The Value of Our Advisory Relationship SHORE WEALTH MANAGEMENT

Transcription

1 The Value of Our Advisory Relationship SHORE WEALTH MANAGEMENT

2 When you were younger, your financial needs were probably straightforward. Maybe you got a bonus from your employer and were looking to invest it. Maybe you needed help setting up a college fund or picking out a life insurance policy to help protect your new family. But as you get older, your financial needs become more complex. Instead of a quick recommendation on which stock or insurance policy to buy, you may need more personalized services: How do you start building a portfolio and planning for the future? Can you plan to send your children to private school? How can you use your assets to send your children to college in 10 years? How do I know my family s financial future is protected? Do you need guidance on how to manage your investments to potentially retire at 65? Do you know how much money you will need to fund the retirement lifestyle of your dreams? Do you have the apropiate plan to leave your intended financial legacy? These are the types of questions we can help you and your family answer.

3 Commission Versus Fee-Based Services What are the differences between commission-based and fee-based services? Commission-based services pay brokers and brokerage firms a commission for each sale. In a fee-based or advisory relationship, you are charged a fee for personalized services, including: Portfolio construction In addition to a more personalized approach to investing, fee-based services align the performance of your advisory accounts with my compensation. My compensation, as your investment adviser representative, is not tied to transaction charges or sales commissions. Instead, my fee is a fixed percentage of your accounts values. So, we have a mutual interest in growing your assets. Investment recommendations Financial planning tailored to your unique goals and time lines Asset management services to support your individual needs

4 Benefits of Fee-Based Services As an advisory client, you ll enjoy the following benefits of our fee-based relationship: Regular, personalized communication feebased services rely on an ongoing relationship. You and I will meet one or more times a year to ensure your investment policy is tracking toward its goals. You will also receive regular Quarterly Performance Reports by mail that illustrate your progress, as well as online access to view your portfolio on a daily basis. The regular communication can help you gain confidence in our investment strategy. Professional guidance as an investor, you are flooded with information in the media and on the Internet that can help you make informed financial decisions. But, do you have the time to research each investment strategy and product? I can relieve the burden of making individual buy and sell decisions. You can feel more comfortable knowing your money is being professionally managed. Greater transparency in today s economic climate, transparency is a major factor in consumer confidence. When compared to commissionbased services, fee-based services are much more transparent. Advisory fees are a fixed percentage of your accounts values, and they are clearly displayed in your Quarterly Performance Reports. A more disciplined approach to investing markets inevitably rise and fall, and sometimes cause investors to make emotional decisions. Following an investment policy and our time tested research helps to institute a methodical, disciplined approach to investing that can strike a balance between risk and reward. A mutual incentive my compensation, as your investment adviser representative, is a fixed percentage of your accounts values. So, the performance of your advisory accounts is directly proportional to the fees I collect. I am genuinely motivated to grow your portfolio and preserve your wealth. Potential tax benefits fees for advisory accounts are potentially deductible against your federal income taxes, which could translate into savings. For more details, speak to your tax professional. Securities and advisory services offered through Cetera Advisor Networks LLC (doing insurance business in CA as CFGAN Insurance Agency), member FINRA/SIPC. Investments are: Not FDIC/NCUSIF insured May lose value Not financial institution guaranteed Not a deposit Not insured by any federal government agency. Advisory services may only be offered by investment adviser representatives in conjunction with the firm advisory services agreement and disclosure brochure as provided.

5 Side-by-Side Comparison Fee-Based (Advisory) Services Investment amount not reduced by front-load sales charge. Investment adviser representatives can freely recommend funds from different mutual fund families. Investment adviser representatives use institutional or advisory share class funds that can translate into lower internal fund expenses. Detailed Quarterly Performance Reports list performance, capital gains/losses, cost basis and fee summaries. Advisory accounts can be discretionary, meaning you can choose to let your investment adviser representative place trades without asking for your permission. Discretion lets your investment adviser representative proactively manage your account in real time according to your risk profile. For example, if a stock reaches a pricing threshold, your investment adviser representative can trade it without asking for your permission. If you prefer to authorize individual trades, advisory accounts can also be provided on a non-discretionary basis. You pay for advice instead of products, and the revenue earned by your investment adviser representative is directly proportional to your accounts values. Investment adviser representatives are required to put their interests aside and provide advice on what s best for you. Per industry regulations, investment adviser representatives must disclose any previous disciplinary history, possible conflicts of interest, and sources of income to you. Advisory fees are potentially deductible against your federal income taxes, which could translate into savings. For more details, consult your tax professional. Advisory fees compensate investment adviser representatives for recommending no-load funds. Commission-Based (Brokerage) Services Front-load sales charge reduces your net investable amount. In order to achieve reduced sales charges, brokers may limit the number of mutual fund families in their recommendations. Brokers use retail share classes that can translate into higher internal fund expenses. Basic transaction and valuation reporting. Brokerage accounts are only non-discretionary; brokers cannot place an order or trade without your consent. Brokers are compensated only when they sell a new investment product. Brokers are not required to notify you about payment incentives they may receive from your business. Brokers are not required to disclose their qualifications or disciplinary history unless you ask. Commissions are not tax deductible. Brokers are not compensated for no-load funds, so they have no incentive to sell them.

6 {Investment Analysis Process } The investment process affords you access to the knowledge, resources and experience of professional investment managers while you receive ongoing guidance from me your investment adviser representative. I will employ a five-step process that identifies your goals, constructs an appropriate strategy, implements the investment plan and periodically monitors it for effectiveness through market cycles. I follow certain standards of conduct while managing your portfolio. Such standards can include offering diversification, analyzing risk and returns, avoiding expenses that are not justified by your needs, and delegating duties where specialized assistance is needed. The goals and needs of each client are unique. Investment returns and time horizons that you desire can be quite different from those of other clients. The general process that we will walk through together includes: Understanding Your Goals and Needs Conducting Periodic Portfolio Reviews Developing Your Investment Policy Statement Implementing Your Plan Designing Your Portfolio Continued on next page Mutual funds, ETFs and variable annuities are only offered through a prospectus. Please consider investment objectives, risks, charges and expenses carefully before investing. The prospectus contains this and other important information and can be obtained from your investment adviser representative or the investment company. Be sure to read the prospectus carefully before investing.

7 {Investment Analysis Process } Understanding Your Goals and Needs I can guide you through a series of questions that can help clarify your current financial position, investment goals and outlook. This evaluation also gives you a complete picture of your risk tolerance, time horizon and cash flow needs. Developing Your Investment Policy Statement Then, I will create an Investment Policy Statement, which outlines how your account should be managed. This document usually summarizes risk tolerance, time horizon, asset allocation, fund selection and the rebalancing criteria by which your accounts are managed. This can serve as your blueprint for potential investment success. Designing Your Portfolio When your investment objectives are clear, I can develop possible investment allocation strategies. Strategies are selected for optimal asset allocation,* which can be the most important decision affecting your long-term investment performance. How assets are dispersed among various asset classes can have more impact on performance than the selection of a specific mutual fund, stock or bond within an asset class. Implementing Your Plan With a wide range of investments in a flexible investment platform, I will customize your portfolio by assisting you in selecting suitable investments such as mutual funds, exchange traded funds (ETFs), stocks and bonds. Conducting Periodic Portfolio Reviews I can also provide a periodic portfolio review that encompasses investment objectives and portfolio performance to help ensure that progress is being made toward your original goals.

8 Our mission is to guide our clients and their family through each stage of life s financial journey. With our comprehensive and disciplined process we give our clients financial peace of mind. Your Goals are Our Focus 3609 N. Vermilion St. Suite C Danville, IL shorewm.com SHORE WEALTH MANAGEMENT