Kelly Financial Group, LLC (“The Kelly Group” or the “firm”) is an investment advisory firm
that is registered with the U.S. Securities and Exchange Commission. The Kelly Group has been in
business since 1997 and has been registered as an investment adviser since October 2020. The
Kelly Group is principally owned by The Darlington Company, Inc., which is owned by The Kelly
Family Revocable Trust; Chad T. Arrington, CFP® and Thomas J. Cusick, CFP®, are minority
owners of The Kelly Group.
The Kelly Group provides ongoing investment advice and management of client assets. We
principally provide advice on the purchase and sale of mutual funds that are included in our model
portfolios. If clients already hold other types of investments, including equities, fixed income
securities, variable annuities, and options, we can provide advice on the holding or disposition of
those assets. We provide a variety of investment management services, including portfolio
management, investment consulting, financial planning, retirement planning, business succession
planning, and estate planning.
Portfolio Management And Investment Advice
The Kelly Group provides advice that is tailored to the individual needs of the client based on the
financial information and the investment objective(s) communicated by the client.
We use a team approach that helps us provide the highest level of service to our clients. In our
typical engagement, the client is served by a team consisting of a lead or senior advisor, who is
supported by our financial planning department (consisting of Certified Financial Planner (CFP®)
professionals and associates working towards their CFP® designation), our operations
professionals, and our client services professionals.
We believe that successful investing requires a consistent process, based on the investor’s particular
financial plan, crafted to take into account the investor’s specific circumstances, such as needs,
goals, time horizon, and risk tolerance.
Here is a summary of The Kelly Group’s investment process:
Create the financial plan.
We believe that a successful investment process must be based on the investor’s particular
circumstances, including the investor’s needs and wants, goals and dreams. We focus on
working with the client to understand the client’s situation, and then, when needed, we help
to develop a financial plan crafted to meet the client’s individual circumstances. We follow a
dynamic financial planning process utilizing software that facilitates interactive discussions
and allows for ongoing updates and modifications.
In the planning process, we ask questions such as (but not limited to):
• How have you handled investment and financial decisions in the past?
• What are your specific financial goals?
• What are your income and expenses, assets, and debts?
• What are the risks to your financial success, and are they adequately addressed, for
example with adequate and appropriate insurance policies?
• What family circumstances could impact your finances going forward? For
example, do you anticipate educational expenses for children or grandchildren, or
upcoming life events such as marriage or divorce?
• At what age do you plan to retire?
• Do you have an estate plan? What type of legacy do you wish to leave?
• Are you on the path to financial success, or should course corrections be made?
These are examples of the kinds of questions we address in creating the client’s financial
plan; we do not necessarily ask all of these questions of all clients.
We offer an initial complimentary consultation to review the client’s needs and objectives
and may provide a written plan describing our recommendations at no cost; however, our
investment management services are initiated only with the execution of an advisory
agreement.
Develop the investment policy.
Armed with the information gleaned from the financial planning process, The Kelly Group
develops an investment policy with the client. We also create a governance document
summarizing that policy and creating, in effect, an investment roadmap that can help the
client stay on the investment path that we and the client have collaboratively developed.
Among the elements that help us develop the investment policy are the client’s goals, time
horizon and risk tolerance.
Clients may notify us if they would like us to try to avoid investing in certain securities or
types of securities. We will attempt to honor those requests if reasonably feasible, but since
our clients’ portfolios are generally composed of select mutual funds, clients should note
that it is not usually feasible for us to do so.
Identify the appropriate, diversified model portfolio.
After the discovery and analysis processes described above, we identify the model portfolio
that we believe would be the best fit for the client. We believe that the greater the time
horizon and risk tolerance, and the more ambitious the financial goals, the more growth
oriented the allocation should be — usually indicating a higher percentage of equities. We
recommend that the client stay invested in the selected model portfolio unless the client’s
personal circumstances change. We do not recommend changes of allocation based on
economic cycles, market fluctuations, and/or political developments. We do not believe
anyone can consistently time the market in the short term, so we prefer to focus on a long-
term investment policy. To accommodate short to mid-term financial goals, we may
purchase fixed-income securities, such as brokered Certificate of Deposits (CDs) available
through our custodian.
Our clients authorize us to manage their investment accounts on a discretionary basis. This
means that we do not have to speak with the client in advance of making any particular
transaction. Absent a specific agreement with a specific client to manage their existing
holdings of individual equities or fixed-income securities, we do not do so.
We assist the client to open one or more accounts with the custodian. Once the client’s
assets are transferred to the new accounts, we implement the client’s investment plan,
always attempting to do so in the most tax-efficient manner.
To develop our model portfolios, The Kelly Group’s Investment Committee first
determines the appropriate, diversified asset allocation for that model. The Investment
Committee then identifies mutual funds that could fit the various asset classes, sub asset
classes, and styles, that will comprise that model. The Investment Committee engages in a
due diligence process to select the specific mutual funds for inclusion in the model
portfolio, and to monitor the funds and their managers on an ongoing basis to assure that
they continue to meet our guidelines. This process is described in more detail in
Item 8
below.
Ongoing monitoring and rebalancing the portfolio.
Once we have the client’s investment portfolio in place, future recommendations for
changes are driven by changes to the client’s goals or circumstances. Our primary
benchmark is whether the client is on track to meet the client’s financial goals. We review
client accounts on an ongoing basis and rebalance when we believe it is appropriate based
on our internal guidelines such as drift parameters and a preference for rebalancing at least
annually. As markets, asset classes, and performance fluctuate, an asset allocation will
inevitably fluctuate as well. A disciplined rebalancing approach helps to keep the client’s
investment allocation aligned with the client’s investment policy.
Rebalancing also serves as an opportunity to trim investments that have done well – i.e.,
selling high – and to increase investments that have underperformed -- i.e., buying low. This
can counter the tendency of many investors to sell low out of panic and buy high out of
fear of missing out.
We offer each client a wealth management review at least annually. During this review, we
update the client’s information. If needs or goals have changed, we may suggest a
modification of the investment plan. We discourage clients from making investment
changes based on short-term developments in the markets or economy.
Coaching client behavior.
We believe that successful investing requires adherence to a disciplined process. In our
experience, successful investors tend to be patient, resist temptation, and do not try to time
the market in response to short-term events. Unfortunately, normal human emotions can
lead investors to veer from their investment plan out of panic or greed, fear of loss, or fear
of missing out. That is why The Kelly Group believes that one of our most valuable roles
is as our clients’ behavioral coach.
We remind our clients that short-term volatility is to be expected and sometimes can
provide fruitful investment opportunities. We believe that getting in or out of the stock
market in anticipation of what is thought to be just around the corner -- such as a “market
correction” or a big run-up -- can detract from long-term investment success. In our role
as behavioral coach, we try to help our clients stay focused on their long-term goals and
committed to a disciplined investment process.
Financial Planning And Consulting Services
The Kelly Group offers a broad range of personalized financial planning and consulting services
to clients. Financial plans may encompass all or some of the following areas of interest:
• Investment Planning
• Asset Allocation Review and Recommendations
• Insurance Planning/Risk Management
• Education Planning
• Employee Benefits Planning (including planning for Federal employee benefits)
• Retirement Planning (including planning for Social Security and Medicare)
• Estate and Legacy Planning
Financial planning services are offered on a comprehensive or on an à la carte (limited focus) basis.
While each of these services may be available on a stand-alone basis, generally these services will
be rendered in conjunction with investment portfolio management as part of a comprehensive
wealth management engagement. The firm obtains appropriate information from the client through
personal interviews (including a discussion of current financial status, future goals, and attitude
towards risk) and reviews the documents and data supplied by the client. Unless the client engages
us to manage the client’s portfolio on a discretionary basis, the implementation of financial plan
recommendations is entirely at the discretion of the client. Financial plans are not limited in any
way to products or services provided by any particular company. In general, The Kelly Group
recommends the use of one of our model portfolios, unless we believe another approach would be
in the client’s best interest.
Investment Advice To Qualified Plans
The Kelly Group provides non-discretionary investment advisory services to qualified plans,
including 401(k) Plans, in accordance with the Plan’s investment policies and objectives. After
review of the Plan’s Investment Policy Statement, we assist the plan sponsor with the selection of
a broad range of investment options consistent with ERISA section 404(c) and the regulations
thereunder. We assist in monitoring investment options by preparing periodic investment reports
that document investment performance, consistency of fund management, and conformance to the
guidelines set forth in any Investment Policy Statement or similar document and make
recommendations to maintain or remove and replace investment options. We meet with the plan
sponsor’s Investment Committee periodically to discuss the investments and any
recommendations. We also provide non-discretionary investment advice to the Plan Sponsor with
respect to the selection of a qualified default investment alternative for participants who are
automatically enrolled in the Plan or who otherwise fail to make an investment election, and we
offer assistance with due diligence in the selection of a plan administrator.
Although the client retains the sole responsibility to provide all notices to participants required under
ERISA section 404(c)(5), we assist the Plan Sponsor in developing a participant education and
communication strategy, conducting employee education meetings and group enrollment meetings,
and providing telephone/email support to Plan participants. The Kelly Group does not provide
investment advice to Plan participants unless they separately engage us and become clients of the
firm. The Kelly Group does not execute transactions at the participant level.
Sub-Advisors
The Kelly Group sometimes engages other advisors and money managers (collectively, “sub-
advisors”) to manage all or a portion of its clients’ assets, based on the stated investment objectives
of the client or upon the client’s request. The Kelly Group will enter into a sub-advisory agreement
with these sub-advisors. When a sub-adviser is engaged, The Kelly Group continues to serve as the
client’s principal investment advisor. We monitor and review the account’s performance in light of
the client’s investment objectives on an ongoing basis, and select, engage, monitor, and terminate
sub-advisory relationships on a discretionary basis. The client will pay the standard investment
advisory fee, set forth below and in Item 5; the firm absorbs the fee paid to the sub-advisors it
selects.
Regulatory Assets Under Management
As of December 31, 2023, The Kelly Group advises on $810,923,460 in assets, including
$747,375,389 in assets under its discretionary management, and $63,548,071 in assets held in
qualified plans as to which The Kelly Group serves as adviser.