Last updated: November 9, 2020
These Terms add to, and don’t replace, any other agreement that applies to your relationship with Digit. For example, you might use other Digit features (e.g., savings, bill payment) that have their own terms. Those agreements still apply. IF YOU DO NOT AGREE TO ALL OF THESE TERMS, YOU MAY NOT USE OR ACCESS THE RETIREMENT AND INVESTMENT SERVICES.
THESE TERMS INCLUDE, AMONG OTHER THINGS, A BINDING ARBITRATION PROVISION CONTAINING A CLASS ACTION WAIVER.
1. Investment advisor relationship
You’re entering into a discretionary investment advisory relationship with us. We talk more about that below. You acknowledge receipt of our Form ADV Part 2A, which include important information about Digit Advisors and the Services, including risks. Digit Advisors is registered with the Securities and Exchange Commission (SEC) as an investment adviser, but that doesn’t imply any qualification or expertise.
We do not charge any additional fee for the Services. They’re included as part of the subscription fee paid to Digit.
3. Description of our services
(a) The Website is designed to provide an automated investment service through the internet. We offer two main and opt-in services: a Retirement feature and an Investing feature.
(b) The Retirement feature is designed to, well, help you put away money for retirement. We open a tax-advantaged (meaning you may get tax benefits) Individual Retirement Account (or “IRA”) on your behalf. You tell us your age, and we use that to estimate how long it will be before you retire and choose your investment portfolio. We allocate funds across diversified asset classes in line with your expected time horizon. There may be tax benefits to investing this money and not withdrawing it until you retire. There are also possible tax penalties for taking your money out of your Retirement account early. Consult with your tax professional if you have any questions about the tax considerations associated with IRAs.
(c) The Investing feature opens a more liquid but non-tax-advantaged brokerage account. We determine your investment portfolio by assessing your risk tolerance to select investment objectives. We allocate funds across diversified asset classes in line with your risk tolerance. You can withdraw this money at any time without penalty. You only pay taxes on your gains (e.g., dividends, gains on your investments), but you do not get the tax advantages that are possible with Retirement accounts.
(d) The Services are not legal or tax advice or comprehensive financial planning. There are factors we do not consider, like your financial condition, if you have any other retirement or investing accounts, or any other data you have not entered into Digit (e.g., individual goals, loans). These can be important factors, and you should think about your situation and make sure our offering is right for you. We don’t allow you to select specific mutual funds and ETFs because each mutual fund, ETF and asset class is considered part of an overall investment strategy.
(e) You authorize us to instruct the broker-dealer (DriveWealth) to move money from your checking account into brokerage account/s in your name (together, the “Account”). We tell DriveWealth to transfer funds from your Account to execute and settle securities transactions. We will only tell DriveWealth to transfer funds where the account is held in your name and within DriveWealth’s list of destination accounts you’ve authorized. The account numbers and institution will be specified and shared with the broker-dealer.
(f) If you use the Investing feature, we’ll analyze your checking account and identify funds that may be put towards your investing goals. We’ll then automatically and periodically transfer those funds from your checking account directly to your brokerage (Investing) account. In other words, we look for money you can allocate to your investing goals (in addition to any other goal you have set up with us), and we move it and invest it into your portfolio on your behalf.
(g) If you use the Retirement feature, we will open two accounts for you: a taxable brokerage account, with a cash feature that is FDIC insured, and an individual retirement account (“IRA”). We’ll analyze your checking account and identify funds that may be put towards your Retirement goals. We’ll then automatically and periodically transfer those funds from your checking account directly to your taxable brokerage account. The money sits in there until it’s ready to be invested (and in the meantime, you could withdraw it if you wanted to, without penalty). We do this to provide a staging area for your funds before they are invested in your IRA. The cash temporarily held in the taxable brokerage account participates in a bank cash sweep program. In the meantime, it accrues interest on a daily basis. DriveWealth retains that interest. This arrangement with DriveWealth allows us to provide this service for no additional cost to you or to Digit Advisors (e.g., DriveWealth doesn’t charge any brokerage account maintenance fee). Allowing DriveWealth to keep that interest could be regarded as a conflict of interest for Digit Advisors that you should consider. Digit Advisors doesn’t have actual custody of the securities and other property in your Account. All such securities and other property are held by DriveWealth, which is a “qualified custodian” as defined in Rule 206(4)-2 of the Investment Advisers Act of 1940 (the “Advisers Act”).
(h) You appoint Digit Advisors as your agent and attorney-in-fact with full power and authority to supervise and direct the investment and reinvestment of all assets in your Account, and any proceeds or contributions, on a fully-discretionary basis and without consultation. This includes the power to buy, sell, retain and exchange securities and other assets in the Account and trade on your behalf and at your risk. We will also exercise discretionary authority in determining the timing of purchases and sales of securities in accordance with our policies and procedures, which include procedures for mitigating potential market risk. This authority remains effective until you terminate the Services.
(i) We may rebalance or change your portfolio based on material changes to the recommendations generated by proprietary algorithms we may use to determine portfolio models and individual allocations (the “Algorithms”) and any material changes you make to your information. For example, we will adjust your Retirement portfolio as you get older and closer to retirement.
(j) We don’t currently allow you to place restrictions on the purchase or sale of securities that you wish to exclude or hold in your Account (or cash allocations you want to maintain).
(k) We may modify the Algorithms or other elements of the Website without notice to make changes we deem necessary or appropriate. These changes may have a material impact on our Algorithms, analysis, and advice. While these changes are intended to enhance performance, reliability or usability, we can’t guarantee they will work perfectly. Use of the Services is subject to various risks, including the risk of loss, some of which are described in our Form ADV, Part 2A. Accepting these Terms means you accept these risks.
4. Client information
(a) Our analysis and recommendations rely on you providing accurate information. If you provide us with inaccurate or incomplete information, this could materially impact the quality of our analysis and recommendations.
(b) You agree to provide us with the information we request to use the Services. We rely on that information being complete and accurate to provide analysis and recommendations and transact on your behalf.
5. Risk factors
(a) In addition to the other important disclosures included throughout these Terms and in our Form ADV, Part 2A, this subsection contains some of the key risk factors that you must consider when determining whether to become our client. Below are some examples, but they’re not every possible risk.
(b) Right now, our retirement analysis recommendations are appropriate only for investors with medium-term and long-term investment horizons (three years or more) before you plan to access assets that are invested pursuant to our recommendations.
(c) Investing in any type of security involves risk, including the risk that you could lose your entire investment. It’s the stock market; the value can go up or down.
(d) Past performance is no guarantee of future results.
(e) We can’t guarantee that you will meet your investment objectives using the Services.
(f) If you need access to the assets invested pursuant to our recommendations at any point prior to the end of the investment horizon, the prices at which these assets are liquidated may cause you to experience a material loss and negatively compromise the ability of our recommendations to help you meet your long-term investment goals.
(g) The recommendations we provide and other information that appears on the Website may be time-sensitive, especially during times of significant market volatility.
(h) Our recommendations rely on the accurate operation of the Algorithms and the technology that generates them. A malfunction or failure in either could cause you to experience losses, some or all of which could be significant.
(i) We use quantitative models that involve assumptions based upon a limited number of variables. These assumptions, even when supported by past experience, could be incorrect. This could result in major losses.
(j) Losses may arise from shortcomings or failures in internal processes, people or systems, or from external events. For example, there is operational risk (e.g., from routine processing errors to potentially costly major systems failures), information security risk, third party risk (we rely on other companies) and technological risk (like the internet going down). We work to prevent these things from happening, but we can’t guarantee it. These risks can disrupt business operations and result in financial losses, the inability to transact business, violations of laws, regulatory fines, penalties, reputational damage, and/or additional compliance costs, including the cost to prevent cyber incidents.
(k) Subject to our discretion, we place transactions on your behalf as soon as reasonably practicable after generating the recommendations. However, there could be material delays in the amount of time it takes us to place transactions. This delay could reduce, perhaps materially, your profit or cause losses.
6. You represent and warrant to us that:
(a) You will give us true and accurate information. If you don’t, then our investment recommendations may not meet your needs and our ability to execute transactions to help meet your objectives may be compromised.
(b) You independently assessed the Services and determined they’re appropriate for you.
(c) You will not directly or indirectly sublicense, resell, rent, lease, transfer, assign, time share or otherwise make the Services or the Website available to any third party.
(d) You are a natural person who is a U.S. citizen or resident who is at least 18 years old.
(e) You’re not on any governmental sanctions list.
(f) You won’t try to do bad stuff, like hacking. You will not, directly or indirectly: (i) decipher, decompile, disassemble, reverse engineer or otherwise attempt to derive any source code or underlying ideas or algorithms of any part of the Services or the Website, except to the limited extent applicable laws specifically prohibit this restriction; (2) modify, translate, or create derivative works of any part of the Services/Website; (3) use or access the Website in order to build a competitive product or service.
7. Risk acknowledgment, limitation of liability and indemnification
(a) We will use good faith and diligence to meet our responsibilities under the Services. However, we haven’t and won’t make any guarantee about the future performance of your Account, including the success of any given investment decision or strategy, or the success of our overall management of the Account. There may be loss or depreciation of the value of any investment due to factors like the fluctuation of the market. We can’t promise your investment objectives will be achieved and you agree we are not responsible and/or liable for any failure to meet them.
(b) We’re not responsible or liable for any loss or damages incurred due to any act or omission of any custodian, broker-dealer, or other investment adviser whether appointed by you or chosen in good faith by us.
(c) In the unlikely event of a trade error that causes your Account to incur a loss, you agree that we will bear the actual cost of the trade error in an amount that is the lesser of the amount of the loss or up to, and not in excess of, $100 but only in those instances where the trade error results from our gross negligence or violation of applicable laws. We define “trade error” as: (i) the purchase or sale of securities other than those identified by the Algorithm or in a quantity other than the quantity identified by the Algorithm; (ii) the purchase or sale of securities for the wrong Account; or (iii) a purchase when it should have been a sale (or vice versa). When a trade error results in a net positive financial impact to your Account, you keep the gain resulting from the error.
(d) To the fullest extent allowed by law and except as otherwise provided for in these Terms, neither we nor our affiliates and each of our, and our affiliates’ employees, contractors, directors, suppliers and representatives (each of the foregoing, including but not limited to Digit Advisors, being the “Service Parties”) are liable:
- (i) for any action performed by the Service Parties or by you as well as any error in judgment and/or for any investment losses you incur;
- (ii) for decisions and/or actions that you take or authorize third parties to take on your behalf based on information you see on the Website;
- (iii) under contract, tort, strict liability, negligence or any other legal or equitable theory with respect to the Website and/or the Services: (1) for any lost profits, data loss, cost of procurement of substitute goods or services, or special, indirect, incidental, punitive, or consequential damages or any kind whatsoever (however arising); or (2) for any damages or losses of any kind whatsoever arising from or in connection with any bugs, viruses, Trojan horses, or the like (regardless of the source).
(e) Certain federal and state securities laws impose liability under certain circumstances on persons who act in good faith. Nothing in these Terms is a waiver or limitation of any rights that you may have under federal or state securities laws.
(f) You will defend, indemnify, and hold harmless the Service Parties from all liabilities, claims, and expenses, including, without limitation, judgments, fines, amounts paid or to be paid in settlements, and reasonable attorneys’ fees incurred or suffered by a Service Party: (i) in connection with the good-faith performance of such Service Party’s responsibilities to you under this Agreement; (ii) that arise from or relate to your use or misuse of, or access to, the Website, the Services; (iii) that arise from or relate to your violation of these Terms.
You represent and warrant to us that:
(a) This Agreement is personal to you, and is not assignable, transferable or sublicensable by you except with our prior written consent.
(b) We will not assign (within the meaning of the Advisers Act) these Terms (which represent an investment advisory agreement with you) without your consent. If, after 30 days of receiving notice of an assignment from us you do not terminate your use of the Website or the Services as provided for in these Terms, you consent to our assignment of these Terms with respect to you and your Account.
9. Other clients
We act as an investment adviser for other clients. Since we provide investment recommendations, we may make recommendations and take action for other clients and their accounts that may differ from the recommendations we give to you or the action we take on your behalf.
In addition, our personnel may take actions for their own accounts that differ from the recommendations we give you or actions we take on your behalf.
10. Termination of the services
You may stop using the Services, close your Account, and cancel these Terms at any time by contacting us at [email protected] and providing sufficient information for us to verify your identity. Notwithstanding the foregoing, if there are any pending transactions relating to your Account when we receive your termination notice, we will close your Account promptly after such transactions are completed. Termination will not affect any of your prior rights or your obligations.