Firm Description
Cygnet Financial Planning, Inc. (“Cygnet”) was established in 1982 and was incorporated as a C-Corp in 1983.
Cygnet converted to a S-Corp in 2018. It is headquartered in Waterford, Michigan. Cygnet is a federally registered
investment adviser (“RIA”) with the SEC.
Cygnet is a privately owned and independent corporation that is 100% owned by Theodore “Ted” Lakkides.
Fiduciary Certification
In 2016 Cygnet became the 72nd firm in the USA, to have completed the “ISO-like” certification process by the
Centre for Fiduciary Excellence and become a CEFEX-certified Investment Adviser & Fiduciary. CEFEX
certification is conferred upon successful completion of the due diligence process that includes a detailed
assessment of the firm’s client files, procedures, as well as on-site interviews with key personnel. Continued
certification is subject to an annual recertification audit and "peer review". Cygnet’s certification was renewed
in July 2022. As of March 1, 2024, Cygnet is 1 of 2 CEFEX-certified Investment Advisors in the state of
Michigan.
CEFEX (Centre for Fiduciary Excellence) is an independent global assessment and certification organization that
has conducted a voluntary third-party assessment of FFH’s books and records to evaluate FFH’s adherence to a
defined fiduciary standard. The CEFEX assessment process is based upon ISO 19011 – an international standard
and guideline for auditing management systems. More information about ISO 19011 can be found at
www.iso.org/standard/70017.html. The CEFEX audit process is set forth at www.cefex.org/process.shtml.
CEFEX charges a fee to cover costs related to the initial and annual certification audit. FFH’s fee for the initial
certification audit in 2016 was $5,000 plus travel costs and the fee for annual recertification audits has ranged
from $2,000 to $4,000 plus travel costs. The fees paid do not have any bearing on the outcome of the audit or the
determination of the CEFEX Registration Committee. Furthermore, FFH did not pay any additional fees after
receiving certification in order to use the CEFEX mark or otherwise to refer to its certification.
Receipt of the CEFEX certification is not indicative of FFH’s future performance, or any future performance
pertaining to its clients’ investments and should not be construed by a client or prospective client as a guarantee
that they will experience a certain level of results if FFH is engaged, or continues to be engaged to provide
investment advisory services. CEFEX certification should not be construed as a current or past endorsement of FFH
by any of its clients. To FFH’s knowledge, any investment adviser may seek certification from CEFEX. According to
CEFEX, approximately 95% of firms that undergo assessment are determined to be in conformance with the defined
fiduciary standard and are granted certification. For more information on CEFEX, please visit www.cefex.org.
Revenue Profile
The majority of Cygnet’s revenue (approximately 97%) is derived from fees charged to individuals, businesses,
trusts, pensions, profit sharing and 401(k) plans for investment advisory, portfolio management, fiduciary
services, and other fee-based services.
Cygnet is a licensed resident insurance agent in the State of Michigan. It has contracts with various insurance
companies and insurance brokerages which allows it and its properly licensed representatives to write insurance
(life, health, disability, long term care, supplemental benefits, etc…) and fixed annuity business on behalf of
Cygnet’s clients. First year commissions and renewal commissions from this insurance related activity accounts
for approximately 3% of Cygnet’s annual revenue.
Insurance and Bonding
Cygnet maintains a professional liability policy through Lloyds of London to cover its investment advisory,
financial planning, consulting, and other professional services. This policy provides affirmative coverage for
Cygnet’s service as a professional fiduciary for its individual, qualified retirement plan, and other institutional
clients.
Cygnet maintains a Cyber Breach Response Insurance Policy as part of its commitment to protect client data.
Cygnet also maintains an ERISA fidelity bond as required for its service as a discretionary investment fiduciary
for qualified retirement plans.
Advisory Services Description
Cygnet provides portfolio investment management, investment advisory, and financial planning services to
individuals, business owners, corporations, estates, trusts, and qualified retirement plans for a fee.
Cygnet’s personal financial advice and planning services are provided by following a consultative and systematic
process of cash flow analysis. A written evaluation of each client's financial situation is provided to the client using
Cygnet’s Financial Lifestyle Analysis℠, a net worth statement, and, if warranted, a diagnostic analysis of their
portfolio which features a review of total account fees and expenses, asset allocation, and investment due
diligence. This information serves as the foundation for Cygnet’s investment advisory recommendations and
portfolio management services.
Cygnet’s investment advisory and portfolio management services are designed to help clients efficiently manage
their investments with respect to the risks of market volatility, longevity, and inflation. Cygnet’s investment
philosophy is grounded in the concepts of Modern Portfolio Theory and the Efficient Market Hypothesis and is
implemented via strategic asset allocation.
Cygnet provides fiduciary investment advice and portfolio management services through its Cygnet Managed
Accounts. These accounts are designed to help the Client achieve the goals and cash flow requirements identified
during client meetings and the planning process.
Cygnet also provides ERISA §3(38) discretionary plan investment management and ERISA §3(21) non-discretionary
participant investment advisory services to qualified retirement plans (defined contribution and defined benefit
pension plans). When serving as an ERISA §3(38) fiduciary, Cygnet will develop, implement, and maintain the
Investment Policy Statement; select and monitor plan investments; and the develop and maintain managed
strategies (asset allocation models) for plan participant which utilize plan investments. When serving as an ERISA
§3(21) fiduciary, Cygnet will provide one-on-one investment advice and consultation to plan participants during the
enrollment process and subsequent worksite service visits. The scope of services to be provided is defined in the
signed written agreement between Cygnet and the Plan.
On the following pages are descriptions of the general characteristics of the investment advisory and portfolio
management services offered by Cygnet including types of investments utilized, discretionary authority,
management fee structures, payment of fees, termination of agreements, and other fees and compensation.
For a more complete discussion and disclosure regarding services or fee structure, Cygnet provides clients with a
detailed advisory agreement, an Investment Policy Statement, and a copy of this Brochure. These documents will
be provided at or prior to account opening.
Discretionary Authority
Clients typically grant Cygnet discretionary authority to manage their account. This authority and its scope is
disclosed in the applicable advisory agreement that is entered into between the client and Cygnet.
Advisory Services Offered
Cygnet offers its clients several investment advisory and portfolio management options. After consultation with a
client, Cygnet and the Investment Adviser Representative (“IAR”) determine which platform, asset allocation, and
investment strategy to recommend based on the client’s income needs, investment goals, risk tolerance, account
size, and other material information.
Cygnet Managed Accounts
Cygnet Managed Accounts feature a complementary array of investment solutions and model portfolio
structures that cover a range of asset allocations. They are designed to allow Cygnet
and its IARs to implement
investment strategies to help clients achieve the financial goals documented during the financial planning
process, while taking into account the client’s personal financial situation, needs for cash flow and liquidity, and
capacity and tolerance for investment risk.
The investments used in Cygnet Managed Accounts include Exchange Traded Funds (“ETFs”), no-load index
mutual funds, passively managed institutional mutual funds, and other investments such as actively managed
mutual funds and cash equivalents deemed prudent by Cygnet in its role as the client’s investment fiduciary.
Cygnet Managed Accounts are managed on a discretionary basis. The granting of this discretionary authority
and any limitations on it are documented in the agreement signed by the client and Cygnet. The investment
advisory and portfolio management services that the IAR and Cygnet provide to clients are similar regardless of
the account structure or model allocation selected. When using a Cygnet Managed Account, the client pays
separate fees for investment advice and portfolio management, institutional custody, and recordkeeping
platform services.
These accounts are managed using the trading, performance reporting, and recordkeeping software developed
and maintained by Envestnet | Tamarac (“Platform”). Charles Schwab & Company, Inc. serves as an
independent and unaffiliated custodian for client’s accounts.
Cygnet Managed Annuities
Cygnet Managed Annuities are primarily used by Cygnet for those clients with non-qualified assets who are
seeking tax-deferred growth and earnings or those clients who already have a non-qualified variable annuity and
are looking to reduce fees.
Cygnet Managed Annuities are based on the same investment process and philosophy as Cygnet Managed
Accounts. When using a Cygnet Managed Annuity, the client pays separate fees for Cygnet’s investment advice
and portfolio management services and the annuity custody/recordkeeping platform.
Cygnet Managed Annuities use the no-load variable annuity platform and investment options offered by
Nationwide Advisory Services (formerly Jefferson National). Cygnet may utilize no-load variable annuities from
other providers based upon client needs and developments in the no-load annuity marketplace.
Portfolio Diagnostic Analysis and Portfolio Management Assistance
Cygnet provides limited scope and duration advisory services to clients who do not wish to retain Cygnet to
provide discretionary portfolio management services.
Portfolio Diagnostic Analysis
Upon request, Cygnet will conduct a diagnostic and due diligence analysis of a client’s investments,
portfolio allocation, and fees.
Portfolio Management Assistance
Cygnet can provide investment advice and portfolio management assistance for client accounts held by
other financial institutions. These services may include a periodic review of the client account(s) and
clerical assistance in allocating and rebalancing the account(s). Services are non-discretionary; the client
must consent to or execute trades themselves. The scope of services to be provided will be documented in
the agreement signed by the client.
Qualified Plan Consulting and Fiduciary Investment Services
Cygnet provides ERISA §3(38) investment management, ERISA §3(21) investment advisory, and general
consulting services to sponsors, trustees and participants of qualified retirement plans that include but are not
limited to defined benefit pension plans, profit sharing plans, §401(k) plans, §403(b) plans, §457 Plans, etc….
(“Plan”)
Cygnet’s Qualified Pension Consulting and Fiduciary Investment Services include, but are not limited to, the
following:
• Development, implementation, and maintenance of an Investment Policy Statement (“IPS”)
• Due diligence screening and ongoing monitoring of Plan investment options
• Selection and replacement of Plan investment options
• Development and maintenance of managed strategies (“asset allocation models”) that utilize Plan
investments
• Allocation of investments within the Plan
• Review of investment performance and fees
• Participant fiduciary investment advice during enrollment meetings and worksite service visits
The full scope of the services to be provided and the fees to be charged by Cygnet are documented in the
written agreement between the Plan trustees (or other authorized person) and Cygnet. In this agreement,
Cygnet will acknowledge that it is a fiduciary to the Plan and its participants for the services Cygnet has been
retained to provide. The full scope of Cygnet’s fiduciary obligation and Cygnet’s acceptance of fiduciary liability
is specified in the written agreement between the Plan and Cygnet.
Financial Planning Services
Cygnet provides comprehensive planning, analysis, and recommendations in the area of Financial Planning,
Investment Planning, Retirement Planning, Insurance Planning, Estate Planning, Benefits Planning, Tax
Planning, and Business Planning. Cygnet’s IARs and professional staff carefully review the information and
related documents supplied by the client to prepare a financial plan and report unique to that client.
Financial plans for new clients and prospective clients are developed using Cygnet’s Financial Lifestyle
Analysis℠ (a proprietary cash-flow based retirement and financial analysis). Cygnet uses Money Guide Pro
and/or other third-party financial planning and Monte Carlo Simulation software to monitor the client’s progress
in achieving their goals.
Several financial plans and reports are available from Cygnet and are described below:
• Develop a Pre-Retirement Cash Flow Plan to assist the Client in developing a clear picture of their current
financial situation while helping them chart a course of action that blends future quality of life with career
goals.
• Develop a Post-Retirement Cash Flow Plan to assist the Client after they have retired in developing a clear
picture of their current financial situation while helping them chart a course of action that maximizes the
value of all their benefits and assets during the retirement years.
• Develop an Asset Allocation Plan, based on the Client's goals and objectives, and recommend generic or
specific investments for the repositioning of current and future investable dollars where appropriate.
• Develop an Estate Plan to assist the Client in developing a strategy for distribution of estate while
minimizing taxes. (This plan must be reviewed with Client’s tax or legal advisor).
• Conduct an Insurance Policy Analysis to assess the appropriateness of the Client’s existing insurance
policies.
• Develop a Charitable Gifting strategy that achieves the Client's altruistic objectives while also satisfying the
Client's cash flow needs.
• Develop a Financial Check-Up to help Client determine if they are on track to achieve their financial goals.
• Assist Client in developing a plan to finance future education costs.
• Assist Client in developing a debt reduction strategy.
Implementation requires that clients work closely with their attorney, accountant, insurance agent, investment
professional. However, implementation is up to client's discretion. Clients are under no obligation to act on our
recommendation. If they elect to act on any or all of the recommendations, clients are under no obligation to
effect the transactions through Cygnet.
Regulatory Assets Under Management
As of 12/31/2023, Cygnet’s discretionary regulatory Assets Under Management (AUM) totaled $174,480,389.
This total is broken down as follows:
• $124,618,392 for service as a discretionary investment fiduciary for individuals using our Cygnet
Managed Accounts and Cygnet Managed Annuities platforms.
• $49,861,997 for service as a discretionary ERISA §3(38) plan investment manager and fiduciary for
qualified retirement plans.
Cygnet also provides ERISA §3(21) investment advisory services to most of the plans it is providing ERISA §3(38)
services to.