An Invitation to a Successful Financial Planning Relationship With Us

Welcome to Sound Financial Planning!

We believe in the value of comprehensive financial planning. Financial planning is one of the most important services that successful people use to create an extraordinary business career and personal life. We expect to build a trusted advisory relationship with you over your lifetime.

Effective financial planning requires a commitment from both the planner and the client. These Engagement Standards will help you get the most out of the experience, and help both of us produce beneficial, lasting results in your life. If the Engagement Standards are followed carefully, there is a higher probability that you will benefit from our services for the rest of your life.

Clientele: Who are our current clients? What kind of people work with us and utilize our services?

Financial planning works best with people who are willing to learn, grow and take action, and when there is a gap between where you are now and where you want to be.

Most of our clients are affluent or semi-affluent individuals and families who desire ongoing professional assistance and coaching in the creation and implementation of strategies to reach their life goals, as they may exist now or develop in the future.

Our planning firm is recognized as one of the best in the country. However, we realize that our service is not right for everyone. Over the years, we have found that our firm works most effectively with people who share some or all of the following characteristics:

A desire to live a more meaningful life.

An open mind and a willingness to creatively brainstorm with us--to engage in a continuing dialogue about the goals that drive their life values.

An understanding that there are many ways to live and an openness to exploring their choices.

A willingness to make a shift in behavior if it furthers their long term goals.

Consider our firm to be the chief financial officer of their personal and/or business life;

Recognition that we don’t have all the answers, and that financial planning--like life--is really not an exact science.

A desire to be a conscious and prudent consumer.

Realistic investment objectives and a willingness to communicate those expectations to our firm clearly;

A willingness to accept the investment returns offered by the market, recognizing that there is no foolproof way to “beat the market” or achieve above-average performance.

Sufficiently trusts us and our advice that they commit to ignoring all financial porn (CNBC, financial magazines, well-intended co-workers, friends, relatives, and neighbors);

A commitment to hold up their end of the engagement by delivering financial information and completing the necessary tasks in a timely manner;

A recognition that big goals can be achieved by making small changes consistently over time;

A desire to have a financial plan that organizes their financial lives, and which uses their human and financial capital to create a result which helps them achieve their goals;

A willingness to delegate unwanted work to a professional financial advocate on an ongoing basis;

A willingness to look for other people who have a need for better financial planning service, and to refer these people to our offices for the same kind of help that they receive.

Overview: What services does Sound Financial Planning provide you?

Comprehensive financial planning integrates seven key areas of your financial life:

1) asset management (your total investment picture)

2) disability and risk management (protecting you from catastrophe)

3) tax planning and management (improving your wealth-building efficiency)

4) debt management (reducing unnecessary expenses)

5) estate planning (helping you transfer your lifetime assets to your heirs and/or to worthy causes)

6) charitable (or social capital) planning, to help you give back to the community

7) An evaluation of the goals and objectives that provide a context for the financial plan as a whole.

All of these areas are important to helping you achieve personal financial success. Successful people need and value all aspects of financial planning. If any one of these areas is not examined before decisions are made, then there is a danger of providing advice that may conflict with your actual needs.

Our planning services include mathematical analysis and forecasting, professional evaluation and advice, specific recommendations, support, a structure for making decisions, and accountability--all so that we can enable people to make effective financial decisions, and to find ways to become more effective in their personal and business lives. Often people work with us to put issues into perspective, and to make important decisions that require professional analysis.

In the broadest possible sense, our goal and duty is to be your advocate in every area of your life in which we are allowed to be a part. We are willing and ready to stand between our clients and the difficulties of life, to help you make decisions that will resolve existing problems and prevent future ones.

When it is not possible for our team to handle your problems alone, we will call in outside professionals and monitor the relationship to ensure that the work done on your behalf is of the highest standards. We also strive to be the best friend, confidant, and mediator of conflict that a person can have.

Grounds for a good working relationship: What are our core beliefs and philosophies?

It is our view, not that "Life is too short," but rather that "Life is too long, not to be doing those things that are fun and rewarding," and that the majority of people in our society and culture don't spend enough time examining these issues.

We believe that the money is "the means, not the goal." While money can assist the achievement of these goals, often there are other ways to achieve these goals which may have little to do with personal finance, and which are instead related to astute lifestyle choices.

We also believe that in our society, there are certain activities, undertaken by professionals and financial consumers, that are usually harmful to a person’s financial health. Financial publications, chat rooms and discussion forums, and many television programs promote investment habits which we believe--and which the most respected financial research confirms--are at best unproductive and at worst destructive.

At our firm, we do not believe in the concept of “hot” stocks or in seeking short-term returns from any investment.

Nor do we believe in attempting to “time” the market, which usually means moving investments out of the markets when a manager thinks they are going to go down, and/or moving back in when a manager thinks the markets are going to move up.

We also believe that if your time horizon is greater than three years, you should accept some of the volatility risks of the stock market. For those financial needs that are fewer than three years in the future, we believe you should invest in ways that do not accept this risk.

Our investment activities are generally defined by principles that are collectively known as Modern Portfolio Theory, based on the work of Harry Markowitz, who was awarded the Nobel Prize in Economics in 1990. One of the primary tenets of Modern Portfolio Theory is the idea that the future cannot be predicted, and neither can stock prices. Another is that a portfolio composed of several asset classes will experience fewer price movements and volatility than more concentrated portfolios--even though the more diversified portfolio will inevitably include some losing positions at any given time.

Despite the scientific underpinnings, we believe that the investment discipline that we provide is not rocket science. Many of our clients have the intellectual ability to practice it without us. Yet our investment services are valuable to them because we take the emotions out of their decisions, and because we handle the messy paperwork associated with maintaining and monitoring an investment portfolio.

We believe that much of the “financial advice” people receive comes in the form of advertisements, which suggest, in powerful images, that happiness and/or fulfillment can be achieved by the purchase of this or that advertised item. Our goal is to help people recognize their individual view of happiness and/or fulfillment, so they can determine which personal expenditures further their progress toward that goal.

Finally, we believe in the value of synergy--of the team approach to financial planning. Effective communication and exchange of data and ideas between all related advisors is essential to creating an exceptional plan for you. That means that we expect to routinely share your financial information, as needed, with our professionals on staff. (We will NOT share your financial information with outside persons unless and until we receive direction from you to do so.)

Our role is to provide financial leadership. It is said that a good leader takes people where they want to be, while a GREAT leader takes people where they ought to be.

Mutual commitments: What are our obligations to you, and what are yours to us?

In consideration of the trust you place in us, we will commit:

To act as your fiduciary – treating your money with the same care and prudence that we would treat our own. We will routinely make recommendations that we believe are best for you even if it means less revenue to our firm.

To have no allegiance to any company, product, or service, beyond our belief in its ability to help you reach your goals.

To get to know you, your personal goals, your struggles and challenges around money, and to tailor our recommendations so that they help you create an abundant and free financial life.

To treat your financial information in strict confidentiality.

To treat you with respect, professionalism, honesty, and to maintain a nonjudgmental attitude toward the goals and information you present to us.

To be available to you during business hours, by phone or in person.

To deliver important advice even if it may create discomfort in the short-term. The people we work with prefer us to be honest whenever we encounter what seem to be unrealistic expectations or a pattern of living beyond one’s means, or a disconnect between stated goals and financial or purchase decisions.

Recognizing our fiduciary responsibility to clients and the public, we will uphold the highest standards of care in the industry by espousing and practicing:

Objectivity, Fairness, and Suitability, Full Disclosure, Confidentiality, Integrity and Honesty, Professionalism, Competence, and Regulatory Compliance.

Our mission is to offer you an open architecture structure in which we can customize a plan for you. Your unique plan will be created using only the tools in my toolbox that add value for your situation. Together, we will function as architect and builder of your plan of action. Additionally, we freely make available the wisdom we have acquired through years of experience to each of our clients as the opportunity arises.

What commitments do we expect from you in this working relationship?

If you become a client of ours, we hope and expect you to be honest and forthcoming about your personal and professional goals, and about your current financial situation. The quality of our advice will depend on the quality of information that you provide to us.

Financial planning is personal, so we will ask you to share with us data and issues that you may not share with anyone but your family. The more effectively we are able to communicate with one another, the more personalized your long-term plan will be.

Specifically, we expect you to share your personal financial data and financial history with us, and to bring in relevant documents upon request. Just as you have to disclose a great deal of information to your doctor, your lawyer, and your accountant in order for them to do their job well, we will need a great deal of information to make professional recommendations. For example, your medical history may give us insights that we need for projecting mortality, for such areas as retirement or long term cash flow projections, as well as certain types of risk management (insurance).

We believe that a terrific financial plan requires a commitment of time from you. The initial year will include six to eight meetings over a period of a year. You need to be willing to attend each of these meetings. We design these meetings to provide you with the knowledge and tools to make good decisions. These meetings also provide us with the necessary information to create a unique plan for you.

We believe that a team approach to financial planning is the most successful for our clients. You will meet with each member of the Sound Financial Planning team during your initial year with us. Each member of our team commits to maintaining the highest level of professionalism and technical expertise for the benefit of our clients.

As time goes on, we expect you to keep us informed, as soon as possible, about important changes that will have a significant effect on your financial and personal life, such as marriage, new baby, any new major financial obligation, change of income, change of health etc.

We always ask that you carefully review all communications and statements immediately and promptly report any errors to us and/or ask for clarification on anything that you do not understand.

If the partnership between us is to be valuable and beneficial, you must be willing to allow yourself to trust the intentions and experience that we bring to the relationship. You should be comfortable that the advice we give to you comes from wanting to do only what is right and just for you and your circumstances.

In order to schedule time for analysis and communication with our clients, our meeting times are Monday, Tuesday, and Thursday between 9:30 a.m. and 5:00 p.m. Because we schedule these meetings in a preordained fashion, we ask that you be on time so that we may fully address every issue you have without taking away from the time set aside for you or the next client.

We ask that you give us at least 24 hours notice for any cancellation or delay.

If, at any time, you find that we are speaking in terms that you don’t understand, we ask that you make us aware of it, and request clarification.

We ask you to follow our investment management recommendations for at least five years in order to allow any early market declines ample time to recover.

We ask you to follow all of our advice to the best of your ability and to the extent that it is compatible with the goals you have given us, even when that requires personal sacrifice, changing a behavior pattern, or overcoming inner resistance.

We ask that if you are reluctant to follow our advice, and/or if you don’t feel a real trust in our motives and advice, that you contact us immediately. In our experience, much great advice is not taken because people lack a real trust in the giver of advice. The result is that the advisory relationship becomes a cost, but not a provider of benefits.

The most important element of getting the most out of a financial plan is giving it a chance to work. This involves following through on the smallest details. This does not mean that everything must be done exactly as it is initially planned. It means that when an element of the plan needs to change, it is changed through the planning process.

Most financial plans quietly fade away into obscurity. No meaningful goals are furthered by most financial plans. This is because the end result of the initial planning process is really only the first draft of the plan. As elements of the plan fail to work they are dropped and little by little the plan is abandoned.

The clients who make the most progress do so by making an honest effort to follow the plan. The clients who enjoy exponential progress toward their goals continuously update their plans in annual meetings and fine tune the plans until they have an efficient goal meeting machine tailored to their personality and individual needs. For these clients, following the plan becomes effortless since it is perfectly designed for them and following it has become a habit.

In our firm, we have embraced the following Core Covenants for our clients and ourselves:

You will honor our relationship by working to maintain an even deeper commitment than we have for the realization and continued enjoyment of financial freedom for your family and you.

You promise to invest the necessary time and energy required to educate yourself about efficient capital markets, diversification and Modern Portfolio Theory in order to develop the absolute conviction that capitalism will always work, because this belief will empower you to replace stress with peace of mind during the inevitable times of adversity and turmoil that surely will come to pass in the financial markets.

You are committed to following a disciplined financial planning approach and will stick to your plan so that you maximize the probability of achieving your family’s American dream.

You promise to share these ideas and the belief that free markets work with the people you love and care about because it is the right thing to do. This will help them make smart choices about their money for a better life.

You will uphold the utmost integrity in our relationship by being completely open and forthright with us about my financial affairs, goals, dreams, and even your fears. You hereby direct and grant us permission to be your coach in order to maximize the probability of achieving your lifelong financial goals thereby fulfilling your true purpose for money.

We promise you that throughout all the years and even decades we work together, you will never find another private financial consultant who'll care more about you and your family, or who'll be more deeply committed to the realization of your financial goals than us.

We will invest your capital as carefully as we do our own, because we know that your hopes for your family's future are every bit as sacred to you as ours are to us.

We promise to tell you the plain, unvarnished truth all the time, especially when you may not want to hear it. Understand clearly that investment returns are not guaranteed and financial markets go down as well as up. Also understand that we do not control the financial markets.

When you ask a member of our staff a question and we don't know the answer, we promise always to say, "I don't know but I'll find out" and then we will make every effort to get you the answer.

You will surely encounter financial advisors smarter than us, and just as surely you'll find advisors who are less expensive than us. However, we promise our fees will always remain reasonable and you will never in your life find an advisor you can trust more implicitly than you can trust us.

Because you have placed special trust and confidence in us, we are committed to making sure you receive lifelong impeccable advice and service. We will do our utmost to create an environment that will perpetuate the continuation of our high quality relationship even in the event of the death, disability or retirement of the principals of our firm.

We provide a disciplined financial planning approach based on the absolute conviction that capitalism will always work, and we insist our clients plan, and then stick to their plan. Beyond that, we encourage them to hope, because we know that in investing, optimism is the only long-term realism.

We absolutely forbid our clients to worry, because in a very real sense that's what you're hiring us to do. If you're going to pay for our financial planning and investment counsel, and then worry about it, you haven't gained the peace of mind for which you're paying us. One of our most important responsibilities is to provide reassurance and comfort in times of adversity.

Understand clearly that you are being asked to entrust your family's financial future to us and the system of capitalism; not to a particular financial plan, nor to an investment portfolio, but to us and our firm. We have accepted that responsibility and to that end will do our utmost on your behalf.

Services: What is the financial planning process?

Most successful people have one thing in common: they want to get more out of their lives, and they don’t want to spend their time doing things they aren’t interested in or good at.

Our firm specializes in taking care of the mundane, routine chores that arise from your chosen path. We also specialize in helping people make small changes that can contribute to significant changes in the future.

Recommendations, strategies, and management are made only after a thorough examination and evaluation of a client’s financial situation.

The specific reason or reasons that brought you here will probably be addressed first. As a part of that solution process, we will take a broader look at other aspects of your financial life. When we see potential issues, we will discuss them with you. We will discuss options, timelines and ways to proceed with whatever option you choose.

The evaluation is broken down into several well-defined areas:

Financial assessment - where we create a cash flow and net worth statement;

Retirement planning - where we will create a projection of the future at-retirement value of your taxable investments, pensions, IRAs, and expected Social Security benefits;

Education funding (if applicable) - where we will project the cost of one or more child’s education and look for appropriate ways to pay for it;

Portfolio building and investment analysis - where we review all of your investments and provide recommendations among different types of assets with a view toward fulfilling your financial planning objectives;

Insurance planning - including a review of your life and disability insurance coverage, property and casualty insurance, and long-term care insurance where appropriate;

Tax Planning (with an assessment of income and estate taxes);

Estate planning (with an assessment of the need for an updated will, trusts and trust services, and advice on charitable gifting).

Our firm offers a systematic approach to crafting a customized plan for each client.

Step 1: We start with a complimentary meeting, where there is a mutual process of getting to know each other and decide if there is a desire on both sides to continue working together, and whether we feel that our services would be of benefit to you.

Step 2: Our first objective in the planning process is for us, together, to identify your personal goals and objectives, so that we can better understand how your primary assets--your time and your finances--can be organized to achieve these goals. What do you want to happen, personally and financially, and in what time-frame?

We typically spend our first planning session discussing your goals, identifying the motivation behind the goals, challenging each goal to see if it will make it into the final list. We provide our clients with a copy of the final list. Periodically, we will again visit these goals to see if they are still priority items.

At the same time, there may be short-term and specific goals that you want to achieve, where we may be able to provide guidance or assistance.

During this initial client meeting, we also seek to compile all current assets, take an inventory of insurance coverage, wills and any estate documents, an annotation of your monthly income and expenses, and a review of your tax returns. We identify your investment experience and attempt to evaluate your tolerance for investment volatility and risk.

Step 3: We deliver a preliminary financial analysis, with proposals and preliminary recommendations. This includes a long-term tax and cash flow projection, and an evaluation of whether the goals articulated on the goals list are achievable within a reasonable time frame. At this time, we’ll make recommendations on all your investment holdings with suggestions for changes, if appropriate.

This evaluation will normally include a retirement plan, although each person’s concept of retirement differs. The goal is to set a course that will adequately fund your future lifestyle however you wish to define it, in whatever time frame you offer in the initial meeting.

In the insurance area, we have found that many individuals have too little insurance coverage, while others still have policies that were purchased for reasons that are no longer relevant.

Our asset management advice will primarily be focused on no-load mutual funds and private asset managers. We maintain discretion in most accounts, which means the company makes trades and investment decisions on our clients’ behalf. (Assets are kept in the client’s name with a Trust Company or discount brokerage firm, and there is no opportunity for us to take personal custody of any of our client assets.)

Developing the plan is a collaborative process. At this point, we ask for your thoughtful review of our draft analyses and proposals, and candid commentary.

Step 4 is to revisit the financial planning analyses and proposals after receiving client feedback, adjust recommendations where appropriate, complete the various applications, transfer assets and set an action plan.

In situations where a specialist (attorney, tax or insurance professional) is appropriate, we will provide referral options and offer to coordinate with that specialist.

The end result is a financial plan that is specific to the client and addresses both intangible and tangible goals. It tries to strike a balance between the financial choices you make that consume capital and the value based goals you wish to activate that are intangible in nature but have everything to do with creating a satisfying life.

Step 5: We complete asset transfers, implement the investment recommendations, and begin to take action on any estate planning and insurance issues that were addressed in the plan.

In most cases, achieving long-term goals such as retirement generally requires additional ongoing savings. Therefore, our firm encourages you to save regularly into this investment account. Let us know if you would like for us to add an automatic savings feature to your account. The automatic savings feature sets up automatic recurring transfers into your account from your checking or savings account.

Step 6: We have a comprehensive, systematic approach to monitoring your progress towards your goals. Many of these processes require intensive analysis by various members of our team and then communication of any necessary changes to you.

During the course of the year, if we believe that something in your portfolio needs to be changed because of factors either directly related to the investment or to the economy, which could cause adverse consequences to your investments, we will automatically make the necessary changes. You will always receive notification from us and our custodian concerning changes that have been made to your account.

You will meet with each member of (our firm’s) team during your initial year with us. Each member of our team commits to maintaining the highest level of professionalism and technical expertise for the benefit of our clients.

Our financial planning and managed accounts are reviewed at least annually or as needed by the client due to changing circumstances, changes in the economy, or performance of the mutual fund manager selected.  In addition to the statements provided by other money managers, our firm prepares and forwards quarterly client performance reports In PDF format and annually by mail.

When a client account is managed on a discretionary basis, discretionary authority is limited by prohibiting our firm from withdrawing funds (except for our fees) and/or securities from client accounts. In addition, our firm limits trading in the accounts to stocks, bonds, and mutual funds.

For managed accounts, clients are free to select any broker. If you request a recommended broker, the recommendation will be based on the broker's costs, skills, reputation, dependability and compatibility with your interests, but never upon a financial arrangement between our firm and the recommended broker.

Step 7: Each year, we come back to the goals and see what, if anything , needs to be adjusted to the financial analyses, the financial plan and the action items for the coming year. Have any internal family or business events occurred that might trigger changes in your financial goals? Based on reasonable projections, are you on track to achieve your goals? Can anything be done to decrease the risks associated with accomplishing your goals?

In our work with other successful people, we have learned that your goals and objectives will change over time. Life is a journey. If your goal today is to reach the farthest hill you can see from here, then eventually we expect you to be standing on that hill. When that happens, it will be time to look around and create new objectives to be achieved.

Communication: What happens after the initial financial plan is delivered and implemented?

Effective communication is critical to our ability to help you get the best possible results. The more effectively we are able to communicate, the more personalized your long-term plan will be.

Financial planning is personal, so we will ask you to continue to share with us data and issues that you may not share with anyone but your family. We will keep all information, whether in written or verbal form, in the strictest of confidences.

We take full responsibility for errors. If we make them, we must correct them. But first, we must be made aware of an error. We depend on you to give us the opportunity to correct any mistake. Please talk to us so that we may do so.

We typically meet at least annually with all of our retainer clients, but will meet for monitoring and revisions, consultations, and meetings as needed by our retainer clients whenever necessary. We welcome the opportunity to schedule time for analysis and communication with you. We ask that you recognize that our available meeting times are Monday, Tuesday, and Thursday, between 9:30 AM and 5:00 PM, Pacific Time. Because we schedule these meetings in a preordained fashion, we ask that you be on time so that we may fully address every issue you have without taking away from the time set aside for you or our other scheduled client meetings.

During business trips email and voicemail are used to provide client support and keep in touch. There will be a message on the phone for all significant physical absences.

There are times when our company principal goes on vacation throughout the year. You will be notified before any absence longer than 7 days. Usually when the company principal is gone his associate will be available in the Mount Vernon office.

If something important arises between our scheduled meetings, please call us with updated information, problems or questions. We ask that you inform us of your financial choices, before you make a decision, not after the fact. Please call us only during our office hours--8:30 AM to 5:00 PM, Pacific Standard Time, Monday through Thursday.

We distribute periodic client communications, which are designed to help you stay abreast of important topics and what is going on, generally, in the financial world and how it might affect you. Reading it is, of course, optional, but we ask that, if you DO spend time reading about financial affairs, that you substitute our newsletter for any material (including financial talk shows and magazines and chat rooms) which provide tips on short-term financial moves or hot opportunities, or which provide coverage of hourly or daily “white noise” movements in the markets. In our experience, people who pay attention to the markets on anything but an occasional basis have more trouble focusing on their most important goals than those who are able to tune out this white noise information.

Most importantly, please be open with us at all times. Remember that you can tell us everything--even things that you are just barely ready to tell yourself. Please do not hold back.

Recognize that we are not able to read minds, and that we aren’t able to keep track of events in your life without your help. By keeping us informed of changes in your life and your progress toward your goals, you are making it easier for us to help you make great decisions and move ahead in your journey.

If anything is said or done that upsets you or doesn’t feel right, please bring it to the attention of the firm, so it can be resolved as soon as possible.

Supportive termination: Is there a procedure to end this business relationship?

Effective financial planning should be proactive, flexible, value-added and enjoyable. If we ever stop enjoying or respecting one another, then our relationship needs evaluating.

We provide the right to end our working relationship at any time.

In addition, you agree to give advance notice of the end of our work together. Several weeks is sufficient; however, long-term clients generally discuss the decision to terminate a few months in advance.

You understand that by handling termination this way, it often turns out to be a productive part of the financial planning engagement.

Referrals: Is there a procedure for making other people aware of these financial planning services?

Our organization works primarily with people who are referred to us by our existing clientele. If your planning experience has enabled you to generate the results you want in your life, then we encourage you to share your experience with others. Sound Financial Planning will happily conduct a risk-free, explorative session with anyone interested in how to provide referrals without risk to the important person being referred.