financial planning services, inc. 185 wind chime ct. ste ...i item 1 – cover page financial...
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Item 1 – Cover Page
Financial Planning Services, Inc.
185 Wind Chime Ct. Ste. 203
919-676-2806
www.askholly.com
This Brochure provides information about the qualifications and business practices of
Financial Planning Services, Inc. If you have any questions about the contents of this
Brochure, please contact us at 919-676-2806 and/or [email protected]. Currently,
our Brochure may be requested free of charge by contacting Holly Nicholson, President at
919-676-2806 or [email protected]. Our Brochure is also available on our web site
www.askholly.com, also free of charge.
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.
Financial Planning Services, Inc. is a registered investment adviser. Registration of an
Investment Adviser does not imply any level of skill or training. The oral and written
communications of an Adviser provide you with information about which you determine to
hire or retain an Adviser. Additional information about Financial Planning Services, Inc. is
also is available on the SEC’s website at www.adviserinfo.sec.gov.
Form ADV Part 2A Brochure
March 7, 2014
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Item 2 – Material Changes
The following are the material changes that have been made to our Brochure since our last
annual update (February 25, 2013).
1. Material Change 1. Since last update the 2nd office location in Oak Island, NC is no
longer in existence.
2. Material Change 2. Since last update the minimum aggregate account size for new
clients has changed from $200,000 to $400,000.
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Item 3 -Table of Contents
Item 1 – Cover Page ....................................................................................................................................... i
Item 2 – Material Changes ............................................................................................................................ ii
Item 3 -Table of Contents ............................................................................................................................ iii
Item 4 – Advisory Business ........................................................................................................................... 1
Item 5 – Fees and Compensation ................................................................................................................. 1
Item 6 – Performance-Based Fees and Side-By-Side Management ............................................................. 4
Item 7 – Types of Clients ............................................................................................................................... 4
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss ........................................................ 5
Methods of Analysis & Investment Strategies: ............................................................................................. 5
Methods may include charting, fundamental analysis, technical analysis and cyclical analysis. The main
sources of information include financial publications, research materials, annual reports, prospectus,
conference calls, webinars, Morningstar, Web Content and filings with the SEC. ....................................... 5
Investing in securities involves risk of loss that clients should be prepared to bear. .................................. 6
Item 9 – Disciplinary Information ................................................................................................................. 6
Item 10 – Other Financial Industry Activities and Affiliations ...................................................................... 7
Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading .................................. 7
Item 12 – Brokerage Practices ...................................................................................................................... 8
Item 13 – Review of Accounts....................................................................................................................... 9
Item 14 – Client Referrals and Other Compensation .................................................................................... 9
Item 15 – Custody ....................................................................................................................................... 10
Item 16 – Investment Discretion ................................................................................................................ 10
Item 17 – Voting Client Securities ............................................................................................................... 11
Item 18 – Financial Information .................................................................................................................. 11
Item 19 – Requirements for State-Registered Advisers.............................................................................. 12
Brochure Supplement(s)
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Item 4 – Advisory Business
Sample Language
Financial Planning Services, Inc. is owned by Holly K. Nicholson and has been providing
advisory services since 1989.
As of 12/31/2013, Financial Planning Services, Inc. managed $95.8 million on a
discretionary basis and $0 on a nondiscretionary basis.
Financial Planning Services, Inc. provides personalized/confidential financial planning and
investment management services to individuals, pension and profit sharing plans, trusts,
estates, charitable organizations and small businesses. Advice is provided through
consultation with the client and may include: determination of financial objectives,
identification of financial problems, cash flow management, tax planning, insurance review,
investment management, portfolio development, education funding, retirement planning
and estate planning.
Item 5 – Fees and Compensation
The specific manner in which fees are charged by Financial Planning Services, Inc. is
established in a client’s written agreement with Financial Planning Services, Inc. Financial
Planning Services, Inc. is a fee-only firm.
Summary Description
FINANCIAL PLANNING SERVICES, INC. bases its fees on a percentage of
assets under management, hourly charges and fixed fees.
In most cases, fees are not negotiable.
The following agreements define the typical client relationships and associated fees.
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On-going Investment Management/Advisory Services Fees:
Many clients choose to have Financial Planning Services, Inc. manage their assets in order
to obtain on-going in-depth advice and life planning.
Financial Planning Services, Inc. will generally bill its investment management fees on a
quarterly basis in arrears each calendar quarter. Clients shall authorize Financial Planning
Services, Inc. to directly debit fees from client accounts. Management fees shall be prorated
for each capital contribution and withdrawal made during the applicable calendar quarter
(with the exception of de minimis contributions and withdrawals). Accounts initiated or
terminated during a calendar quarter will be charged a prorated fee. Upon termination of
any account, any earned, unpaid fees will be due and payable. The client has the right to
terminate an agreement at any time but the first $2,000 of the annual advisory fee is not
refundable due to the time and effort involved in transferring accounts, developing and
implementing a portfolio. Financial Planning Services, Inc. may terminate the investment
advisory relationship by sending written notification to the client.
Financial Planning Services, Inc’s fees are exclusive of transaction fees, and other related costs and expenses which shall be incurred by the client. Clients may incur certain charges imposed by custodians, brokers, third party investment and other third parties such as fees charged by managers, custodial fees, trade away fees, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual funds and exchange traded funds also charge internal management fees, which are disclosed in a fund’s prospectus. Such charges and fees are exclusive of and in addition to Financial Planning Services, Inc.’s fee. Financial Planning Services, Inc. shall not receive any portion of these fees, and costs. Item 12 further describes the factors that Financial Planning Services, Inc. considers in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their compensation (e.g., fees). The fee schedule applicable as of this Brochure is as follows: Client Assets Annual Fee (%) for all assets On the first $250,000 1.00% On the next $250,000 0.85% On the next $500,000 On the next $ 1 million On the next $ 3 million
0.75% 0.50% 0.40%
On all amounts in excess of $ 5 million Negotiable
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Financial Planning Agreement
A financial plan is designed to help the client with all aspects of financial
planning without ongoing investment management after the financial plan is
completed.
The financial plan may include, but is not limited to: a net worth statement; a
cash flow statement; a review of investment accounts, including reviewing
asset allocation and providing repositioning recommendations; strategic tax
planning; a review of retirement accounts and plans including
recommendations; a review of insurance policies and recommendations for
changes, if necessary; one or more retirement scenarios; estate planning
review and recommendations; and education planning with funding recommendations.
Detailed investment advice and specific recommendations are provided as
part of a financial plan. Implementation of the recommendations is at the
discretion of the client.
The fee for a financial plan is predicated upon the facts known at the start of
the engagement. The fee range is $2,500 to $15,000 and is NEGOTIABLE
depending on the scope of work. Since financial planning is a discovery
process, situations occur wherein the client is unaware of certain financial
exposures or predicaments.
In the event that the client’s situation is substantially different than disclosed
at the initial meeting, a revised fee will be provided for mutual agreement.
The client must approve the change of scope in advance of the additional
work being performed when a fee increase is necessary.
After delivery of a financial plan, future face-to-face meetings may be
scheduled as necessary for up to one month. Follow-up implementation work
is billed separately at the rate of $250 per hour.
_____________________________________________________________
Portfolio Review & Analysis
Fees for portfolio development and analysis are based on fair market value of
investment account. Accounts less than $250,000 will be charged a flat fee of
$1,250. Accounts valued at $250,000 and over will be charged 50% of the annual
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fee per investment advisory fee schedule above. A portion of this fee may be
applied toward the management fee if the client hires applicant to manage the account.
Retainer Agreement
In some circumstances, a Retainer Agreement is executed in lieu of an
Advisory Service Agreement when it is more appropriate to work on a fixed-
fee basis. The minimum annual fee for a Retainer Agreement is $2,000 and
is Not Negotiable.
Hourly Planning Engagements
FINANCIAL PLANNING SERVICES, INC. provides hourly planning services
for clients who need advice on a limited scope of work. The hourly rate for
limited scope engagements is $250 with a one hour minimum.
Termination of Agreement
A Client may terminate any of the aforementioned agreements at any time by
notifying FINANCIAL PLANNING SERVICES, INC. in writing and paying the
rate for the time spent on the investment advisory engagement prior to
notification of termination. If the client made an advance payment,
FINANCIAL PLANNING SERVICES, INC. will refund any unearned portion of
the advance payment.
FINANCIAL PLANNING SERVICES, INC. may terminate any of the
aforementioned agreements at any time by notifying the client in writing. If the
client made an advance payment, FINANCIAL PLANNING SERVICES, INC.
will refund any unearned portion of the advance payment.
Item 6 – Performance-Based Fees and Side-By-Side Management
Financial Planning Services, Inc. does not charge any 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
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Financial Planning Services Inc. generally provides portfolio management services and
financial planning services to individuals, high net worth individuals, small business
pension and profit-sharing plans but may advise other entities.
Investment Advisory Services:
Financial Planning Services, Inc. generally requires a minimum aggregate account value of
$400,000/client to open a portfolio in 2014. Financial Planning Services, Inc. has the
discretion to waive the account minimum. Accounts less than $400,000 may be set up
when the client and the advisor anticipate the client will add additional funds to the
account within a reasonable time to meet the minimum. Other exceptions will apply to
employees of Financial Planning Services, Inc., and their relatives or relatives of existing
clients. When an account falls below the minimum the account will either be maintained
per the stated fee schedule or under an hourly agreement.
Financial Planning and Portfolio Review Services:
There is no net- worth requirement for these services.
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis & Investment Strategies:
Methods may include charting, fundamental analysis, technical analysis and cyclical
analysis. The main sources of information include financial publications, research
materials, annual reports, prospectus, conference calls, webinars, Morningstar, Web
Content and filings with the SEC.
The primary investment strategy is strategic asset allocation. Both passive and actively managed
investments are utilized. Portfolios are individually tailored to a specific client based on the objectives
and risk tolerance as stated by the client during consultations.
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Investing in securities involves risk of loss that clients should be prepared to bear.
Investors face the following risks:
Interest-rate risk: Fluctuations in interest rate risk may cause investment prices to rise or decline.
Market risk: Political, economic and social conditions may trigger market events. The price of a security,
bond, mutual fund or other investment may drop in reaction to tangible and intangible events and
conditions.
Inflation risk: Purchasing power may erode when any type of inflation is present.
Currency risk: Overseas investments are subject to fluctuations in the value of the dollar against the
currency of the investment’s originating country, also referred to as exchange rate risk.
Reinvestment risk: Future proceeds from reinvestments may have to be reinvested at a lower rate of
return – this primarily relates to fixed income investments.
Business risk: Particular industries or companies within an industry may have more risk than others.
Liquidity risk: Some investments cannot be readily converted to cash which may cause concern if you
need cash and this is your only source.
Financial risk: During periods of financial stress a company may not be able to meet its loan obligations
which may result in bankruptcy and/or a declining market value.
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 financial Planning
Services, Inc. or the integrity of it’s management. Financial Planning Services Inc. nor its
employees have been involved in any legal or disciplinary events related to past of present
investment clients.
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Item 10 – Other Financial Industry Activities and Affiliations
FINANCIAL PLANNING SERVICES, INC. has arrangements that are material
to its advisory or its clients with a related person who is a broker-dealer.
Client accounts are held at either Charles Schwab or TD Ameritrade. No
material conflict of interest with the client is created from this relationship.
Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading
Financial Planning Services, Inc. has adopted a Code of Ethics for all supervised persons of
the firm describing its high standard of business conduct, and fiduciary duty to its clients.
The Code of Ethics includes provisions relating to the confidentiality of client information, a
prohibition on insider trading, a prohibition of rumor mongering, 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 Financial Planning Services, Inc. must acknowledge the terms of the Code of
Ethics annually, or as amended. The firm will provide a copy of the Code of Ethics to any
client or prospective client upon request.
Participation or Interest in Client Transactions
FINANCIAL PLANNING SERVICES, INC. and its employees may buy or sell
securities that are also held by clients. Employees may not trade their own
securities ahead of client trades. Employees comply with the provisions of
the FINANCIAL PLANNING SERVICES, INC. Compliance Manual.
Personal Trading
The Chief Compliance Officer of FINANCIAL PLANNING SERVICES, INC. is
Holly K. Nicholson. She reviews all employee trades each quarter. Her
trades are reviewed by herself. The personal trading reviews ensure that the
personal trading of employees does not affect the markets, and that clients of
the firm receive preferential treatment. Since most employee trades are small
mutual fund trades or exchange-traded fund trades, the trades do not affect
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the securities markets.
Financial Planning Services, Inc. anticipates that, in appropriate circumstances, consistent
with clients’ investment objectives, it will cause accounts over which Financial Planning
Services, Inc. has management authority to effect, and will recommend to investment
advisory clients or prospective clients, the purchase or sale of securities in which Financial
Planning Services, Inc., its affiliates and/or clients, directly or indirectly, have a position of
interest. Financial Planning Services, Inc.’s employees and persons associated with
Financial Planning Services, Inc. are required to follow Financial Planning Services, Inc.’s
Code of Ethics.
Item 12 – Brokerage Practices
Selecting Brokerage Firms
FINANCIAL PLANNING SERVICES, INC. does not have any affiliation with
product sales firms. Specific custodian recommendations are made to Clients
based on their need for such services. FINANCIAL PLANNING SERVICES,
INC. recommends custodians based on the proven integrity and financial
responsibility of the firm and the best execution of orders at reasonable
commission rates.
FINANCIAL PLANNING SERVICES, INC. recommends discount brokerage
firms and trust companies (qualified custodians), such as Scottrade, Fidelity,
Charles Schwab and TD Ameritrade. FINANCIAL PLANNING SERVICES,
INC. is an advisor with TD Ameritrade and Charles Schwab.
FINANCIAL PLANNING SERVICES, INC. DOES NOT receive fees or
commissions from any of these arrangements.
Best Execution
FINANCIAL PLANNING SERVICES, INC. reviews the execution of trades at
each custodian each quarter. The review is documented in the FINANCIAL
PLANNING SERVICES, INC. Compliance Manual. Trading fees charged by
the custodians is also reviewed on a quarterly basis. FINANCIAL PLANNING
SERVICES, INC. does not receive any portion of the trading fees.
Soft Dollars
FINANCIAL PLANNING SERVICES, INC. receives a software maintenance
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credit of about $300 per year from Charles Schwab & Company because
some client assets are custodied at Schwab. This credit offsets annual
maintenance fees for our portfolio management software. All clients benefit
from this credit as it reduces the firm.s overall expenses.
The selection of Charles Schwab & Company as a custodian for clients is not
affected by this nominal credit.
Order Aggregation
Most trades are mutual funds or exchange-traded funds where trade
aggregation does not garner any client benefit.
Item 13 – Review of Accounts
Periodic Reviews
Account reviews are performed monthly by advisor Holly K. Nicholson,
President. Account reviews are performed more frequently when market
conditions dictate.
Review Triggers
Other conditions that may trigger a review are changes in the tax laws, new
investment information, and changes in a client's own situation.
Regular Reports
Account reviewers are members of the firm's Investment Committee. They
are instructed to consider the client's current security positions and the
likelihood that the performance of each security will contribute to the
investment objectives of the client.
Retainer agreement clients receive periodic communications on at least an
annual basis. Investment Management clients receive written quarterly
reports.
Item 14 – Client Referrals and Other Compensation
Incoming Referrals
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FINANCIAL PLANNING SERVICES, INC. has been fortunate to receive many
client referrals over the years. The referrals came from current clients, estate
planning attorneys, accountants, employees, personal friends of employees
and other similar sources. The firm does not compensate referring parties for
these referrals.
Referrals Out
FINANCIAL PLANNING SERVICES, INC. does not accept referral fees or
any form of remuneration from other professionals when a prospect or client
is referred to them.
Other Compensation
None
Item 15 – Custody
Clients will receive at least quarterly statements from the qualified custodian that holds and maintains client’s investment assets. Financial Planning Services, Inc. urges you to carefully review such statements and compare such official custodial records to the account statements that we may provide to you. Our statements may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities. Financial Planning Services, Inc. does not custody any client assets.
Item 16 – Investment Discretion
Discretionary Authority for Trading
FINANCIAL PLANNING SERVICES, INC. accepts discretionary authority to
manage securities accounts on behalf of clients. FINANCIAL PLANNING
SERVICES, INC. has the authority to determine, without obtaining specific
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client consent, the securities to be bought or sold, and the amount of the
securities to be bought or sold. However, FINANCIAL PLANNING
SERVICES, INC. consults with the client prior to each trade to obtain
concurrence if a blanket trading authorization has not been given.
The client approves the custodian to be used and the commission rates paid
to the custodian. FINANCIAL PLANNING SERVICES, INC. does not receive
any portion of the transaction fees or commissions paid by the client to the
custodian on certain trades.
Discretionary trading authority facilitates placing trades in your accounts on
your behalf so that we may promptly implement the investment policy that you
have approved in writing.
Limited Power of Attorney
A limited power of attorney is a trading authorization for this purpose. You
sign a limited power of attorney so that we may execute the trades that you
have approved.
Item 17 – Voting Client Securities
Proxy Votes
FINANCIAL PLANNING SERVICES, INC. will vote proxies on securities if
requested. If not requested, clients are expected to vote their own proxies.
When assistance on voting proxies is requested, FINANCIAL PLANNING
SERVICES, INC. will provide recommendations to the Client. If a conflict of
interest exists; it will be disclosed to the Client.
In most cases, FINANCIAL PLANNING SERVICES, INC.s proxy voting policy
is to vote with the board of directors.
Item 18 – Financial Information
Registered investment advisers are required in this Item to provide you with certain
financial information or disclosures about Financial Planning Services, Inc.’s financial
condition. Financial Planning Services, Inc. has no financial commitment that impairs its
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ability to meet contractual and fiduciary commitments to clients, and has not been the
subject of a bankruptcy proceeding.
A balance sheet is not required to be provided because FINANCIAL
PLANNING SERVICES, INC. does not serve as a custodian for client funds
or securities, and does not require prepayment of fees of more than $500 per
client, and six months or more in advance.
Item 19 – Requirements for State-Registered Advisers
Business Continuity Plan
General
FINANCIAL PLANNING SERVICES, INC. has a Business Continuity Plan in
place that provides detailed steps to mitigate and recover from the loss of
office space, communications, services or key people.
Disasters
The Business Continuity Plan covers natural disasters such as snow storms,
hurricanes, tornados, and flooding. The Plan covers man-made disasters
such as loss of electrical power, loss of water pressure, fire, bomb threat,
nuclear emergency, chemical event, biological event, T-1 communications
line outage, Internet outage, railway accident and aircraft accident. Electronic
files are backed up daily and archived offsite.
Alternate Offices
Alternate offices are identified to support ongoing operations in the event the
main office is unavailable. It is our intention to contact all clients within five
days of a disaster that dictates moving our office to an alternate location.
Loss of Key Personnel
FINANCIAL PLANNING SERVICES, INC. has a Business Continuation
Agreement with another financial advisory firm to support FINANCIAL
PLANNING SERVICES, INC. in the event of Holly K. Nicholson’s serious
disability or death.
Information Security Program
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Information Security
FINANCIAL PLANNING SERVICES, INC. maintains an information security
program to reduce the risk that your personal and confidential information
may be breached.
Privacy Notice
FINANCIAL PLANNING SERVICES, INC. is committed to maintaining the
confidentiality, integrity and security of the personal information that is
entrusted to us.
The categories of nonpublic information that we collect from you may include
information about your personal finances, information about your health to the
extent that it is needed for the financial planning process, information about
transactions between you and third parties, and information from consumer
reporting agencies, e.g., credit reports. We use this information to help you
meet your personal financial goals.
With your permission, we disclose limited information to attorneys,
accountants, and mortgage lenders with whom you have established a
relationship. You may opt out from our sharing information with these
nonaffiliated third parties by notifying us at any time by telephone, mail, fax,
email, or in person. With your permission, we share a limited amount of
information about you with your brokerage firm in order to execute securities
transactions on your behalf.
We maintain a secure office to ensure that your information is not placed at
unreasonable risk. We employ a firewall barrier, secure data encryption
techniques and authentication procedures in our computer environment.
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We do not provide your personal information to mailing list vendors or
solicitors. We require strict confidentiality in our agreements with unaffiliated
third parties that require access to your personal information, including
financial service companies, consultants, and auditors. Federal and state
securities regulators may review our Company records and your personal
records as permitted by law.
Personally identifiable information about you will be maintained while you are
a client, and for the required period thereafter that records are required to be
maintained by federal and state securities laws. After that time, information
may be destroyed.
We will notify you in advance if our privacy policy is expected to change. We
are required by law to deliver this Privacy Notice to you annually, in writing.
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Brochure Supplement (Part 2B of Form ADV)
Education and Business Standards
FINANCIAL PLANNING SERVICES, INC. requires that advisors in its employ
have a bachelor's degree and further coursework demonstrating knowledge of
financial planning and tax planning. Examples of acceptable coursework
include: an MBA, a CFP®, a CFA, a ChFC, JD, CTFA, EA or CPA.
Additionally, advisors must have work experience that demonstrates their
aptitude for financial planning and investment management.
Professional Certifications
Employees have earned certifications and credentials that are required to be
explained in further detail.
Certified Financial Planner (CFP): Certified Financial Planners are licensed
by the CFP Board to use the CFP mark. CFP certification requirements:
.
Bachelor.s degree from an accredited college or university.
.
Completion of the financial planning education requirements set by the
CFP Board (www.cfp.net).
.
Successful completion of the 10-hour CFP® Certification Exam.
.
Three-year qualifying full-time work experience.
.
Successfully pass the Candidate Fitness Standards and background
check.
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Holly K. Nicholson, Certifications Education & Business Background
Holly K. Nicholson.
Born: 1955
Education: B.A. (Business/Personnel)
1977 University of Kansas
Doctorate - Law
2003 UNC Chapel Hill
Professional Designations: CFP, JD
NAPFA – Registered Financial Advisor
Business Background:
1989 – present Financial Planning Services, Inc. Raleigh, NC
President
1977 – 1989 Carolina Power & Light Co. (now Duke Energy)
Human Resources
Disciplinary Information: None
Other Business Activities: None
Additional Compensation: None
Supervision:
Self
Contact Information:
919-676-2806 [email protected] www.askholly.com
Arbitration Claims: None
Self-Regulatory Organization or Administrative Proceeding: None
Bankruptcy Petition: None