IPS RIA, LLC CRD No. 172840 ADVISORY CLIENT BROCHURE 10000 N. Central Expressway Suite 1100 Dallas, Texas 75231 O: 214.443.2400 F: 214-443.2424 FORM ADV PART 2A BROCHURE 1/26/2015 This brochure provides information about the qualifications and business practices of IPS RIA, LLC. If you have any questions about the contents of this brochure, please contact us at 214.443.2400. 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 IPS RIA, LLC is also available on the SEC s website at www.adviserinfo.sec.gov. The searchable IARD/CRD number for IPS RIA, LLC is 172840. IPS RIA, LLC is a Registered Investment Adviser. Registration with the United States Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. Prepared by: FBR Compliance Consulting
Item 2 Summary of Material Changes Since our initial ADV filing in December 2014, there have been no material changes to the Form ADV Part 2 brochure. Form ADV Part 2 requires registered investment advisers to amend their brochures when information materially inaccurate. If there are any material changes to an adviser s disclosure brochure, the adviser is required to notify you and provide you with a description of the material changes. 1
Item 3 Table of Contents Item Section Page Item 1 Cover Page Item 2 Summary of Material Changes 1 Item 3 Table of Contents 2 Item 4 Advisory Business 3 Item 5 Fees and Compensation 4 Item 6 Performance Based Fees and Side-by-Side Management 5 Item 7 Types of Clients 5 Item 8 Method Analysis, Investment Strategies, and Risk of Loss 6 Item 9 Disciplinary Information 7 Item 10 Other Financial Industry Activities and Affiliations 7 Item 11 Code of Ethics, Participation or Interest in Client Transaction and Personal Trading 8 Item 12 Brokerage Practices 8 Item 13 Review of Accounts 9 Item 14 Client Referrals and Other Compensation 9 Item 15 Custody 9 Item 16 Investment Discretion 10 Item 17 Voting Client Securities 10 Item 18 Financial Information 10 Item 19 Requirements for State-Registered Advisors 11 Item 20 Miscellaneous Information 11 2
Item 4 Advisory Business IPS RIA, LLC is a SEC registered investment adviser based in Dallas, Texas. We are organized as a limited liability company under the laws of the State of Texas. This brochure describes the investment management and advisory services we offer to our clients which include, but are not limited to, individuals, high net worth individuals, businesses, trusts, estates, retirement plans, endowments or foundations. This Summary Disclosure Statement is only for use with Advisor Managed clients; if you are not an Advisor Managed client please contact your Advisor to obtain the proper brochure. The following paragraphs describe our services and fees. Please refer to the description of each investment advisory service listed below for information on how we tailor our advisory services to your individual needs. Advisory Services Advisor provides asset management services defined as giving continuous investment advice to a client and making investments for the client based on the individual needs of the client. Advisor offers diversified portfolio development and management designed to achieve the client s financial objectives. Advisor may recommend stocks, bonds, mutual funds, exchange traded funds, variable annuities, direct participation programs or a combination thereof. Financial Planning & Consultation As part of its asset management services, Advisor may provide clients with financial planning services that may be specific or modular in their preparation (unique to each client in their depth of preparation). Topics included as part of the financial planning services may include the following: organization and assessment, retirement planning, education planning, long-term care, insurance planning, debt management, investments, tax planning, estate planning, and life events. In performing financial planning or consulting services, the Advisor generally examines and analyzes the client s entire financial situation, such as your tax status, insurance needs, overall debt, business ventures, retirement savings and current investments. The Advisor may review on one or several of these areas, depending upon the client s specific engagement. Selection of Other Advisors Advisor may recommend or select third party advisors to oversee the investment management responsibilities or Advisor may delegate third party advisor with discretionary authority of a client portfolio. Advisor and client will discuss the possible selection of any third party advisor to ensure that third party advisor is in alignment with attaining the client s financial objectives. Customarily, such arrangement will have the client enter into an agreement with third party advisor directly, which will outline, among other things, fees and trading practices attributable to your account by such third party advisor. Advisor and the third party advisor will share in the management fee paid by client. Regulatory Assets Under Management As of 12/31/14, we have no regulatory assets under management. Asset Under Advisement As of 12/31/2014, we have no assets under advisement. 3
Item 5 Fees and Compensation Advisor provides asset management services defined as giving continuous investment advice to a client and making investments for the client based on the individual needs of the client. Through this service, Advisor offers a highly customized and individualized investment program for clients. A specific asset allocation strategy and investment policy is crafted to focus on the specific client s goals and objectives. Advisor typically constructs portfolios consisting of securities and investments, equity securities, corporate debt securities, certificates of deposit, municipal securities, mutual funds, United States Government securities, option contracts, real estate and oil and gas interests. Asset-based account management fees range from 0.05 2.5 percent and are decided by the Advisor and based on many factors, such as the value of assets under management, account registration or type (e.g. retirement), the scope of services provided, the platform or program the Advisor and client choose and the current market and pricing for similar services. Fees are negotiable. Asset-based fees are paid on a quarterly basis in advance, meaning Advisor will invoice and charge client before the end of the three month billing period. Advisor will base fees on the fair market value of the client account assets on the last business day of the preceding quarter. Advisor may waive or charge a lesser fee from time to time or may charge a flat fee for services rendered. Advisor s fees may be higher or lower than those charged by other advisers for comparable services. Additional Fees and Expenses In addition to Advisor s investment advisory fee(s), Client may be assessed other fees by parties independent from Advisor. The client may also incur, relative to certain investment products (such as mutual funds), charges imposed directly at the investment product level (e.g. advisory fees, administrative fees, and other fund expenses). Brokerage fees/commissions charged to Client for securities trade executions may be billed to the Client by the broker-dealer or custodian of record for the Client account, not Advisor. From time to time and as allowed by regulatory rule or law, Advisor or its representatives may receive commissions as a result of certain securities transactions effected on behalf of Client, where such transactions are effected in connection with Advisor s advisory services provided to Client. Any such commissions/fees are exclusive of, and in addition to compensation charged by Advisor. Compensation for the Sale of Securities or Other Investment Products Persons providing investment advice on behalf of our firm are registered representatives with Lion Street Financial, a securities broker-dealer, and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. In their capacity as registered representatives, these persons will receive commission-based compensation in connection with the purchase and sale of securities, including 12b-1 fees for the sale of investment company products. Compensation earned by these persons in their capacities as a registered representative is separate and in addition to our advisory fees. This practice presents a conflict of interest because persons providing investment advice on behalf of our firm who are registered representatives have an incentive to effect securities transactions for the purpose of generating commissions rather than solely based on your needs. However, you are under no obligation, contractually or otherwise, to purchase securities products through any person affiliated with our firm. 4
Persons providing investment advice on behalf of our firm are licensed as independent insurance agents and may, from time to time, conduct insurance transactions for our advisory clients. If these persons were to sell insurance products to our advisory clients they would be compensated by commissions and this may present a conflict of interest. It is our firm policy to recommend insurance products to our non-retirement plan clients or advisory clients based solely on their needs and objectives, and only when appropriate. All of our clients are under no obligation, contractually or otherwise, to purchase insurance products through our firm or any person affiliated with our firm. Item 6 Performance-Based Fees and Side-by-Side Management We do not accept performance-based fees or participate in side-by-side management. Side-by-side management refers to the practice of managing accounts that are charged performance-based fees while at the same time managing accounts that are not charged performance-based fees. Performance-based fees are fees that are based on a share of capital gains or capital appreciation of a client's account. Our fees are calculated as described in the Advisory Business section above, and are not charged on the basis of a share of capital gains upon, or capital appreciation of, the funds in your advisory account. Item 7 Types of Clients We provide investment advice and services to individuals, high net worth individuals, corporations and other business organizations, trusts, estates and charitable organizations. We generally require a minimum account level of $50,000 of these types of clients, although we may waive the account minimum from time to time at our discretion. 5
Item 8 Methods of Analysis, Investment Strategies and Risk of Loss We may use one or more of the following methods of analysis or investment strategies when providing investment advice to you: Fundamental Analysis - involves analyzing individual companies and their industry groups, such as a company's financial statements, details regarding the company's product line, the experience and expertise of the company's management, and the outlook for the company's industry. The resulting data is used to measure the true value of the company's stock compared to the current market value. Technical Analysis - involves studying past price patterns and trends in the financial markets to predict the direction of both the overall market and specific stocks. Long Term Purchases - securities purchased with the expectation that the value of those securities will grow over a relatively long period of time, generally greater than one year. Short Term Purchases - securities purchased with the expectation that they will be sold within a relatively short period of time, generally less than one year, to take advantage of the securities' short-term price fluctuations. We employ a system for analyzing mutual fund investment selections made available to our Advisory clients. We will evaluate certain aspects of the mutual fund and, given the results of said evaluation, will determine the fund's suitability. The criteria evaluated for each fund include, but are not limited to, manager tenure, expense ratios and fees, one- and five- year returns, level of assets under management, correlation to style and/or peer group, performance relative to peer group, and its reputation in the industry. We may recommend allocation models designed to fit the specific needs of individual client. Our investment strategies and advice may vary depending upon each client's specific financial situation. As such, we determine investments and allocations based upon your predefined objectives, risk tolerance, time horizon, financial horizon, financial information, liquidity needs, and other various suitability factors. Your restrictions and guidelines may affect the composition of your portfolio. Risks of Methods of Analysis Technical Analysis - The risk of market timing based on technical analysis is that charts may not accurately predict future price movements. Current prices of securities may reflect all information known about the security and day to day changes in market prices of securities may follow random patterns and may not be predictable with any reliable degree of accuracy. Fundamental Analysis - The risk of fundamental analysis is that information obtained may be incorrect and the analysis may not provide an accurate estimate of earnings, which may be the basis for a stock's value. If securities prices adjust rapidly to new information, utilizing fundamental analysis may not result in favorable performance. 6
Risk of Loss Investing in securities involves risk of loss that an Advisory should be prepared to bear. We do not represent or guarantee that our services or methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate an Advisory client from losses due to market corrections or declines. We cannot offer any guarantees or promises that a Client s financial goals and objectives will be met. Past performance is in no way an indication of future performance. Recommendation of Particular Types of Securities The Advisor does not recommend any one particular type of security in its underlying investment portfolio. Instead, allows for a diversified portfolio which simply eliminates the sectors and economies which are currently at the highest perceived and/or statistical risk of decline, while focusing on those sectors with the highest probability of gain in the opinion of Advisor. Item 9 Disciplinary Information We have no legal or disciplinary events relating to our firm s advisory services to Plan clients or otherwise. Item 10 Other Financial Industry Activities and Affiliations Advisors providing investment advice on behalf of our firm are registered representatives with Lion Street Financial, a securities broker-dealer, and a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC). We have an affiliated company that is an insurance agency. Advisors providing investment advice on behalf of our firm are licensed insurance agents independent from our firm. In this capacity our Advisors may, from time-to-time, conduct insurance transactions for our Advisory clients. If these persons were to sell insurance products to our advisory clients they would be compensated by commissions and this may present a conflict of interest. Advisors may recommend insurance products to our clients based solely on their needs and objectives, and only when appropriate. All of our clients are under no obligation, contractually or otherwise, to purchase insurance products through our affiliated insurance agency or any person affiliated with our firm. 7
Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Code of Ethics We strive to comply with applicable laws and regulations governing our practices. Therefore, our Code of Ethics includes guidelines for professional standards of conduct for our Associated Persons. Our goal is to protect your interests at all times and to demonstrate our commitment to our fiduciary duties of honesty, good faith, and fair dealing with you. All of our Advisors are expected to adhere strictly to these guidelines. Persons associated with our firm are also required to report any violations of our Code of Ethics. Additionally, we maintain and enforce written policies reasonably designed to prevent the misuse or dissemination of material, non-public information about you or your account holdings by persons associated with our firm. Clients or prospective clients may obtain a copy of our Code of Ethics by contacting us at the telephone number on the cover page of this brochure. Participation or Interest in Client Transactions Neither our firm nor any of our Advisors has any material financial interest in client transactions beyond the provision of investment advisory services as disclosed in this brochure. Personal Trading Practices Our firm or persons associated with our firm may buy or sell the same securities that we recommend to you or securities in which you are already invested. A conflict of interest exists in such cases because we have the ability to trade ahead of you and potentially receive more favorable prices than you will receive. To eliminate this conflict of interest, it is our policy that neither our Associated Persons nor we shall have priority over your account in the purchase or sale of securities. Item 12 Brokerage Practices Our firm does not maintain custody of client assets which we may advise. Therefore, client assets will be held by a qualified custodian, generally a broker/dealer of bank. We may recommend the brokerage and custodial services of Charles Schwab & Co., Inc. ( Schwab ), a securities broker-dealer and a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation(SIPC). We believe that Schwab provides quality execution services for you at competitive prices. We consider a range of factors, including but not limited to, asset custody and transaction execution services provided by Schwab, the value of research provided, the firm's reputation, execution, clearance and settlement capabilities, competitive pricing of comparable services offered by other available providers, commission rates, and responsiveness to our clients and our firm. In recognition of the value of research services and additional brokerage products and services Schwab provides, you may pay higher commissions and/or trading costs than those that may be available elsewhere. Advisor and its IARs may buy or sell securities that are also recommended to clients. In order to minimize this conflict of interest, securities recommended by Advisor are widely held and publicly traded. In addition, in accordance with its fiduciary duty to clients, Advisor and its associated persons will place client interests ahead of their own interests. 8
In accordance with its fiduciary duty to clients, Advisor and its associated persons will place client interests ahead of their own interests. Brokerage for Client Referrals We do not receive client referrals from broker-dealers in exchange for cash or other compensation, such as brokerage services or research. Item 13 Review of Accounts Our Advisors will contact you, and typically meet with you at least annually, to review the performance of your account and any changes to your financial situation or investment goals and objectives. Advisors may also perform account reviews more frequently when market conditions dictate. Other conditions that may trigger a review are changes in laws, new investment information and changes to your situation. We also require you, in our standard client agreement, to inform your Advisor promptly of any changes to you information, including changes to your financial situation or investment objectives and policies. You will receive confirmations of all transactions, monthly statements and/or quarterly account statements Schwab, the designated custodian, of you advisory assets. Our Advisors are available during normal business hours to answer questions or concerns you may have. Item 14 Client Referrals and Other compensation Advisors providing investment advice on behalf of our firm are licensed insurance agents, and are registered representatives with Lion Street Financial, a securities broker-dealer, and a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation(SIPC). We may also enter into arrangements where we and our Advisors refer you to unaffiliated investment advisers that will provide advisory services to you. When we make such a referral, we and our Advisors will typically receive a portion of the total fee the investment adviser charges you so long as they provide you services. We and your Advisor may receive a transaction fee for such services as a solicitor. Any such arrangements will be designed to comply with the Advisers Act of 1940. We may receive securities commissions, service fees, 12b-1 fees and other third-party payments if you implement our recommendations through Schwab. We receive an economic benefit from Schwab in the form of support products and services it makes available to us and other independent investment advisors that have their clients maintain accounts at Schwab. These products and services, how they benefit us, and the related conflicts of interest are disclosed above. The availability to us of Schwab s products and services is not based on us giving particular advice, such as buying particular securities for our clients. Item 15 Custody Our clients authorize us to instruct Schwab to deduct advisory fees directly from their Advisory account. Your funds and securities will be held at Schwab, qualified custodian, and not our firm. If you have a question regarding your account statement or if you did not receive a statement from your custodian, please contact our office at 214.443.2400 or Schwab s customer service. 9
Item 16 Investment Discretion Client will authorize Advisor to provide discretionary investment advisory services for client accounts. Advisor s discretionary authority will be granted by the client in the client agreement. When discretionary authority is granted, it is limited in that Advisor will only be given discretionary trading authority. This authority will allow Advisor to determine the type of securities and the amount of securities that can be bought or sold for the client portfolio without obtaining the client s consent for each transaction. Item 17 Voting Client Securities We will not vote proxies on behalf of your advisory accounts. At your request, we may offer you advice regarding corporate actions and the exercise of your proxy voting rights. If you own shares of common stock or mutual funds, you are responsible for exercising your right to vote as a shareholder. In most cases, you will receive proxy materials directly from the account custodian. However, in the event we were to receive any written or electronic proxy materials, we would forward them directly to you by mail, unless you have authorized our firm to contact you by electronic mail, in which case, we would forward any electronic solicitation to vote proxies. Item 18 Financial Information We do not have any financial condition likely to impair our ability to meet our contractual commitments to you. 10
Item 19 Requirements for State-Registered Advisers Neither our firm, nor any of our Advisors are compensated for advisory services with performance-based fees. Please refer to the "Performance-Based Fees and Side-By- Side Management" section above for additional information on this topic. Neither our firm, nor any of our Advisors have a material relationship or arrangement with any issuer of securities. Neither our firm, nor any of our Advisors have any reportable arbitration claims, civil, self regulatory organization proceeding or administrative proceeding. Refer to the Part 2B brochure supplements for background information about management personnel and those giving advice on behalf of our firm. We have an affiliated company that is a licensed insurance agency. Item 20 Miscellaneous Information Class Action Lawsuits We do not determine if securities held by in Advisory portfolio are the subject of a class action lawsuit or if the Client is eligible to participate in class action settlements or litigation nor do we initiate or participate in litigation to recover damages on the Client s behalf for injuries as a result of actions, misconduct, or negligence by issuers of securities held by you. Business Continuity Plan We maintain a business continuity plan designed to minimize the impact of disasters, emergencies, and other unforeseen circumstances involving our services and communications. 11