through SMAs and UMAs. These services can be any combination of the following, including tax loss harvesting overlays, Environmental, Social, and Governance (ESG) overlays, factor tilts, implementation of client-driven asset allocations and custom index exposures and additional portfolio constraints. For the equity strategy, AP II invests in exchange-traded equity securities, exchange-traded funds (“ETFs”), mutual funds, and American Depository Receipts (“ADRs”). AP II may also invest in other types of securities including, but not limited to, fixed income and fixed income ETFs, foreign securities, multi-currency/foreign exchange, ordinaries and real estate investment trusts (“REITs”). Please see Item 8 “Methods of Analysis, Investment Strategies and Risk of Loss” of this brochure for further information about the investments and strategies employed by AP II.

Depending on the type of product selected, AP II generally tailors its advisory services to the individual needs of the RIA. There are different types of products and investment structures AP II can implement for the RIA which can be offered to their Underlying RIA Clients. For example, SMAs are generally highly customized based upon individual investment goals and objectives which are mutually agreed upon by AP II, the RIA, and the Underlying RIA Client. The Underlying RIA Client can impose reasonable restrictions on investing in certain securities or types of securities subject to the limitations further detailed in the “Investment Discretion” Item 16.

Separately Managed Accounts (“SMA”)

AP II provides discretionary investment solutions and management in the form of individually manages accounts within its SMA program. The SMA program is designed for a single strategy. AP II constructs customized equity and fixed income portfolios for Underlying RIA Clients. As part of managing the SMA, AP II will apply an overlay strategy, such as a tax-loss harvesting, ESG, and/or other factor screens as selected by the client or determined by AP II to be consistent with the client’s investment objectives. Clients typically access AP II’s SMA services through an RIA where the RIA would select AP II as a sub-adviser; or, clients may enter into an investment management agreement directly with AP II. Each equity and fixed income portfolio are tailored to the client’s financial circumstances and preferences.

In instances where AP II serves as a discretionary sub-adviser or as a portfolio manager in a wrap fee program, AP II’s discretionary relationship is fully disclosed to the client. When AP II acts as a portfolio manager for a wrap fee program, AP II receives a portion of the wrap fee for its services.

Unified Managed Accounts (“UMA”): Overlay Manager and Active Manager Allocation (“AMA”)

As an extension of its SMA business, AP II manages an UMA program, whereby AP II expands its discretionary investment solutions to include multi types of strategy within a portfolio. In this program, clients can hold diverse set of investments in multiple strategies in a single account and objectives can be managed across these assets. There are two ways AP II implements its UMA strategy:

Overlay Manager

As an Overlay Manager for an UMA, AP II is responsible for applying an overlay on a portfolio such as a tax-loss harvesting overlay, Environmental, Social and Governance (“ESG”) overlay, and/or other factor screens as selected by the RIA or determined by AP II to be consistent with the Underlying RIA Client’s investment objectives. The RIA will provide the strategy and objectives for a given portfolio, and the AP II manages the implementation, trading, reconciliation, and reporting.

Active Manager Allocation (“AMA”)

AMA is a further enhancement of AP II’s Overlay Manager UMA product. In AMA, the RIA stipulates the targeted asset allocation within the AP II managed portfolio. The asset allocation may include allocations to third-party model managers with which the RIA, and not AP II, contracts directly. As stipulated within the contract, these third-party managers share their models with AP II for implementation by AP II within the AMA strategy. The RIA is ultimately responsible for the due diligence of the third-party managers and verification of these models. AP II is only responsible for implementing the models on behalf of the RIAs. The use of these models results in additional fees that are paid to the third-party model managers which are incremental to the fees specified by the fee schedule AP II has in place with the RIA. While AP II may assist in the calculation and collection of third-party model manager fees, in addition to its own contract-stipulated fees, the RIA is ultimately responsible for paying fees to third-party managers. Please see Item 5 “Fees and Compensation” section named “Third-Party Model Managers’ Fees” for additional information.

Model Portfolio Management (“MPM”)

AP II’s MPM services typically involve the construction of model portfolios used by RIAs. The models are typically benchmarked to an index incorporating screening criteria mandated by the institution. Models primarily consist of individual equity securities but may include other investments.

3. Amount of Assets Under Management

As of December 31, 2024, AP II manages $7,668,325,922 in discretionary assets under management (“RAUM”) as reflected in Form ADV, Part 1A, Item 5F (“Item 5F of Part 1A”).

In addition, AP II advises on $38,717,107 in the Model Portfolio Management program. These assets are not regulatory assets under management; however, AP II does provide investment advisory services and are reported in Form ADV, Part 1A, Item 5C (“Item 5C of Part 1A”).

ITEM 5 – FEES AND COMPENSATION

AP II Fees

AP II receives compensation for their sub-advisory services provided to RIAs for SMAs, UMAs, and MPMs pursuant to the various written agreements. AP’s II fees vary depending on the strategies, along with the amount of customization and complexity, such as additional constraints imposed by the RIA or Client (i.e., ESG or other criteria). There are no set fee schedules for the SMA, UMA, and MPM programs. Typically, the SMA Program Fees start at 35 bps (0.35%); however, the fees for all services are negotiable.

An account accepted for management by AP II that is less than the asset minimum described in Item 7 – “Types of Clients” below may still be subject to the minimum fee. The minimum quarterly fee is generally $750 for each SMA, which may be waived at the sole discretion of AP II.

The specific fee schedule, nature, rate, timing (e.g., quarterly, in advance, or in arrears), method of calculation, and manner of payment in which fees are charged by AP II are established in a client’s written agreement or governed by the sub-advisory agreement with the RIA. Fee calculations can be based on a number of arrangements, including, but not limited to, AUM based on the average market value at each month-end during the preceding quarter, the market value on the last business day of the preceding quarter, or the average daily market value for the quarter. Depending upon the billing arrangements and methodology chosen, AP II fees may be deducted by AP II from the Client’s applicable account, separately invoiced at the Client’s discretion, or other agreed upon method. Fees for MPM services are based on the total aggregate percentage of assets which will be invested based on AP II’s model construction. Fees are set and payable pursuant to the agreement with the model management service provider.

Other RIA Fees

In addition to AP II’s fee for their sub-advisory service, the client will also be subject to an additional RIA fee. This RIA fee is separate from AP II’s and subject to its own separate written agreement. AP II is not privy to the RIA fee.

Third-Party Model Managers’ Fees

As part of the AMA strategy, a client can be charged third-party model manager fees. AP II will assist with both the calculation and collection of third-party model manager fees. The third-party model manager fees are separate and in addition to the sub-advisory fee AP II charges. The RIA is responsible for negotiating the third-party model manager fee and for the accuracy and payment of the model manager fees to third-party managers.

Other Third-Party Expenses

In addition to an Underlying RIA Client paying AP II’s fees, they are responsible for all unaffiliated, third-party expenses incurred directly or indirectly in connection with transactions on behalf of the Clients pursuant to their agreements, which expenses shall include, but are not limited to brokerage commissions, transaction fees, and other related costs and expenses which shall be incurred by the client. Clients may incur certain charges imposed by custodians, brokers and other third parties such as fees charged by managers, custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual Funds and ETFs also charge management, shareholder servicing and/or 12b-1 fees, which are disclosed in each fund’s prospectus. Such charges, fees and commissions are exclusive of and in addition to AP II’s fee and AP II does not receive any portion of these commissions, fees and costs.

A Client, an RIA, or AP II may terminate an advisory agreement for any reason upon effective written notice to either party. Upon termination of an account, prepaid, unearned fees will be promptly refunded and earned, unpaid fees will be due and payable.

Factors that AP II considers in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their compensation (e.g., commissions) are further described in the “Brokerage Practices” Item 12 in this brochure.

ITEM 6 – PERFORMANCE BASED FEES AND SIDE-BY-SIDE MANAGEMENT

AP II does not charge performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client).

ITEM 7 – TYPES OF CLIENTS

AP II’s clients are primarily Registered Investment Advisers or other financial institutions. AP II subadvises accounts for the RIA’s as defined above as Underlying RIA Client. In certain circumstances, AP II manages accounts for individuals, family entities, or other types of clients directly.

Observations on Number Clients and Accounts in Part 1 A Item 5 D&F

For clarification, in our Form ADV Part 1A, (Item 5 D&F), the number of clients and accounts disclosed represents the total number of Underlying RIA clients’ accounts sub-advised by AP II.

AP II generally requires a minimum of $250,000 for each SMA account; however, AP II may waive this requirement at its sole discretion.

ITEM 8 – METHODS OF ANALYSIS, INVESTMENT STRATEGIES, RISK OF LOSS

AP II uses a combination of qualitative and quantitative statistical analysis to build client-specific portfolios. In managing individual accounts, AP II uses a quantitative portfolio construction methodology to build a portfolio that meets the client’s individual objectives and needs. The methods of analysis used by AP II are unique to each client or SMA Program and are summarized below. Further details about AP II’s investment methodology may be obtained upon request.

SMA Program

An SMA is typically comprised of individual equity, ADRs and fixed income securities. Each SMA is closely tailored to the client’s specific financial circumstances and preferences. AP II seeks to control risks, such as volatility and tracking error, through explicit measurement and management techniques. For example, a customized SMA may have custom individual securities weights and include or omit a given security, sector, capitalization or value-growth style. Relevant circumstances and preferences of each Client’s can be considered in creating the account.

AP II manages some SMAs that seek to closely track the performance of a benchmark index. Assigned account benchmarks can be custom designed to address the client’s specific financial circumstances and preferences. In seeking to match the performance of an assigned index, AP II typically does not invest in all constituents of the index but will rather use its judgment to select a subset of index constituents that it believes will closely match the performance of an index. This technique is commonly referred to as “sampling.”

AP II investment personnel also use portfolio optimization software in portfolio construction, provided by an unaffiliated third-party. The software incorporates a multi-factor risk model and makes portfolio transaction recommendations based upon factors inherent in the model and predefined constraints including, but not limited to transaction costs, taxes, tracking error and position size. Common examples of customized investment strategies employed by AP II’s SMA clients are listed below. Due to numerous investment strategies that may be employed within an individual SMA, a complete list of all possible strategies available has not been provided. Additional examples may be obtained upon request.

Example of Customized Investment Strategies

Active Tax Indexing: While not exclusive to all SMAs managed by AP II, most SMAs contain a tax-managed component. AP II seeks to actively manage the taxable gains and losses both at inception and opportunistically thereafter based on a defined tax plan. The plan can include pursuing losses within the account to offset gains from within or outside the client’s portfolio or realizing gains to offset losses outside the portfolio. The first strategy is generally achieved by “loss harvesting,” identifying and selling tax lots with high cost basis. Conversely, a “gain-seeking” approach involves identifying tax lots with unrealized gains that would be most beneficial to realize according to the client’s objectives.

The ongoing tax plan incorporates the client’s preference to maximize tax results, more closely reproduce benchmark performance, or achieve a blend of each. Having an emphasis on maximizing tax outcome could result in selling positions in the client’s portfolio that are important to controlling tracking error. As a result, accounts emphasizing tax outcomes tend to track their benchmarks less closely than accounts that are focused on closely reproducing benchmark performance.

Thematic Beta Mandates: Some SMAs managed by AP II are designed to diversify away from a concentrated equity risk (such as a single stock or industry) or to focus on a specific set of attributes (such as high-quality dividend yielding equities or socially responsible companies, also called “ESG” companies). In these strategies, AP II may attempt to replicate the performance of an index, while at the same time avoiding or favoring particular index constituents, sectors or style factors to achieve a diversified portfolio that reflects the client’s preferences.

Material Risks

Investing in securities involves the risk of loss that a client should be prepared to bear. The following describes certain material risks involved with each significant investment strategy, method of analysis and particular types of securities. The risks listed below are not all inclusive.

Market Risk: Global financial markets and economic conditions have in the past, and will in the future, experience periods of uncertainty and unprecedented volatility and stress resulting from social, political, economic conditions and events as well as natural disasters, epidemics and pandemics, terrorism, military conflicts, cyber-attacks, and social unrest, etc. Such conditions may negatively impact both the business of AP II and the underlying investments of clients. For example, uncertainties regarding the recent instability in the banking system have resulted and may in the future, result in serious economic disruptions across the globe. These conditions can cause severe decreases in core business activities and lead to unavailability, instability, or hindered operation of markets and economic systems, asset price declines, heightened volatility, and extreme and unpredictable governmental measures. Although it is impossible to predict the precise nature and consequences of these conditions, client portfolios could be significantly impacted, and there can be no assurances that these events will not cause a client to suffer a loss of any or all of the value of its investments. In addition, associated disruptions may affect AP II’s ability to maintain normal business operations for an extended period, which could negatively impact the identification, monitoring, operation and disposition of investments.
Equity Risk: The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Fixed Income Risk: Investment in fixed income securities are subject to the risk of the issuer’s or a guarantor’s inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer, the rate of inflation, and general market liquidity (i.e., market risk). In addition, mortgage-backed securities and asset-backed securities may also be subject to call risk and extension risk. For example, the duration of a security backed by home mortgages can either shorten (i.e., call risk) or lengthen (i.e., extension risk).
High Yield Securities: High-yield bonds (commonly known as “junk bonds”), distressed debt instruments, and other debt securities will typically be junior to the obligations of companies to senior creditors, trade creditors, and employees. The lower rating of high-yield debt reflects a greater possibility that adverse changes in the financial condition of the issuer or in general economic, financial, competitive, regulatory, or other conditions may impair the ability of the issuer to make payments of principal and interest. High-yield debt securities have historically experienced greater default rates than investment grade securities. The ability of holders of high-yield debt to influence a company’s affairs will be substantially less than that of senior creditors.
The market for lower grade debt securities may be thinner and less active than for higher grade debt securities, and thus less liquid. This could result in an investor being unable to sell such securities for an extended period of time, if at all.

Small Capitalization Companies: Securities of small capitalization companies and recently organized companies have historically been more volatile in price, and less liquid, than those of larger, more highly capitalized, established companies and therefore may pose greater investment risks. Small capitalization companies may require substantial additional capital or borrowings.  There is often less publicly available information concerning such companies, making them more difficult to value. Investments in companies with limited or no operating histories are more speculative and entail greater risk than investments in companies with an established operating record.
Growth Stock Risk: Securities of growth companies may be more volatile since such companies usually reinvest a high portion of their earnings in their businesses and may lack the dividends of value stocks that can cushion stock prices in a falling market. In addition, earnings disappointments often lead to sharply falling prices because investors buy growth stocks in anticipation of superior earnings growth.
Value Stock Risk: A particular risk of value stock investment is that some holdings may not recover and provide the capital growth anticipated or that a stock judged to be undervalued may be appropriately priced. Further, because the prices of value-oriented securities tend to correlate more closely with economic cycles than growth-oriented securities, they generally are more sensitive to changes in interest rates, corporate earnings, and industrial production. Markets may not favor value-oriented stocks or equities at all, and during those periods, relative performance may suffer.
Default Risk: Cash balances typically are managed by a client’s custodian bank. However, AP II may invest client cash balances in certain situations. An account managed by AP II may hold cash, invest in short-term debt securities or in other money market instruments for defensive purposes or in order to earn a return on available cash balances pending investment or reinvestment or in anticipation of redemptions.
Non-Diversification Risk: AP II may construct client portfolios using a limited number of securities with varying weights depending on the desired investment strategy or solution. These portfolios may be subject to non-diversification risk. The price of any security held in a client account may decrease and AP II may be unable to liquidate its position quickly or at a relatively advantageous price. As a result, losses incurred in any one security could adversely affect a client’s performance to a greater degree than if a client had been invested in a more diversified portfolio.
Portfolio Turnover Risk: AP II’s taxed-managed strategies may involve frequent trading of securities. Depending on the market and other conditions, the investment strategy may experience high portfolio turnover, which may result in higher brokerage commissions and transaction costs, which could reduce client investment returns, and capital gains.
Credit Risk: The values of the debt securities held in the strategy fluctuate with the credit quality of the issuers of those securities. Credit risk relates to the ability of the issuer to make payments of principal and interest when due. U.S. government securities (“USGS”) are obligations of, or guaranteed by, the U.S. government, its agencies or government sponsored enterprises. USGS are subject to market and interest rate risk and may be subject to varying degrees of credit risk. Some USGS are issued or guaranteed by the U.S. Treasury and are supported by the full faith and credit of the U.S. government while others supported by the full faith and credit of the U.S. (but not issued by the U.S. Treasury). These securities have the lowest credit risk. Still other types of USGS are: (1) supported by the ability of the issuer to borrow from the U.S. Treasury; (2) supported only by the credit of the issuing agency, instrumentality or government-sponsored corporation; or (3) supported by the U.S. in some other way. These securities may be subject to greater credit risk. USGS include zero coupon securities, which tend to be subject to greater market risk than interest-paying securities of similar maturities.
Interest Rate Risk: When interest rates change, the value of the strategy’s holdings will be affected. An increase in interest rates tends to reduce the market value of debt securities, while a decline in interest rates tends to increase their value. Securities with longer durations tend to be more sensitive to interest rate changes than securities with shorter durations.
Changes in Debt Ratings: If a rating agency gives a debt security a lower rating, the value of the security may decline because investors may demand a higher rate of return.
Tracking Error Risk: For clients who have selected an indexing strategy, AP II seeks to track the performance of a selected index. AP II may not be successful doing this. The divergence between the performance of an account and its index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.
ETF Risk: Shares of ETFs may trade at prices other than net asset value (“NAV”). ETF shares may be bought and sold in the secondary market at market prices. There may be times when the market price and the NAV vary significantly. AP II may pay more than NAV when it buys shares of an ETF in the secondary market and may receive less than NAV when it sells those shares in the secondary market.
Foreign Investment Risk: Risks associated with foreign investments include the potential of heightened illiquidity, greater price volatility and adverse effects of political, regulatory, tax, currency, economic or other macroeconomic developments.
Model Risk: AP II’s quantitative models may not produce the results intended which may cause an investment strategy to not meet its stated objective. Separately, with its AMA product, some models are constructed and provided by third-party managers. These models may not have the results intended by the third-party manager. AP II is not responsible for the due diligence of the third-party managers nor for the verification of the models provided by third party managers where the third-party manager is contracted by the RIA.
Liquidity Risk: Less liquid securities can increase the volatility of the client portfolio. Positions in such securities entail risks including increased transaction costs and potential difficulty in exiting the position at an advantageous price.
Tax-Management Strategy Risk: The tax-management strategies may alter investment decisions and affect portfolio holdings, when compared to those of non-tax managed strategies. In addition, AP II may have incorrect tax basis information from a client, which could cause the purchase or sale of securities in a way that may not maximize taxable benefits.
Legal, Tax and Regulatory Risks: Legal, tax and regulatory changes or uncertainty could adversely affect the investments made by underlying funds, or separate accounts of underlying managers or the firm’s operations. It is uncertain what impact legal, tax and regulatory changes applicable to the separate accounts or the one or more underlying funds, the markets in which the underlying funds trade and invest, or the counterparties with which they do business will have, or what further changes may be instituted. Any such regulation could have a material adverse impact on the profit potential of the underlying funds (and, as a result, the client).
Cyber Security Risk: As the use of technology has grown, there are ongoing cybersecurity risks that make AP II and its clients susceptible to financial, operational, legal, and reputational risks associated with cybersecurity. To the extent that AP II is subject to a cyber-attack or other unauthorized access is gained to its systems, AP II and its clients may be subject to substantial losses in the form of theft, loss, misuse, improper release, or unauthorized access to confidential or restricted data related to AP II or its clients. Cyber-attacks could also affect AP II’s service providers such as custodians, brokers, pricing services, and other technology vendors which may result in financial losses to AP II’s clients, despite efforts to prevent and mitigate such risks under AP II’s policies. While AP II has implemented and continually enhances procedures and controls designed to reduce the risks associated with cybersecurity, there are inherent limitations in such procedures and controls that could impact their effectiveness. In addition, AP II does not directly control the cybersecurity procedures and controls of its service providers and financial intermediaries, and therefore, there are inherent limitations in the third party’s procedures and controls that could impact their effectiveness.

ITEM 9 – DISCIPLINARY INFORMATION

Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of AP II or the integrity of AP II’s management. AP II has no such reportable legal or disciplinary events.

ITEM 10 – OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS

Factors AP II is related to Pathstone Family Office, LLC (“Pathstone”) (CRD# 151736) as a result of common control and ownership. Pathstone, through Pathstone Intermediate Holdings, LLC, is wholly owned by Pathstone Holdings, LLC. Pathstone is an integrated wealth management organization serving ultra-high-net-worth (“UHNW”) families, single family offices, endowments, foundations, and other clients. Pathstone provides a broad range of investment advisory and professional services to its clients.

AP II provides sub-advisory and Overlay Manager services to Pathstone’s clients through SMAs and UMAs, and these services are detailed in this brochure and are governed by a sub-advisory agreement between Pathstone and AP II.

AP II is affiliated by common control and ownership with the following affiliated companies: Willow Street Trust Company of Wyoming, LLC (“WSTC, LLC”) and Willow Street Group, LLC (“WSG, LLC”) (collectively, “Willow Street”) provide professional solutions for the administration, management, and stewardship of assets. Pathstone is affiliated by common control and ownership with Willow Street. Please note that WSTC, LLC is a trust company and WSG, LLC is a fiduciary services firm and not a trust company. Laurel Trust Company (“LTC”) is a Nevada trust company that provides professional solutions for the administration, management, and stewardship of assets. Pathstone is affiliated by common control and ownership with LTC. Cambrian Capital Management, L.L.C. (CRD# 324643) (“Cambrian”) is a separately registered investment adviser that sponsors anchor investments with highly qualified portfolio managers who are interested in starting their own private equity firms.

AP II, through Pathstone Intermediate Holdings, LLC is wholly owned by Pathstone Holdings, LLC which is owned by investment vehicles controlled by Kelso & Company (“Kelso”) and Lovell Minnick Partners, LLC (“LMP”) and as well as certain Pathstone employees and clients of Pathstone, in each case through intermediate subsidiaries.

Kelso (CRD# 131471) and LMP (CRD#156494) are separately registered investment advisers who sponsor and manage their own privately offered funds. Collectively, they own a controlling interest in Pathstone, through Pathstone Holdings, LLC and indirectly through Pathstone Intermediate Holdings, LLC. Please see AP II’s Form ADV Part 1A, Schedule A Direct Owners & Schedule B Indirect Owners for more details.

ITEM 11 – CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING

Pursuant to SEC Rule 204A-1, AP II, in conjunction with the Pathstone Compliance Group, has adopted a Code of Ethics for all supervised persons of the firm describing its standard of business conduct and fiduciary duty to its clients under the Advisers Act. The Code of Ethics includes provisions relating to the confidentiality of client information, a prohibition on insider trading, the maintenance of a Restricted List in specific securities, requirements with respect to personal trading intended to avoid actual or mitigate potential conflicts with any client’s interests, limitations with respect to gifts and business entertainment, among other requirements. Employees at AP II must comply with and acknowledge the terms of the Code of Ethics annually, or as materially amended.  The Code of Ethics also includes requirements related to confidential treatment of certain information. The Code of Ethics is an exhibit to the firm’s Compliance Manual.

AP II reviews the Code of Ethics and other compliance policies and procedures in its onboarding of new employees and provides annual training on compliance topics to employees. Annually, personnel are required to certify in writing that they have received a copy of and complied with the provisions of the Compliance Manual, including the Code of Ethics and any amendments, and submit other compliance-related certifications. The Pathstone Compliance Group actively monitors compliance with the Compliance Manual and the Code of Ethics and recommends sanctions deemed appropriate for violations.

In addition, the Code of Ethics requires restrictions on the acceptance of significant gifts and the reporting of certain gifts and business entertainment items, and personal securities trading procedures, among other things. All supervised persons at AP II must comply with and acknowledge the terms of the Code of Ethics annually, or as amended.

Nonetheless, because the Code of Ethics in some circumstances would permit employees to invest in the same securities as clients, there is a possibility that employees might benefit from market activity by a client in a security held by an employee. Employee trading in a specific security may occur on the same day AP II trades for a client. The employee will receive a different price from the client which could potentially be better. Employee trading is monitored under the Code of Ethics and is reasonably designed to prevent conflicts of interest between AP II and its clients.

AP II’s clients or prospective clients may request a copy of the firm’s Code of Ethics by contacting Douglas McCall, Chief Compliance Officer of AP II via email at compliance@pathstone.com.

ITEM 12 – BROKERAGE PRACTICES

1. Selection and Ongoing Monitoring of Broker-Dealers
Unless otherwise instructed or directed by a client for which it has discretion, AP II has the authority generally to determine the broker to be used to effect a client’s securities transactions and the commission rates to be paid in connection with a client’s securities transactions. When exercising its discretion to select broker-dealers to execute securities transactions for clients, AP II selects brokers in accordance with its obligation to seek “best execution” as further described below. Through its brokerage discretion, AP II is authorized to place trades in various manners, including through different broker-dealers for most client accounts. The selection of the broker-dealer used for executing transactions is dependent on several factors. AP II has relationships with many custodians. AP II will inform its RIA client which custodians are available; however, the clients make the actual selection. When a client chooses a custodian that is compensated for its custodial services through trading commissions, such as those discussed in Section F. Trade Practices, it is most cost-effective to the client to trade through the custodian’s broker-dealer.

The custodian/trading relationships maintained by AP II offer competitive trading costs, electronic order execution, and competent back-office support, including technological links with AP II’s information systems.

2. Best Execution

AP II seeks to execute trades through a broker or dealer offering the best execution. Best execution does not necessarily mean the lowest broker commission rates. In selecting brokers, AP II considers several relevant factors including, but not limited to, execution capability, responsiveness, and commission rates; research and other services offered by a broker; the size and type of the transaction and capital strength and stability. Unless otherwise agreed to or directed by the client as discussed in Section F. Trade Practices, AP II has discretion to execute trades with such brokers or dealers as it deems appropriate. This could include placing client trades with their broker-custodian (e.g., Schwab, Fidelity, etc.).

AP performs periodic evaluations of our trading practices and the broker/custodians utilized in AP II’s ongoing effort to help ensure that it is fulfilling its best execution obligation.
3. Research and Other Soft Dollar Benefits
AP II does not utilize what are commonly referred to “soft dollar” arrangements to acquire brokerage and research services in carrying out its investment decision-making responsibilities.
4. Directed Brokerage
A client may, in its sole discretion, elect a different broker-dealer to execute securities transactions. Clients may direct AP II to use a specific broker, and some clients have relationships with brokers that predate their relationship with AP II. In these directed brokerage situations, the firm has not negotiated the terms and conditions (including, but not limited to, commission rates) and does not have any responsibility for obtaining best execution. Clients who direct AP II to use a specific broker may pay higher commission rates or receive less favorable execution transactions than non-directing clients. For example, in directed brokerage accounts, clients may pay higher brokerage commissions than the firm has negotiated with broker-dealers. AP II may direct a client account to pay a brokerage commission exceeding that which another broker might charge for effecting the same transaction, in recognition of the value of the execution capabilities.
5. Aggregation of Orders
Where possible and advantageous to clients, AP II will seek to aggregate or block transaction orders in securities that may be appropriate for more than one client or account and allocate the trades, in a fair and equitable manner, across participating accounts. AP II has adopted procedures designed to help ensure that investment opportunities are allocated in a manner whereby no client or account of AP II is improperly favored over any other client or account.
6. Trade Practices
Step-Outs. AP II may determine that exercising a block trade step-out is most advantageous for its clients. This step-out trade occurs when an executed trade is transferred or “stepped out” from the custodian of record to another broker for execution and settlement. In these situations, the block trade is executed with a specific broker, resulting in clients’ accounts being traded away. There could be additional costs associated with step-out trades.

Trade rotations. AP II may also determine to trade accounts on a rotational basis among the various custodians of clients’ accounts. This is to limit market impact and provide fair & equitable treatment of execution, irrespective of where accounts are held. Transactions for all clients utilizing the same custodian will typically be aggregated/blocked together for execution purposes. AP II utilizes a random generator to determine the rotational basis each time.
7. Principal and Cross Transactions
It is the policy of AP II that the firm will not exercise principal or agency cross securities transactions for client accounts. Principal transactions are generally defined as transactions where an adviser, acting as principal for its own account or the account of an affiliated broker-dealer, buys from or sells any security to any advisory client. A principal transaction may also be deemed to have occurred if a security is crossed between an affiliated hedge fund and another client account. An agency cross transaction is defined as a transaction where a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlled by or under common control with the investment adviser, acts as broker for both the advisory client and for another person on the other side of the transaction. Agency cross transactions may arise where an adviser is dually registered as a broker-dealer or has an affiliated broker-dealer.

On occasion, AP II may execute transactions in which a client’s securities are sold to or bought from another client of AP II. Such transactions, when they occur, shall be affected in compliance with Rule 206(3)-2 under the Investment Advisers Act of 1940, as amended. Cross Trades will only be exercised where it is in the best interest of both participating client accounts. The use of cross trades can create conflicts as the client accounts are both advised by AP II. AP II views the cross trades as two distinct transactions for each client (buy/sell). AP II will generally use cross trades when accounts are harvesting tax losses and specific security can be used by another account harvesting a loss with similar criteria investment strategy, guidelines, restrictions and limitations. Examples of details reviewed and assessed to ensure they are appropriate for both clients are the following but are not limited to, issuer, maturity, call, credit rating, and coupon. In all cases, the bonds in the cross trade must be similar but not identical (e.g., different security identifiers such as CUSIP, ISIN, or SEDOL) to prevent a wash sale for tax loss harvesting purposes and the transaction must comply with applicable account restrictions and guidelines. There may be instances of cross trades where each client is not harvesting losses. These are documented and are reviewed in the same manner as a tax loss harvesting trade. All cross trades are subject to our best execution evaluations. Examples of guidelines which need to be met prior to executing a cross trade:

A good faith determination has been made that the trades are beneficial to both parties.
The trades adhere to applicable client contractual restrictions and limitations, investment objectives and guidelines for those client accounts involved in the cross.
The trades adhere to applicable trading and trade allocation policies.
The trades are consistent with applicable federal and securities laws.
Transaction prices reflect fair market value and are based on prices provided by independent third-party services.
The trades are processed through broker-dealers not affiliated with AP II.

AP II will not engage in cross transactions with its ERISA accounts, IRAs, or proprietary accounts sub-advised by the firm.

ITEM 13 – REVIEW OF ACCOUNTS

AP II reviews client account activity, performance and positioning at least monthly. Accounts are reviewed on an ongoing basis for available cash, tax-loss harvesting opportunities (as applicable), and compliance with any client-specific restrictions. AP II’s Investment Committee (“IC”) reviews the integrity of management processes each quarter comparing accounts’ results versus expectations and researching account-specific results in detail. The IC evaluates and recommends potential updates to portfolio management processes to ensure portfolio composition is consistent with each client’s investment guidelines and aligns with target asset allocations. A client account is also reviewed when AP II receives notice from the client or the client’s RIA that a material change has occurred with respect to the client which would impact the client’s portfolio, its investment objective or asset value.

Individual clients of AP II’s SMA Program are provided with quarterly reports electronically via access to a secure website. All reports contain summary statistics including, but not limited to, inception date, current market value, and performance metrics. The portfolio mandate varies by account type. For example, each SMA has a portfolio goal (e.g., broad market, large cap) measured against a specific benchmark. Quarterly reports for individual SMA clients may include charts and/or tables detailing portfolio holdings, sector exposure, portfolio performance measured against a benchmark and net realized gains and losses.

Clients are encouraged to review and compare the statements received from AP II with those received from the client’s custodian.

ITEM 14 – CLIENT REGERRALS AND OTHER COMPENSATION

AP II does not pay or compensate any third party for client referrals.

ITEM 15 – CUSTODY

Pursuant Clients should receive at least quarterly statements from the broker dealer, bank or other qualified custodian that holds and maintains the client’s investment assets. AP II urges its clients to carefully review and compare such official custodial records to the account statements that AP II may provide to its clients. Account statements received directly from AP II may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities.

ITEM 16 – INVESTMENT DISCRETION

Within the SMA and UMA Programs, unless otherwise instructed or directed by a client, AP II has the discretionary authority generally to determine the securities to be purchased and sold for the account of a client (subject to restrictions set forth in the applicable advisory agreement and any written investment guidelines) and the amount of securities to be purchased or sold for the client accounts of a client, without client consultation or consent.

The RIA, providing written notification or agreement, may specify or restrict the types of securities, or individual securities, it does or does not want held in an account. AP II will take reasonable measures to comply with such restrictions. However, AP II, at its sole discretion, may decline to open or maintain a client account if restrictions placed on the account by the Underlying RIA Client cause the account’s characteristics to materially differ from other accounts invested in a similar investment strategy or if AP II does not have sufficient expertise or capabilities to manage such an account. Investment guidelines and restrictions must be provided to and acknowledged by AP II in writing.

Within the MPM program, AP II constructs and updates models that are utilized by other RIAs. AP II does not implement or execute these models for the RIA. AP II also does not accept investment discretion in the model creation.

ITEM 17 – VOTING CLIENT SERVICES

1. Proxy Voting

As a fiduciary, AP II owes its clients duties of care and loyalty in proxy voting. For clients who direct AP II to vote proxies on their behalf, AP II will monitor corporate events and vote these proxies as needed. AP II will cast proxy votes in a manner consistent with the best interests of its client and AP II will not seek to place its interests ahead of its clients.

AP II has retained Broadridge Investor Communication Solutions, Inc., (“Broadridge”), an independent third party, as proxy adviser and voting agent to assist with monitoring, researching, making voting recommendations, and voting proxies. Broadridge provides AP II’s Investments team with analysis and recommendations on voting proxies, according to a set of pre-determined policy guidelines. AP II retains the right to vote on any agenda item in a ballot in a different manner if it does not believe the Broadridge recommendation is in the best interest of its clients. Once ballots have been voted, Broadridge provides AP II with proxy voting records on an aggregated basis for AP II’s clients.

The AP II Investments team will monitor and resolve possible material conflicts of interest, if any, between AP II and those of its clients with respect to proxy voting. Since AP II’s voting guidelines are predetermined by AP II’s Investments team using recommendations from Broadridge, possible conflicts of interest should, in most instances, be adequately addressed.

Clients may obtain a copy of AP II’s and/or Broadridge’s complete proxy voting policies and procedures and information about how AP II voted any proxies on behalf of their account(s) upon request. Clients who authorize AP II to vote proxies on their behalf may not generally direct the vote in a particular solicitation, except at AP II’s sole discretion.

For clients who have not authorized AP II to vote proxies, clients will receive proxy materials directly from their custodian or transfer agent. Clients may contact AP II with questions about specific proxy solicitations at the address and telephone number on the front page of this brochure.

2. Class Action Lawsuits

From time to time, securities held in client accounts may be the subject of class action lawsuits. AP II has no obligation and does not to determine if securities held by the client are subject to a pending or resolved class action lawsuit. AP II also has no duty to and does not evaluate a client’s eligibility or to submit a claim to participate in the proceeds of a securities class action settlement or verdict. Furthermore, AP II has no obligation or responsibility to initiate litigation to recover damages on behalf of clients who may have been injured as a result of actions, misconduct or negligence by corporate management of issuers whose securities are held by clients. In the event AP II receives written or electronic notice of a class action lawsuit, settlement or verdict affecting securities owned by a client, it will forward, to the extent practicable, all notices, proof of claim forms and other materials to the client (or client representative), unless alternative mutually agreed to written arrangements have been Made.

ITEM 18 – FINANCIAL INFORMATION

AP II has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients and has not been the subject of a bankruptcy proceeding.