HOMETOWN Financial Planning and Asset Management

Transcription

1 Part 2A of Form ADV: Firm Brochure HOMETOWN Financial Planning and Asset Management Terry Nelson, CFP TM MS 1957 Lake Street Roseville, MN (651) Fax: (651) This brochure provides information about the qualifications and business practices of Terry Nelson, CFP TM MS of HOMETOWN Financial Planning and Asset Management. If you have any questions about the contents of this brochure, please contact us at (651) or The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about HOMETOWN Financial Planning and Asset Management is also is available on the SEC s website at: Note: The term referred to in this brochure "Registered Investment Advisor" or Registered" DOES NOT in any way imply any certain level of training and skill. Only that the firm is registered with the SEC. Material Changes While this Brochure conforms to the updated format for the new Form ADV Part 2 as of March 31st, 2011, there are no material changes to the data in the previous format.

2 Table of Contents Advisory Business 3 Fees and Compensation 5 Performance-Based Fees 6 Types of Clients 6 Methods of Analysis, Investment Strategies and Risk of Loss 6 Disciplinary Information 8 Other Financial Industry Activities and Affiliations 8 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading 9 Brokerage Practices 10 Review of Accounts 10 Client Referrals and Other Compensation 10 Custody 10 Investment Discretion 10 Voting Client Securities 11 Financial Information 11 Requirements for State-Registered Advisers 11 HOMETOWN Financial Planning and Asset Management Page: 2

3 Advisory Business HOMETOWN Financial Planning and Asset Management, a Minnesota sole proprietorship, is a Personal Financial Advisory and Planning Firm specializing in Personal Financial Planning Advice and Asset Management Assistance. Mr. Nelson has worked in the financial services industry since Clients may select from a variety of services, categorized as Financial Planning Services, Portfolio Construction and Investment Supervisory / Asset Management Services and Plan Implementation Services. As an integral part of its services, HOMETOWN Financial Planning and Asset Management provides general advice regarding investments. Therefore, the firm is registered with the Securities and Exchange Commission and the Department of Commerce of the State of Minnesota as an Investment Advisor. We will provide you with a copy of all required documents before entering into any engagement agreement. This brochure provides a potential client with an understanding of Mr. Nelson's approach to Investment Advice, Portfolio Construction, Asset Allocation and Financial Planning. This disclosure statement also includes: Information about the experience and education of the Firm's personnel, The Firm's methods of compensation and Methods for handling any possible conflicts of interest. The CLIENT SERVICES AGREEMENT, and Minnesota Disclosure Statement are an integral part of this ADV Part 2, and are incorporated by reference. This ADV Part 2 Brochure should be read in its entirety prior to entering an agreement with HOMETOWN Financial Planning and Asset Management. OUR MISSION "To provide the highest quality financial advice and personal service possible to between 50 and 70 high income or net worth clients, helping them set and meet goals by wisely making money and keeping it." ABOUT HOMETOWN FINANCIAL PLANNING We take our Commitment and Responsibility to our clients extremely seriously and strive to provide the highest level of service possible. Our work requires a relationship of trust and confidence. We understand that our work as Investment Advisers and Personal Financial Planner s will affect our clients' destinies. We help our clients achieve financial independence, educate their children, enjoy a secure retirement and/or leave a lasting legacy to society. Terry Nelson, CFP TM MS is committed to continuing education, with the objective of providing the highest quality Financial Advice possible. HOMETOWN Financial Planning and Asset Management Page: 3

4 HOMETOWN Financial Planning and Asset Management provides assistance in the planning of a client's overall financial affairs. The firm serves as Financial Adviser and Planner for individuals, corporations, entrepreneurs, trusts and small businesses. HOMETOWN Financial Planning and Asset Management s staff works with the client and their other advisors, providing Investment Advice, Financial Planning Consultation and over-all coordination on a personal basis. The three major components of our Personal Financial Services are: Financial Planning Services, this includes initial financial advice and miscellaneous financial advice. The advice is based on extensive data gathering, of any and all information that would affect the clients current financial situation and future goals, all of which is the responsibility of the Client to provide. This is the most important and timeconsuming step in the Financial Planning Process. As a part of the initial advice the advisor will help the Client design and construct an initial investment portfolio. (Note: if the client wants ongoing Asset Management Services, this is part of the next component listed as Asset Management Services). Asset Management Services, Investment Supervisory and Portfolio Construction, which include the design, construction and management of an investment portfolio, tailored to the Clients individual financial constraints, objectives, time horizon, risk tolerance and prevailing economic conditions. The development of a portfolio is done initially as part of the financial planning process. Clients may impose restrictions on investing in certain securities or types of securities. The Advisor provides asset management only on a nondiscretionary basis. As of March 31, 2012 assets under management total approximately twelve million dollars. Ongoing Asset Management Services, Investment Supervisory are recommended as it is usually in the Clients best interest. Plan Implementation Services, includes the use of financial products for the purpose of implementing and achieving the client s goals and objectives. Again, Clients may impose restrictions on investing in certain securities or types of securities. It is important for the client to realize that, the planner is committed to the best interests of the client, so HOMETOWN Financial Planning and Asset Management DOES NOT receive a commission or fee of any kind from outside vendors. We are committed to avoiding any Conflicts Of Interest so we can best serve our Clients. Fees and Compensation For general Financial Planning Services, there is an initial Setup/Planning Fee. The amount of the fee will depend on the complexity and scope of the Client's needs. This initial Setup/Planning Fee is based on, an estimated number of hours the advisor will need to do proper planning, together with the advisors hourly rate of $150. This Setup/Planning Fee is negotiable, but must be agreed upon, and recorded in the CLIENT SERVICES AGREEMENT, by both the client and the advisor, before any fee will be charged. HOMETOWN Financial Planning and Asset Management Page: 4

5 Full service financial planning advice is charged for on a fixed fee basis, agreed upon by the Client and the Advisor. The initial Advisory/Planning fee will range from $1,500 to more than $5,000 depending on how extensive the Clients needs may be. Fixed Planning Fees are payable upon signing the CLIENT SERVICES AGREEMENT. Clients may choose to pay this fee up front or have it deducted from their account if that is more convenient. The initial Setup/Planning fee is paid up front at the time of signing the CLIENT SERVICES AGREEMENT or is deducted from the account after sufficient assets are held in their account. For Asset Management Services / Investment Supervisory Services, Clients will be charged an annualized Asset Management Fee based on the value of the assets managed (at the end of each quarter). Asset Management Fees are based on the following schedule: 80 basis points per year (or 8 tenths of 1% annually) on the first $500, basis points per year (or 6 tenths of 1% annually) on amounts between $500,000 and $1,000,000, and 50 basis points per year (or 5 tenths of 1% annually) on amounts in excess of $1,000,000. A minimum quarterly fee of $150 is required. The fee is payable quarterly, with the first payment due at the end of each calendar year quarter following the execution of the CLIENT SERVICES AGREEMENT. Fees will be based on the closing asset balance held in the account on the last day of the previous quarter, and are usually deducted from the Clients account unless other arrangements are made. Fees will be deducted directly from the account and pro-rated from the date the contract is signed to the end of the calendar quarter. Consequently, the first advisory fee will be pro-rated from the quarter past. Clients may also incur charges by third parties other than those imposed by the Investment Advisor. These fees may include, but are not limited to all transaction costs, normal brokerage account fees, certain 12B-1 distribution fees, Contingent Deferred Sales Charges on mutual fund and previously purchased mutual funds and IRA and Qualified Retirement Plan fees. However, should Clients utilize the services of the Advisor in his capacity as a registered investment advisor, the Client should understand that the Advisor uses TD Ameritrade Institutional exclusively as the custodian for clients accounts. The Client or the Advisor may terminate the relationship at any time by notifying the other party by certified mail. The hourly pro-rated portion of Unearned Fees (of $150 per hour) will be returned to the client within 5 business days. For Plan Implementation Services, there are no charges when it is part of the original Financial Plan. It is important to understand that the Advisor DOES NOT receive a commission or other outside compensation from the implementation of financial products. services other than those listed above will be billed at an hourly rate of $150. All Neither the Advisor or other persons at the Advisory Firm accepts or receives compensation for the sale of securities or other investment products, including asset- HOMETOWN Financial Planning and Asset Management Page: 5

6 based sales charges or service fees from the sale of mutual funds, insurance products or any other financial services products. Performance-Based Fees The Advisor is compensated only on the basis of the above mentioned fees. DOES NOT accept Performance Based Fees. The advisor Types of Clients HOMETOWN Financial Planning and Asset Management serves as Financial Adviser and Planner for individuals, corporations, entrepreneurs, trusts and small businesses. The Advisor and or his staff works with the client and their other advisors, providing Investment Advice, Financial Planning Consultation and over-all coordination on a personal basis. The Advisor is currently taking on clients whose portfolio is at least $750,000 or have the financial ability to get to that level in a reasonable amount of time. Also, the Advisor does Pro Bono or reduced fee work with low income Clients committed to improving their financial future. Methods of Analysis, Investment Strategies and Risk of Loss Asset Management Services, Investment Supervisory and Portfolio Construction These services include the design and construction of an investment portfolio consistent with the Clients financial constraints and objectives, time horizon, risk tolerance and prevailing economic conditions, and continued management of the portfolio. Asset Allocation helps us determine what types of assets to include or exclude from the portfolio and in what proportion those assets should be held. We design balanced" investment portfolios so that the funds of all portfolios are allocated to the appropriate asset classes to achieve the Clients Goals. We constantly try to balance risk and reward to take advantage of any currently available returns, while putting a priority on preserving client s portfolios in dangerous times. Because the Advisor works to keep portfolio fees as low as possible and reduce adverse tax implications to the portfolio, the Advisor uses ETF's and Index Funds to a large degree. This does not preclude the use of Mutual Funds, Stocks or direct investments in fixed income products. The advisor focuses more on Tactical Asset Allocation among sectors or asset classes than on picking individual stocks. While this enhances the tradeoff between risk and reward in the Clients portfolio through diversification, the Client must understand that assets do fluctuate in price. Also, all investing in securities carries with it the risk of loss, which the client should be prepared to bear. HOMETOWN Financial Planning and Asset Management Page: 6

7 Initial Asset Allocation The Advisor analyzes the Client's current investments and makes recommendations regarding the retention, purchase or sale of investments. As far as possible, we attempt to move the Client's portfolio toward a strategy which we believe would most be appropriate for the goals and risk aversion of the particular Client. Some clients may have certain beliefs regarding Portfolio Management, which we do not share. This is neither right nor wrong, however, in such a situation we would not be able to help that client. Ongoing Asset Allocation And Monitoring The Advisor constantly monitors the economic environment and recommends and assists Client s in making investment decisions regarding the Client's investment portfolio. We actively manage the Client's investment portfolio, and always encourage Clients questions and communication. Also, we do not hold, take custody of or have Clients assets directed to the Advisor at any time (except for the payment of fees). The Client's Investment Portfolio will be reviewed regularly as required by the Client. The Advisor will assist by implementing any mutually agreed upon changes. The Client acknowledges the risk is involved in any investment and that any investment may or may not perform as expected. Investment Philosophy The major guidelines adhered to by the Advisor in recommending Investment Advice and Strategies are: Recognition of Risk: An investment strategy must be based upon an understanding of both the risk of capital loss (market risk), and the risk of purchasing power loss (inflation risk). Risks associated with an inordinate lack of liquidity, fluctuations in the cost of money and the possibility of a decrease in the overall price level must be addressed. In addition, we believe it is important to minimize volatility of the total portfolio. Balance of Assets: Proper investment planning requires a balanced approach, with due consideration to short and long term liquidity needs, the blending of lower and higher risk approaches, and the combination of income and growth oriented investments. Total Return: In the Portfolio Construction Process, we focus on total return, which is current income plus growth in value. If current income is needed on a regular basis to meet living expenses, those funds may be obtained either from investment income or from selling a portion of the asset portfolio. Economic Considerations: Current and anticipated economic cycles and macro-economic changes are monitored in order to allocate portions of the Client's investment assets into areas of future growth. We believe successful investment performance is primarily a function of proper Asset Allocation, along with a degree of timing or specific investment selection. Diversification: There are no simple answers to investment decisions in the volatile world economy. We believe diversification in a variety of investment vehicles is essential to balancing risk. HOMETOWN Financial Planning and Asset Management Page: 7

8 Discipline: Investment Planning requires a disciplined approach. We are constantly monitoring and thinking about the world economy and markets in an effort to make thoughtful rational investment decisions. The investor must feel comfortable with a Long-Term Investment Philosophy that is designed to achieve results over a full investment cycle. Income Tax Considerations: Income tax considerations are important in Investment Planning. However, it is essential to recognize that economic return is of prime importance. Proper tax planning requires a long-term view of tax reduction and deferral rather than a "quick-fix" at year-end. Plan Implementation Process The Plan Implementation Process includes the use of financial products for the purpose of implementing the client s goals and objectives. It is important for the client to realize that, the Advisor is committed to the best interests of the Client and DOES NOT receive commissions or outside fees for any of these services. When implementing securities transactions, the Advisor uses the services of TD Ameritrade Institutional Services as custodian for all Clients accounts to place investment orders and transactions. The Advisor is completely independent of TD Ameritrade Institutional Services and RECEIVES NO COMPENSATION for using their services as custodian. When implementing various planning strategies, the Advisor works with outside professionals such as CPA's, Attorneys and Insurance professionals to help achieve the specific goals of each individual client. Disciplinary Information The Advisor is proud to have never been the subject of any legal or disciplinary proceeding or actions by any individual or regulatory body. You may contact the following Governmental Departments, Boards or Associations where the Advisor (Terry W Nelson, CFP TM MS) is registered to confirm that no complaints or actions are on file or in process: Certified Financial Planner Board of Standards, Inc: License: (800) Financial Planning Association (FPA): License: (800) Minnesota Department of Commerce: Firm CRD Number is: (651) Securities and Exchange Commission: Firm CRD Number is: (800) (6) FINRA - Financial Regulatory Authority: Firm CRD Number is: (800) The Advisor has not held an Insurance License for many years since the Advisor does not sell any products for commission. Other Financial Industry Activities and Affiliations Terry Nelson, CFP TM MS, has been in the financial services industry since 1985 and began his practice as a Financial Advisor / Certified Financial Planner in March of The Certified Financial Planner Board of Standards, Inc. currently licenses Mr. Nelson to use the Certified HOMETOWN Financial Planning and Asset Management Page: 8

9 Financial Planner and CFP TM marks. He is an active member in good standing of the Financial Planning Association. As a member of the local chapter of the Financial Planning Association of Minnesota, Terry Nelson, CFP TM MS served as a board member for a number of years as well as serving on a number of committees. Terry Nelson, CFP TM MS was born in 1963 in Wisconsin. After high school, he graduated with an Associate's Degree in Law Enforcement from Eau Claire Community College in He also attended Mankato State University from 1984 to 1985 where he studied law enforcement. Mr. Nelson worked in the insurance industry as a health, annuity and life insurance representative until 1991, when he began specializing in personal financial planning for clients. He then entered the College for Financial Planning of Denver Colorado studying to become a Certified Financial Planner. From 1995 to 1997, Mr. Nelson attended Metro State University, where he graduated with a Finance Major. Mr. Nelson has received a Master of Science Degree in the area of Financial Planning from the College of Financial Planning of Denver Colorado in January of Mr. Nelson is an Adjunct Professor at the College for Financial Planning where he has been teaching Investment and Financial Planning courses for the College of Financial Planning's Masters Degree program since When implementing securities transactions, the Advisor uses the services of TD Ameritrade Institutional Services as custodian for all Clients accounts to place investment orders and transactions. The Advisor is completely independent of TD Ameritrade Institutional Services and RECEIVES NO COMPENSATION for using their services as custodian. Code of Ethics, Participation or Interest in Client Transactions and Personal Trading As a Certified Financial Planner TM the advisor is held to the highest standards in the industry through the CFP Board's Standards of Professional Conduct, which include the: Code of Ethics, Rules of Conduct, Practice Standards, Disciplinary Rules, and Fitness Standards for Candidates and Registrants. You can learn more about these standards at the CFP Board of Standards web site at: The Advisor will provide a copy of this code of ethics to anyone upon request. The Advisor is also held accountable through the Investment Adviser Codes of Ethics (Rule 204A-1). Brokerage Practices When implementing securities transactions, the Advisor uses the services of TD Ameritrade Institutional Services as custodian for all Clients accounts to place investment orders and HOMETOWN Financial Planning and Asset Management Page: 9

10 transactions. The Advisor is completely independent of TD Ameritrade Institutional Services and RECEIVES NO COMPENSATION for using their services as custodian. There are a number of research tools available through TD Ameritrade that Advisors can take advantage of at no cost. These are considered "Soft Dollar benefits" and benefit all Clients alike. In addition, TD Ameritrade sends me a Thank You gift at during the Holiday Season. TD Ameritrade does not refer clients to the Advisor. Review of Accounts Since the Advisor works with only a small number of Clients, the Advisor is able to monitor clients accounts on a regular basis. The assets held in clients accounts are monitored on daily basis. The Client's Investment Portfolio will be reviewed with the Client, as often as requested by the Client. Client Referrals and Other Compensation The Advisor does not ask for referrals from Clients. It is the Advisors belief that it is their duty to serve the Client, Not the other way around. The Advisor does not accept pay for referrals from Clients or other Professional with whom the Advisor has a professional working relationship. The advisor does subscribe to websites which prospective clients use to find a financial advisor in their area. Custody The Advisor DOES NOT hold custody of Clients funds or securities. The Advisor uses TD Ameritrade as the custodian for all clients accounts. TD Ameritrade provides account statement on a monthly basis, Clients should carefully review those statements. Investment Discretion The Advisor DOES NOT accept discretionary authority to manage securities accounts. Voting Client Securities The Advisor DOES NOT accept, authority to vote client securities Financial Information The Advisor only chares asset management fee's in arrears. This means that the advisor DOES NOT charge asset management fees in advance, only after the calendar quarter is past and only for the services provided during that calendar quarter. Requirements for State-Registered Advisers None to report. HOMETOWN Financial Planning and Asset Management Page: 10