Item 1 Cover Page 3883 Telegraph Rd., Suite 100, Bloomfield Hills, MI 48302 248 642 6640 or 800 347 3539 (outside Metro Detroit) March 31, 2011 This Brochure provides information about the qualifications and business practices of New SIMCO, Inc. If you have any questions about the contents of this Brochure, please contact our Compliance Department at 248 642 6640 or 800 347 3539 (Outside Metro Detroit) or email faffatato@flexibleplan.com. 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. 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 also is available on the SEC s website at www.adviserinfo.sec.gov. Part 2A of Form ADV i 0311
Item 2 Material Changes On July 28, 2010, the United State Securities and Exchange Commission published Amendments to Form ADV which amends the disclosure document that we provide to clients as required by SEC Rules. This Brochure dated March 31, 2011 is a new document prepared according to the SEC s new requirements and rules. As such, this document is materially different in structure and requires certain new information that our previous brochure did not require. In the future, this Item will discuss only specific material changes that are made to the Brochure and provide clients with a summary of such changes. We will also reference the date of our last annual update of our brochure. In the past we have offered or delivered information about our qualifications and business practices to clients on at least an annual basis. Pursuant to new SEC Rules, we will ensure that you receive a summary of any material changes to this and subsequent Brochures within 120 days of the close of our business fiscal year. We may further provide other ongoing disclosure information about material changes as necessary. We will further provide you with a new Brochure as necessary based on changes or new information, at any time, without charge. Currently, our Brochure may be requested by contacting our Compliance Department at 248 642 6640 or 800 347 3539 (outside Metro Detroit) or by emailing faffatato@flexibleplan.com. Additional information about is also available via the SEC s web site www.adviserinfo.sec.gov. The SEC s web site also provides information about any persons affiliated with who are registered, or are required to be registered, as investment adviser representatives of SEC File # 801 60235 Part 2A of Form ADV ii 0311
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... 2 Item 6 Performance Based Fees and Side By Side Management... 3 Item 7 Types of Clients... 3 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss... 3 Item 9 Disciplinary Information... 6 Item 10 Other Financial Industry Activities and Affiliations... 6 tem 11 Code of Ethics... 6 Item 12 Brokerage Practices... 7 Item 13 Review of Accounts... 7 Item 14 Client Referrals and Other Compensation... 8 Item 15 Custody... 9 Item 16 Investment Discretion... 9 Item 17 Voting Client Securities... 9 Item 18 Financial Information... 10 Brochure Supplement Supplemental Information for Jerry C. Wagner...11 Part 2A of Form ADV iii 0311
Item 4 Advisory Business Overview New SIMCO Inc. ( SIMCO or Adviser or we or our ) is a wholly owned subsidiary of Flexible Plan Investments, Ltd. ( FPI ). SIMCO was organized in 2001 to acquire the investment management business of Sosnowy Investment Management Company, Inc. Both SIMCO and FPI are investment advisers registered under the Investment Advisers Act of 1940. Please note that SIMCO has no employees and all of its investment advisory services and operations are performed by its parent corporation, FPI. As of 12/31/10 SIMCO had $5,481,873 of discretionary assets under management. For purposes of the following discussion, unless otherwise specified, the term "Investment" includes mutual funds, exchange traded funds, annuities, insurance or other investment products having unit values determined on a daily basis. Adviser utilizes risk management investment plans known as "tactical allocation and "dynamic asset allocation." Client accounts are established in one or more Investment Families. An Investment Family means a mutual fund complex, insurance company, brokerage firm, or a trust company custodian that maintains a universe of Investments suitable for Adviser's management. Unless otherwise noted, account assets are invested by purchases and sales of money market, equity, and/or bond Investments based upon the advisability of the purchase or sale as supported by numerous indicators followed by Adviser. Use of any Investment Plan is limited to those Investments approved by Adviser. Other restrictions may apply. Note: There is no generally accepted definition of the term "Market Timing." Adviser does not engage in what is now commonly referred to as market timing, i.e. international arbitrage. However, a broad definition of the term could encompass any Plan employed other than "buy and hold," which Adviser does not employ. Investment Advisory Services SIMCO s mission is to provide the best possible investment management to its Clients on an ongoing basis. Decisions as to the investment of Client funds are made on the basis of Client requests and their suitability questionnaire responses. Adviser requires clients to complete a suitability questionnaire as part of the Investment Management Agreement. The client s questionnaire responses are used to calculate a risk profile (conservative, moderate, growth or aggressive) and the client supplies aninvestment time horizon, both of which condition the client s selection of an investment management strategy. Clients may impose restrictions on Adviser s use of specific mutual fund investments. At least quarterly, Adviser inquires of each Client whether there has been any change in the Client's financial situation and individual needs. At the close of each quarter, the Client is Part 2A of Form ADV 1 0311
also provided with a statement of their account, along with a summary of all transactions during the previous quarter. Adviser encourages its Clients to call if they have questions or need consultation regarding the management or administration of their accounts. Item 5 Fees and Compensation SIMCO s investment advisory fees are: Quarterly Annual Managed Assets Percentage Percentage Valuation to $ 250,000.500% 2.00% Next $ 250,000.375% 1.50% Next $ 500,000.250% 1.00% Next $ 4,000,000.175%.70% Next $ 5,000,000.125%.50% Over $ 10,000,000 Ask for details Minimum Quarterly Fee: $125.00. Payment is due upon receipt of invoice. If payment is not received within 30 days, the Investment Advisory Agreement may be terminated. Termination will not constitute a waiver of SIMCO s right to proceed against Client for monies owed under this contract. SIMCO reserves the right to modify the above fee schedule with thirty (30) days advance written notice. Adviser's fee may be higher than that charged by other advisers for similar services. Investment of assets in securities such as mutual fund shares and variable annuity contracts also involve management fees and expenses associated with such ownership as described in their prospectus, in addition to the SIMCO advisory fee. All fees are subject to negotiation. SIMCO, at its sole discretion, may waive all or part of any advisory fees, and managed assets of related accounts may be aggregated for purposes of computing the above fees. The initial billing period includes a pro rata fee for the balance of the current quarter plus one full calendar quarter s fee. Thereafter, fees are billed quarterly in advance, based on the value of managed assets as of the last business day of the prior quarter. A Client may rescind the Investment Advisory agreement without penalty within five (5) business days after entering into the agreement. Non-payment of fees does not serve as notice of termination or rescission. Part 2A of Form ADV 2 0311
Should the Investment Management Agreement between the Adviser and a Client be terminated prior to the date all services have been rendered and for which a fee has been prepaid, the unearned portion of the fee will be refunded to the Client less a termination fee of $100 or 33 1/3% of the quarterly fee, whichever is greater. No fees are refunded on partial withdrawals made during a calendar quarter. Ten (10) days prior written notice by either party is required to terminate the Investment Management Agreement. Client's decision to terminate the Investment Management Agreement with SIMCO does not in any way obligate Client to make a change in the underlying mutual fund and /or annuity product(s) in which Client is invested. In fact, liquidation of such accounts may result in unnecessary taxes and/or penalties (deferred sales loads) for early redemption. Item 6 Performance Based Fees and Side By Side Management Adviser 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) and Adviser does not employ side-byside management. Item 7 Types of Clients Adviser provides investment advisory services to individuals, high net worth individuals, corporate pension and profit-sharing plans, charitable organizations, corporations, and other businesses. Minimums to Open and Maintain an Account While Adviser does not have a minimum dollar value of assets under management, Adviser does have a minimum quarterly fee of $125.00. Therefore, Adviser recommends that an investor not open an account for less than $25,000 under management, in order to keep the fee percentage at a reasonable level. Item 8 Methods of Analysis, Investment Strategies and Risk of Loss Methodology SIMCO offers tactical asset allocation/risk management services for the management of Clients' mutual funds and variable annuity Investments. The purpose and goal of SIMCO's services is to seek to capture gains during rising market periods and to seek to preserve the Client's capital during declining market periods. SIMCO uses a computerized econometric model based on a set of proprietary indicators and calculations designed to project major market movements. John K. Sosnowy originated this model in 1970 while Mr. Sosnowy was associated Part 2A of Form ADV 3 0311
with another investment firm, and prior to 1984, the model was primarily used for Mr. Sosnowy's brokerage firm Clients. The model was used by Sosnowy Investment Management Company, a Registered Investment Adviser under the Investment Adviser s Act of 1940 until SIMCO succeeded to its business on March 31, 2001. The SIMCO model is used to determine when to change the allocations in, and/or exchange into and out of various funds having different investment objectives within families of mutual funds. SIMCO forms its exchange signals on the basis of the analytical interpretation of calculations made in three major areas: fundamental indicators, monetary indicators, and technical indicators. In addition, the charting of asset value movements for the mutual fund shares and variable annuity sub-accounts being utilized provides the background for market recommendations. The objective is to optimize results over complete market cycles. SIMCO does set predetermined risk control levels before taking positions. Such stop-loss trigger point calculations, are done internally with a "model portfolio" as a part of the econometric model signal and not for individual funds, and are subject to change at SIMCO's discretion without prior notice, depending on market volatility and conditions. While useful in offering protection against openended loss, "stop-loss triggers" offer no guarantee of an exact loss floor and, in fact, can be, in effect, offset by a simultaneous buy signal on SIMCO's model. Investment Strategies Aggressive Growth Plan: Seeks to provide aggressive long-term capital appreciation (5+ years). Suitable for a Client who understands and accepts risk inherent in 100% exposure to stocks on a SIMCO buy signal; and who understands and accepts the risk of 100% exposure to an "inverse" fund or precious metals fund (whichever is applicable) when the SIMCO model indicates a high probability of severe negative stock market performance. Dynamic Asset Allocation Plan: Seeks to provide long-term (5+ years) growth or growth with income. Suitable for a Client who understands and accepts risk inherent in a partial or full exposure at times in stocks and/or bonds, but would not be comfortable with the all-ornone approach of the SIMCO Growth Plan. Growth Plan: Seeks to provide long-term capital appreciation (5+ years). Suitable for a Client who understands and accepts risk inherent in 100% exposure to stocks on a SIMCO buy signal. The Client selects the family or families of mutual funds and/or variable annuity contract universes to be used, and also indicates Client's investment objectives, conditioned by Client s suitability questionnaire responses, of aggressive capital appreciation, capital appreciation or growth with income (Aggressive Growth Plan, Growth Plan, and Dynamic Asset Allocation Plan). Part 2A of Form ADV 4 0311
SIMCO s authority to determine, without obtaining specific Client consent, the amount of securities to be bought or sold, is limited by the amount of securities owned by the Client in the universe of funds under management by SIMCO, since SIMCO s discretionary authority to purchase and sell securities is limited to exchanging such securities within families of funds and/or variable annuity contracts, and SIMCO is not authorized to redeem the securities for cash. Such exchanges may result in short-term capital gains or losses. SIMCO does not consider the personal tax ramifications that an exchange may have on an individual Client. While SIMCO uses its best efforts to make all exchanges within one business day of calculating a buy or sell signal, a delay of several days or more could occur under extraordinary circumstances. In any such event, SIMCO assumes no responsibility for any possible losses. Risk of Loss Investing in securities involves risk of loss that clients should be prepared to bear including: Market Risk: Participation in Investment Plans subjects the investor to the risks of the market place and are the risk of the Client. There is no guarantee that the investment objectives can be obtained. Third Party Risk: Third parties (including without limitation, broker dealers, registered representatives, insurance agents, investment advisers, custodians, insurance companies, transfer agents, solicitors and employees and agents of each of them) provide services, systems, information, programs and data upon which Adviser relies and is believed to be reliable but is unable to guarantee. As such, all trading is on a "best efforts" basis. Fees: Investment Families may impose substantial redemption charges on Investments held for less than a minimum period established by the Investment Family. While Adviser will make reasonable efforts where possible to avoid imposition of such charges, no guarantee is made that Client will not incur such charges. Clients entering and exiting a strategy using funds with redemption fees may incur such charges. Redemption charges are incurred by the Client and are not included in Adviser's fee. Terminations: Either party upon receipt of written notice may terminate the Investment Management Agreement. If a termination request is received from the Client, the adviser shall notify the Investment Family(s) within five (5) trading days of Adviser's receipt of notice of such termination. If an exchange occurs during this period, the Client s funds may or may not be exchanged for which the Adviser shall not be held responsible. ADVISER WILL NOT CHANGE THE THEN INVESTED POSITION OF THE INVESTMENTS. (Note: You are not required to terminate any annuity contract or liquidate a mutual fund account to terminate Adviser's management service. Should you decide to terminate, a surrender/redemption charge or penalty may be imposed by your annuity or fund provider.) Part 2A of Form ADV 5 0311
Other Risk Considerations: In addition to the general investment risks of the plan, specific risks may be associated with the individual plan(s) selected. For details and other risk factors, please review your Investment Management Agreement, and the contents of this Brochure Form ADV. 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 SIMCO or the integrity of SIMCO s management. SIMCO has no information applicable to this Item. Item 10 Other Financial Industry Activities and Affiliations SIMCO is a wholly owned subsidiary of FPI. SIMCO was organized in 2001 to acquire the investment management business of Sosnowy Investment Management Company, Inc. Both SIMCO and FPI are investment advisers registered under the Investment Advisers Act of 1940. Item 11 Code of Ethics SIMCO has no employees. Its operations are conducted by personnel employed by its parent corporation, FPI. The conduct required of FPI supervised persons is governed by Policies and Procedures and a Code of Ethics adopted by FPI, as follows: Code of Ethics. FPI has adopted a Code of Ethics for all supervised persons of FPI as governance for the conduct of its business and fiduciary duty to its Clients. Certain conduct is singled out in FPI s Code of Ethics for prohibition. Other conduct may be prohibited from time to time as circumstances may warrant or as may be required to assure that this Code remains compliant with Rule 17j-1 of the Investment Company Act of 1940 and the Investment Adviser Act of 1940 as amended. All supervised persons must acknowledge the terms of the Code of Ethics annually, or as amended. FPI will provide a copy of the Code of Ethics to any Client or prospective Client upon written request. Participation or Interest in Client Transactions. FPI, at its discretion, effectuates transactions in the Investments discussed in Item 8 pursuant to a limited power of attorney contained in each Investment Management Agreement. With respect to FPI's investment trading strategy, FPI or its employees may have a position or interest in the Investment utilized by its Part 2A of Form ADV 6 0311
Clients. However, since open-end mutual funds by their nature have large diversified portfolios, and, as all strategy trades made on a given day are assigned the same buy or sell price, there is no allocation policy necessary for such shares or for those shares which have specific morning trading closes as well as end of day closes. Employee Personal Securities Trading. FPI does not restrict its employees or agents with respect to trading in the Investments discussed in Item 8 provided, however, FPI does not permit its employees to trade on the basis of material, non-public information, or to direct trades of mutual funds or variable annuity sub-accounts as to which FPI serves as adviser in a capacity other than as an employee of FPI. Item 12 Brokerage Practices Clients must purchase the securities to be managed by SIMCO (mutual funds or variable annuities) through a non-affiliated registered broker/dealer. SIMCO receives Clients primarily from solicitor firms such as broker/dealers, other investment advisers, and other qualified persons that serve as solicitors for SIMCO, none of whom is affiliated with SIMCO. These solicitors may suggest a non-affiliated broker/dealer as a broker to Clients; the Clients are either purchasing mutual funds and/or variable annuity contracts, where the commission structure for the identical product will not normally vary from broker to broker. The solicitors, as a representative of the non-affiliated broker/dealer, may be agent of record for numerous mutual fund and variable annuity accounts who are not currently discretionary Clients of applicant's investment advisory services. However, these solicitors may communicate with and offer investment advice to these accounts concerning their portfolios and from time to time will handle transactions for them as a registered representative, and for that service may receive a commission. Item 13 Review of Accounts Quarterly Review. Investment advisory accounts are computer tracked from statement data received from the Investment vehicles or brokerage firm through which the Investment is purchased. Accounts are reviewed by FPI s staff under the supervision of the Operations Project Manager. Such data is received on a daily, weekly, monthly or quarterly basis, as determined by the Investment provider. Accounts are reviewed when fees are billed. Other than the receipt of such data, requests by a client or the passage of time (i.e. the ending of the quarter), there are no other factors that would trigger such review, nor is there any predetermined sequence of review. At time of review, accounts are reviewed to determine whether or not transaction records maintained by the Adviser accurately reflect such Part 2A of Form ADV 7 0311
transactions. When an account is originally opened with an Investment, all information concerning Adviser shown on the Investment's statements are reviewed to confirm its accuracy (e.g. name, address, etc.). Quarterly Reporting. In addition to the reports described below that are sent directly by Adviser, clients receive from an independent qualified custodian, not less frequently than quarterly, an account statement detailing all transactions and holdings of the client's account. All clients receive a quarterly report summarizing all transactions during the prior quarter, listing all accounts and their quarter ending values, and their total assets under management, along with an advisory fee invoice. Item 14 Client Referrals and Other Compensation Non-affiliated solicitors may receive commissions, 12b-1 "trailer fees," incentive awards, referral or finders fees, or other types of compensation from a non-client, in connection with giving advice to a Client. Adviser's Affiliate (FPI) receives from certain broker/dealers, trust companies, mutual funds, variable annuities, and other investment Advisers computer software and services related to account management which permit Adviser to transmit trading instructions and to receive account information, including trade confirmations and account inventories, electronically via computer modem. Occasionally, these entities will provide financial assistance to advisers for conferences, sales or employee training plans, travel and lodging expenses for meetings and seminars held at various locations and gifts of nominal value as permitted under applicable regulations. The services received by Adviser are not related to the amount of transaction fees paid by Clients and therefore Clients are not charged increased transaction fees by such persons by reason of the services provided by them to Adviser. Adviser may also suggest that Clients use a custodian other than a broker/dealer, such as a bank or trust company. All such custodians are unaffiliated with the Adviser, and separately report to Client. Any such custodian is under separate contract with the Client. SIMCO has in the past and may in the future enter into solicitor agreements with various third party investment advisers and/or broker/dealers and their registered representatives who have no advisory capacity in connection with the exchange of securities under SIMCO's management. The third party solicitor may receive or have received commissions for the Client's initial purchase of the particular mutual fund or variable annuity. SIMCO does not receive any portion of these commissions. The solicitor agreements and resulting compensation to the adviser and/or broker/dealer and his registered representative is disclosed and acknowledged in writing by the SIMCO Client. Part 2A of Form ADV 8 0311
Item 15 Custody Adviser does not provide custodial services to its clients. Client assets are held with non-affiliated qualified custodians. However, Adviser has authority to debit fees directly from client accounts. For this reason only, Adviser is deemed to have custody of client funds. Clients should receive at least quarterly statements from the qualified custodian that holds and maintains Client s investment assets. Adviser urges Clients to carefully review such statements and compare such official custodial records to the account statements that Adviser may provide to them. Adviser statements may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities. Item 16 Investment Discretion SIMCO has discretionary authority only to exchange assets from one fund to another within the families of funds and/or annuity contract universes selected and acknowledged in writing by the Client. This authority does not extend, however, to the redemption of securities for cash. It should be emphasized that families of funds either do not charge or may have a token charge for exchanging assets from one fund to another within the same family. Investment Families may impose substantial redemption charges on Investments held for less than a minimum period established by the Investment Family. While reasonable efforts will be made by Adviser where possible to avoid imposition of such charges, no guarantee is made that Client will not incur such charges. Clients entering and exiting a strategy using funds with redemption fees may incur such charges. Redemption charges are incurred by the Client and are not included in Adviser's fee SIMCO's authority to determine, without obtaining specific Client consent, the amount of securities to be bought or sold, is limited to the amount of securities owned by the Client in the universe of funds under management by SIMCO, since SIMCO's discretionary authority to purchase and sell securities is limited to exchanging such securities within families of funds and/or variable annuity contracts, and SIMCO is not authorized to redeem the securities for cash Item 17 Voting Client Securities As a matter of firm policy and practice, Adviser does not have any authority to and does not vote proxies on behalf of advisory Clients. Clients retain the responsibility for receiving and voting proxies for any and all securities maintained in Client portfolios. Adviser may not provide advice to Clients regarding the Clients voting of proxies. Part 2A of Form ADV 9 0311
Item 18 Financial Information Registered investment advisers are required in this Item to provide you with certain financial information or disclosures about Adviser s financial condition. Adviser has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients, and has not been the subject of a bankruptcy proceeding. Part 2A of Form ADV 10 0311
Jerry C. Wagner 3883 Telegraph Rd. Suite 100 Bloomfield Hills, MI 48098 248 642 6640 or 800 347 3539 March 31, 2011 This Brochure Supplement provides information about Jerry C. Wagner, a supervised person that supplements the Brochure. You should have received a copy of that Brochure. Please contact our Compliance Department at 248 642 6640 or 800 347 3539 outside Metro Detroit or faffatato@flexibleplan.com if you did not receive s Brochure or if you have any questions about the contents of this supplement. Additional information about Jerry C. Wagner is available on the SEC s website at www.adviserinfo.sec.gov. Part 2A of Form ADV 11 0311
Item 2 Educational Background and Business Experience Jerry C. Wagner, JD is President and Chief Investment Officer of Flexible Plan Investments, Ltd. and CEO and Treasurer of Mr. Wagner was born on May 7, 1947. He holds the degree of Juris Doctor awarded by the University of Michigan in 1973 and degrees of Masters in Labor & Industrial Relations (1970) and Bachelor of Arts (1969) from Michigan State University. Mr. Wagner has been a member of the State Bar of Michigan since 1973. He has been the principal investment adviser representative for Flexible Plan Investments, Ltd. since 1981. His business experience for the last 5 years is as follows: Flexible Plan Investments, Ltd. Investment Adviser President and CEO February 1981 to Present Investment Adviser CEO and Treasurer February 2001 to Present Welch Wagner Associates Real Estate Syndication Partner December 1988 to December 2010 My Estate Manager, LLC Internet Service Provider Advisory Board Member January 2009 to Present Wagner and Associates Attorney at Law Founded in 1988 to Present State Bar of Michigan Member 1973 to Present Item 3 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 each supervised person providing investment advice. No information is applicable to this Item. Item 4 Other Business Activities Mr. Wagner is not involved in any other investment related business but he is a licensed attorney at law and Member of the State Bar of Michigan; was a general partner in Welch Wagner Associates, a real estate partnership management company; is a unitholder and advisory board member of My Estate Manager, LLC, a web based estate planning resource center. He spends an immaterial amount of his time in these capacities. Item 5 Additional Compensation Mr. Wagner does not receive any additional compensation beyond his salary, bonus and sub chapter S earnings from his 100% ownership of Flexible Plan Investments, Ltd., a Michigan sub chapter S corporation. Part 2A of Form ADV 12 0311
Item 6 Supervision Mr. Wagner is an attorney knowledgeable in securities law. His advisory activity is monitored through the firm s compliance department. Part 2A of Form ADV 13 0311