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Who We Are
Financial Services Advisory (hereinafter referred to as “FSA,” “the Advisor,” “we,” “us” and
“our”) is a fee-only registered investment advisor1 incorporated in 1982 as a Maryland
corporation. As a fiduciary, we put your interests first as we help you achieve your financial
goals. We provide asset management and financial planning services2 for individuals, business
owners, foundations, trusts, IRAs and other retirement plans.
Owners
The following persons control FSA:
Name Title CRD#
James E. Joseph President and Chief Compliance Officer 2943563
Ronald J. Rough Chief Investment Officer 2083110
Our Mission
Our mission is to be an indispensable financial partner with every client we serve.
What We Do
We assist you in pursuing financial security in an insecure world.
As part of our investment advisory services offering, we help you establish and develop realistic
goals and implement an active-system of asset management and, when requested, provide
limited financial planning as it relates to goal development, retirement planning, investment
allocation, education planning and basic tax and estate planning needs. Our asset management
services are designed to increase your portfolio value during rising markets and use our exit
strategy called FSA Safety Net® to help reduce losses during sustained downward trends (see
Item 8, “Managing Risk”). We also offer FSA Next®, which we designed to assist young families
and individuals to begin investing and planning for their future.
We do not participate in a wrap fee program.
Investment Advisory Services
We believe that managing your money is more than just buying or selling investments – it’s
about understanding your goals and motivations and how your investments support them. So,
before we get started actively managing your portfolio, we need to understand your financial
picture.
1 The term “registered investment advisor” is not intended to imply that Financial Services Advisory has attained a certain level of skill or training. It is used
strictly to reference the fact that we are “registered” as a licensed “investment advisor” with the United States Securities & Exchange Commission and
“Notice Filed” with such other state regulatory agencies that may have limited regulatory jurisdiction over our business practices.
2 Financial Services Advisory is a fiduciary, as defined within the meaning of Title I of the Employer Retirement Income Security Act of 1974 (“ERISA”) and/or
as defined under the Internal Revenue Code of 1986 (the “Code”) for any asset management and financial planning services provided to a client who is: (i)
a plan participant or beneficiary of a retirement plan subject to ERISA or as described under the Code; or (ii) the beneficial owner of an Individual
Retirement Account (“IRA”).
To accomplish this, we have a four-step process for on-boarding new clients, which we
designed to make the transition smooth and stress-free.
Step 1 – “Get to Know You Meeting”
Our first session gives us the opportunity to get to know each other. We do an assessment of
where you are and where you want to be. We want to learn your current financial situation,
including your prior investment experience and tolerance for risk. We listen to your
concerns, ask lots of questions and begin to formulate a strategy to address your goals and
needs.
Step 2 – “The Transition”
Once we understand where you are and where you want to go, this next step involves a
deeper analysis of your retirement goals and finances – including investments. You will
complete our Client Profile and Agreement3. Any analysis we provide helps us better assist
you in meeting your goals and managing your investment portfolio. We will help determine
what (if anything) is needed to prepare for the transition of working together.
We will recommend Charles Schwab & Co., Inc. and its affiliated entities (Schwab) for your
investment assets. In certain cases when consistent with your investment objectives, we
may recommend that you invest a portion of your investment portfolio through Schwab’s
Institutional Intelligent Portfolios® program described below.
We recommend Schwab because of the benefits we receive servicing your account and
Schwab’s ability to accept most securities from other firms. For more information on the
benefits we can receive from Schwab, please see Item 12, “Brokerage Practices.”
Step 3 – “Moving Forward”
After all accounts are opened and assets are in place, we begin management utilizing the FSA
Safety Net® system. Throughout the course of the year, expect to receive various
communications from us in addition to the monthly account statements from your custodian:
v Quarterly Financial Planning Newsletter
v Periodic market updates
v Periodic reviews of your accounts and planning goals
v Webinar invitations to hear and see what we’re thinking and doing
Step 4 – “Peace of Mind”
The goal of this final step is to hear you confidently say, “I’m glad I don’t have to worry
about it anymore.” Working together, your accounts are now actively managed seeking to
make money during good cycles and preserving gains when price trends reverse to help
achieve your financial goals.
During each review meeting, we take the opportunity to review your investment portfolio
considering your current needs as well as any additional financial items you may wish to
discuss.
3 The Client Profile and Agreement we use is an important tool in gathering information about your investment experience, risk tolerance, income/tax bracket,
liquidity, time horizons, etc. If you elect not to answer the questionnaire or choose to respond with limited input, it is possible that we could operate in a
handicapped capacity contrary to your investment needs. Therefore, if you desire the most effective and accurate recommendations regarding your managed
account(s), you should make every effort to provide us with your detailed personal needs and objectives, along with financial and tax information.
FSA Next®
As a financial advisor, one of the most difficult conversations is to inform someone at or near
retirement that they may need to keep working or scale back their lifestyle. We have found
ourselves wishing we had the opportunity to teach principles and provide practical tools at an
earlier age that lead to financial success. For this reason, we developed FSA Next® – a service
built upon the philosophy:
DISCIPLINE = FREEDOM4
We believe, through FSA Next®, that a disciplined approach to spending, saving and investing,
combined with well-defined goals and a long-term time horizon, can give you the best chance
of achieving financial freedom. We view financial freedom as more than just buying or selling
investments – it’s about:
v Taking advantage of long-term time horizons – Just like aiming an arrow towards a
target, small adjustments at the start can have a dramatic effect on where you land
in the future. FSA Next® is designed to make sure you are properly aligned to hit
your financial targets.
v Being S.M.A.R.T.: Have clearly defined goals –
Specific
Measurable
Achievable
Relevant
Time-Bound
v Leveraging the advice of experts – No one has time to be an expert in everything.
Partner with a CERTIFIED FINANCIAL PLANNERä through FSA Next® to develop a strategy
that will give you the best chance at achieving your financial goals.
We have a 3-step process for FSA Next®.
Step 1 – 30 Minute Consultation
Our first session gives us the opportunity to get to know each other. We do an assessment of
where you are relative to your short- and long-term goals. We ask you to complete our
“Client Profile and Agreement” so we can more fully understand your investment objective.
We listen to your concerns, ask a lot of questions and try to gain an understanding of how we
can add value to your current situation.
Step 2 – Personal Financial Analysis (“PFA”)
The PFA is an analysis of your financial situation. Together we will review your current
spending and savings habits and assess the trajectory towards your financial targets. If we
determine that adjustments need to be made, we can assist in developing a strategy to get
you on track towards achieving those goals. Areas of focus include:
v Budgeting
v Cash Flow
v Retirement Savings
v Debt Management
v Investment Allocation
v Education Savings
4 Inspired by the book by: Willink, Jocko (2015). Extreme Ownership, New York, NY: St. Martin’s Press.
v Basic Tax Planning
Step 3 – Ongoing Financial Planning Services and Asset Management
Younger individuals generally experience several transitions both personally and
professionally. The choices you make during this time may dictate the lifestyle you will be
able to live throughout the course of your life. Once you complete the PFA, we hope that it
serves as the blueprint for you and your advisor to decide upon the ongoing topics of focus.
These topics are to help keep you on track towards achieving your financial goals and may
change over time. You may need further assistance from outside professionals (i.e.,
attorneys, accountants, insurance agents, etc.) to address your financial situation. Should
this be the case, we may recommend the services of these outside professionals to help with
implementation. FSA Next® provides you with ongoing access to your personal financial
advisor who can help you navigate these changes and aid in decision making. That personal
financial advisor can also provide asset management services through Schwab’s Institutional
Intelligent Portfolios® (SIIP) program described below.
Asset Management through Schwab’s Institutional Intelligent Portfolios®
Overview
When consistent with an investment advisory client’s investment objectives, we may offer
asset management services through Schwab’s SIIP program. SIIP is an automated investment
program through which you are invested in a range of investment strategies that we
constructed and manage, each consisting of a portfolio that can include exchange traded
funds (“ETFs”), mutual funds and a cash allocation. You can instruct us to exclude up to
three mutual funds or ETFs from your portfolio. Your portfolio is held in a brokerage account
opened by you at Schwab. We use the Institutional Intelligent Portfolios® platform (the
Platform), offered by Schwab Performance Technologies (SPT), a software provider to
independent investment advisors and an affiliate of Schwab, to operate the SIIP program.
We are independent of and not owned by, affiliated with or sponsored or supervised by SPT,
Schwab and their affiliates.
We, and not Schwab, are your investment adviser and primary point of contact with respect
to the SIIP program. As between us and Schwab, we are solely responsible, and Schwab is
not responsible, for determining the appropriateness of the SIIP for you, choosing a suitable
investment strategy and portfolio for your investment needs and goals and managing that
portfolio on an ongoing basis.
We contracted with SPT to provide us with the Platform, which consists of technology and
related trading and account management services for the SIIP. The Platform enables us to
make the SIIP available to you online and includes a system that automates certain key parts
of its investment process (the System). The System includes an online questionnaire that
helps us determine your investment objectives and risk tolerance and select an appropriate
investment strategy and portfolio. We will recommend a portfolio via the System in response
to your answers to the online questionnaire. You may then indicate an interest in a portfolio
that is one level less or more conservative or aggressive than the recommended portfolio, but
we then make the final decision and select a portfolio based on all the information it has
about you. The System also includes an automated investment engine through which we
manage your portfolio on an ongoing basis through automatic rebalancing and tax-loss
harvesting (if you are eligible and elect).
We charge clients a fee for our services as described below under Item 5, “Fees and
Compensation.” Our fees are not set or supervised by Schwab.
We generally recommend to all our clients that investment management accounts be
maintained at Schwab. Because of this consideration, Item 12 below describes possible
conflicts of interest. Keep in mind, you do not have to accept our recommendation.
Clients enrolled in the SIIP program are limited in the universe of investment options
available to them. For example, the investment options available are limited to ETFs and
mutual funds, whereas we recommend various other types of securities in its other services.
You will have access to your accounts and a financial interface online but can also confer
with us with respect to your account. Please also refer to Item 8 below with respect to the
investment risks associated with the SIIP program, including mutual fund and ETF risk.
Rebalancing
The System will rebalance your account periodically by generating instructions to Schwab to
buy and sell shares of funds and depositing or withdrawing funds through the “Sweep
Program,” considering the asset allocation for your investment strategy. Rebalancing trade
instructions can be generated by the System when (i) the percentage allocation of an asset
class varies by a set parameter established by us, (ii) we decide to change the ETFs or your
percentage allocations for an investment strategy or (iii) we decide to change your
investment strategy, which could occur, for example, when you make changes to your
investment profile or impose or modify restrictions on the management of your account.
Accounts below $5,000 may deviate farther than the set parameters as well as the target
allocation of the selected investment profile. Rebalancing below $5,000 may impact the
ability to maintain positions in selected asset classes due to the inability to buy or sell at
least one share of an ETF or mutual fund. For example, withdrawal requests may require
entire asset classes to be liquidated to generate and disburse the requested cash.
Sweep Program
Each investment strategy involves a cash allocation (Cash Allocation) that will be held in a
sweep SIIP program at Charles Schwab Bank (the Sweep Program). The Cash Allocation will
be a minimum of 4% of an account’s value to be held in cash and may be higher depending on
the investment strategy chosen for you. The Cash Allocation will be accomplished through
enrollment in the Sweep Program which is sponsored by Schwab. By enrolling in the SIIP
program, you consent to having the free credit balances in your brokerage accounts at
Schwab swept into deposit accounts (Deposit Accounts) at Charles Schwab Bank (Schwab
Bank) through the Sweep Program.
Schwab Bank is an FDIC-insured depository institution that is a Schwab affiliate. The Sweep
Program is a required feature of the SIIP program. If the Deposit Account balances exceed
the Cash Allocation for your investment strategy, the excess over the rebalancing parameter
will be used to purchase securities as part of rebalancing. If you request cash withdrawals
from your accounts, this likely will require the sale of fund positions in your accounts to bring
your Cash Allocation in line with the target allocation for your chosen investment strategy. If
you have taxable accounts, those sales may generate capital gains (or losses) for tax
purposes. In accordance with an agreement with Schwab, Schwab Bank has agreed to pay an
interest rate to depositors participating in the Sweep Program that will be determined by
reference to an index.
Compensation to Schwab Under the Institutional Intelligent Portfolio® Program
You do not pay fees to SPT or brokerage commissions or other fees to Schwab as part of the
SIIP program. However, Schwab receives other revenues including, but not specifically
limited to, the following which is subject to change: (i) the profit
earned by Charles Schwab
Bank on the allocation to the Schwab Intelligent Portfolios Sweep Program described in the
Schwab Intelligent Portfolios Sweep Program Disclosure Statement; (ii) investment advisory
and/or administrative service fees (or unitary fees) received by Charles Schwab Investment
Management, Inc., a Schwab affiliate, from Schwab ETFs™ Schwab Funds® and Laudus Funds®
that we select to buy and hold in your brokerage account; (iii) fees received by Schwab from
third-party ETFs that participate in the Schwab ETF OneSource™ program and mutual funds in
the Schwab Mutual Fund Marketplace® (including certain Schwab Funds and Laudus Funds) in
your brokerage account for services Schwab provides; and (iv) remuneration Schwab may
receive from the market centers where it routes ETF trade orders for execution.
Stand-Alone Financial Planning and Consulting Services
We provide limited financial planning and consulting services as described above. Except as
detailed in Item 5, we generally do not charge an additional fee for requested financial
planning services unless the services exceed the limited scope of planning identified in our
Client Profile and Agreement. Should additional planning needs be evident, we will have you
enter into a separate stand-alone Financial Planning and Consulting Agreement outlining the
terms, conditions (including termination), scope of services provided and fees that would be
due.
Miscellaneous Disclosures
Financial Planning
We have relied upon information provided by you. We do not verify any information
obtained from you or your attorney, accountant or other professionals, including information
from custodial/investment statements. In the event that any such information provided is
inaccurate or incomplete, the corresponding results or recommendations will be inaccurate
or incomplete.
We are not a law firm, accounting firm or an insurance agency, and no portion of our services
should be construed as comprehensive financial planning or legal, insurance or accounting
advice. Rather, you should seek the advice of your attorney, insurance agent, accountant or
other corresponding professional advisor with respect to those issues. We do not prepare
estate planning documents or tax returns, nor do we sell insurance products.
Unless we specifically agree in writing, neither we nor our representatives are responsible to
implement any financial plans or financial planning advice, provide ongoing financial
planning services or provide ongoing monitoring of financial plans or financial planning
advice. Any financial planning, consulting and investment recommendations by us are
subject to various market, currency, economic, political, tax and business risks and those
recommendations/decisions will not always be profitable. You are free at all times to accept
or reject any recommendation from us, and you have the sole authority with regard to the
implementation, acceptance or rejection of any recommendation or advice and/or services
from us and any recommendations (i.e., estate planning, retirement planning, taxes, etc.)
should be discussed and/or implemented, at your sole discretion, with the corresponding
professional advisors of your choosing.
You may require further assistance from outside professionals (i.e., attorneys, accountants,
insurance agents, etc.) to address your financial situation when preparing your financial
analysis. Should this be the case and you don’t have a professional of your choosing, we may
recommend the services of outside professionals we know to help with implementation, but
you should understand that our referral of a professional to you could present conflicts of
interest because we could have an economic incentive to refer you to a specific professional
and the professional could also make referrals to us. To mitigate those conflicts, we remind
you that you are not under any obligation to engage any professionals that we recommend to
you.
If you engage any professional (i.e., attorney, accountant, insurance agent, etc.)
recommended by us or otherwise and a dispute arises thereafter relative to such
engagement, you agree to seek recourse exclusively from the engaged professional. At all
times, the engaged licensed professional[s] (i.e., attorney, accountant, insurance agent,
etc.), and not us, shall be responsible for the quality and competency of the services
provided.
We believe that it is important for you to address financial planning issues on an ongoing
basis. Our advisory fee, as set forth at Item 5 below, will remain the same regardless of
whether or not you determine to address financial planning issues with us.
Socially Responsible Investing Limitations
Socially Responsible Investing (SRI) involves the incorporation of environmental, social, and
governance considerations into the investment due diligence process (ESG). There are
potential limitations associated with allocating a portion of an investment portfolio in ESG
securities (i.e., securities that have a mandate to avoid, when possible, investments in such
products as alcohol, tobacco, firearms, oil drilling, gambling, etc.). The number of these
securities may be limited when compared to those that do not maintain such a mandate.
ESG securities could underperform broad market indices. Investors must accept these
limitations, including potential for underperformance. Correspondingly, the number of ESG
mutual funds and exchange traded funds are few when compared to those that do not
maintain such a mandate. As with any type of investment (including any investment and/or
investment strategies recommended and/or undertaken by us), there can be no assurance
that investment in ESG securities or funds will be profitable or prove successful.
Sub-Advisory Engagements
We also serve as a sub-adviser to unaffiliated registered investment advisors per the terms
and conditions of a written sub-advisory agreement. The unaffiliated investment advisers
that engage our sub-advisory services shall maintain both the initial and ongoing day-to-day
relationship with the underlying client, including initial and ongoing determination of client
suitability for our designated investment strategies. If the custodian/broker-dealer is
determined by the unaffiliated investment adviser, we will be unable to negotiate
commissions and/or transaction costs and/or seek better execution. As a result, such clients
may pay higher commissions or other transaction costs or greater spreads, or receive less
favorable net prices, on transactions for the account than would otherwise be the case
through alternative clearing arrangements recommended by us. Higher transaction costs
adversely impact account performance.
Held-Away Assets
“Held-Away Assets” are defined as your investment assets or accounts that are:
v Not designated by you to be subject to our discretionary management services
under the terms and conditions of our Client Profile and Agreement.
v Not included in calculating your performance and not subject to fees based upon a
computation of your assets under our management, or
v Any specific individual securities that are purchased for your account at your
direction and not based upon our investment advice or determination to purchase
the individual securities as part of our ongoing discretionary management
authority.
Held-Away Assets can also include investment assets maintained in defined contribution plans
(i.e., 401(k) plans, 403(b) plans, 457 deferred compensation plans, 529 education savings
plan, participation accounts, annuities, etc.) not custodied at Schwab where we have trading
authority. However, at your election, through a third-party agreement with Pontera
Solutions, Inc., you can give us access to manage and trade on Held-Away Assets.
Pontera Solutions Platform
The Pontera Solutions, Inc. (“Pontera”) platform links Held-Away Assets in a single web-
based interface offering us a comprehensive view of your contribution plan(s) and the
ability for us to implement asset allocation and opportunistic rebalancing strategies that
would otherwise be constrained due to regulatory limitations related to federal and state
custody laws.
How It Works
Pontera will provide a secure link for you to gain access to their platform. There you will
provide detailed information relating to your Held-Away Assets and establish the login
credentials to those accounts. We will never have direct login capability to those Held-
Away Assets. You maintain personal autonomy allowing us to only allocate and trade
those accounts you linked to the Pontera platform. Once you give us entitlement to
manage those Held-Away Assets, we can structure asset allocations strategies and use
our account management software to create a seamless management process.
Disclosures
v Pontera charges an asset-based annual fee of 0.30% for each contribution plan
account we manage on their platform. The fee is calculated at the beginning
of each calendar quarter (i.e., 0.30% ÷ 4 = 0.075%) and billed to us – you do not
pay directly for this service. This will NOT result in you paying a higher
management fee above what we have currently disclosed in our above fee
schedule.
v Our investment advice is limited by the investment choices available within
your contribution plan, and we are not responsible for any costs, expenses,
transaction fees, redemption fees, penalties or otherwise resulting from any
account transactions.
v We will not have, nor will we accept, any authority to change beneficiaries or
effect account disbursements or to process any transfers of any funds to/from
your contribution plan account(s).
v We are independent of and not owned by, affiliated with, or sponsored or
supervised by Pontera or any of their affiliates.
Limitations Working with Held-Away Assets
For Held-Away Assets not linked to Pontera, not custodied at Schwab, or investment assets
or accounts where we do not have trading authority, we may provide investment advice
when specifically requested by you, and as agreed to by us, subject to the terms and
conditions of our Client Profile and Agreement which includes the following:
v We do not accept responsibility to provide ongoing review, monitoring or
performance evaluation of any Held-Away Assets not linked to the Pontera
platform.
v If requested by you, we may consult or assist you regarding Held-Away Assets in
matters that include, but are not limited to, disposition of assets, transferring of
non-managed funds to/from the account(s) or assist with trades within the non-
managed account(s) but only as directed by you. You remain responsible for all
decisions and consequences regarding the Held-Away Assets and agree to release
and hold us harmless, and all persons associated with us, from any and all losses
and/or other liabilities resulting from the Held-Away Assets(s).
v It is your exclusive obligation and sole responsibility to immediately notify us, in
writing, if there is a change in your financial situation or investment objective(s)
including, but not limited to, personal/financial situation, goals, needs or
concerns/views regarding economic/political/financial climate as well as any
changes in investment alternatives, restrictions, etc. for the purpose of reviewing,
evaluating or revising any of our previous recommendations and/or services, or if
you want to impose, add or modify any reasonable restrictions to our investment
advisory services. Please Note: Unless you advise, in writing, to the contrary,
there are no restrictions on our services, other than to manage the account in
accordance with your designated investment objective.
v We shall not be responsible for any costs, damages, penalties or otherwise resulting
from the failure to notify us.
v We can also provide account reporting services which can incorporate client
investment assets that are not part of the assets that we manage (the Held-Away
Assets).
Retirement Account Rollovers
When it comes to your retirement account, you have four options to consider when changing
employers or retiring:
v Leave the account assets in the former employer’s plan if permitted.
v Roll over the assets to the new employer’s plan if one is available and rollovers are
permitted.
v Roll over the account assets to an Individual Retirement Account (an “IRA”).
v Cash out the retirement account assets (there may be tax consequences and/or IRS
penalties depending on your age).
Should you approach us to advise you on which option would be the best for your particular
situation, we have an economic incentive to recommend you roll over your retirement
account to a managed IRA account with us where we would earn a management fee on those
assets. This can present a conflict of interest and render our advice as subjective and a
disadvantage to you. Therefore, if we recommend you roll over your retirement account to
an individually managed IRA account, you are under no obligation to engage us to manage
your assets. You are free to take your account anywhere.
Portfolio Trading Activity
As part of our investment advisory services, we will review your portfolios on an ongoing
basis to determine if any trades are necessary based upon various factors including, but not
limited to, investment performance, fund manager tenure, style drift, account
additions/withdrawals, your financial circumstances and changes in your investment
objectives. However, based upon these and other factors, there may be extended periods of
time when we determine that trades within your portfolio are neither necessary nor prudent.
You nonetheless remain subject to the fees described in Item 5 during periods of portfolio
trading inactivity.
Cash Positions
Our clients’ accounts usually contain cash and cash equivalent positions (such as money
market funds), generally for defensive and liquidity purposes. Unless otherwise agreed in
writing, all cash and cash equivalent positions will be included as part of assets under
management for purposes of calculating our investment management fee.
At any specific point in time, depending upon perceived or anticipated market
conditions/events (there being no guarantee that such anticipated market conditions/events
will occur), we may maintain cash positions for defensive purposes. In addition, while assets
are maintained in cash, such amounts could miss market advances. Depending upon current
yields, at any point in time, our advisory fee could exceed the interest paid by your money
market fund.
Inverse / Enhanced Investments
We may utilize inverse (short) mutual funds and/or exchange-traded investment/funds (ETFs)
that are designed to perform in an inverse (opposite) relationship to certain market indices
(at a rate of one or more times the inverse result of the corresponding index). In addition,
we may also use leveraged (enhanced) mutual funds or ETFs that provide an enhanced
relationship to certain market indices (at a rate of more than one times the actual result of
the corresponding index). These strategies involve a higher level of inherent risk, and
therefore, you may direct us, in writing, not to employ any or all such investment strategies.
See “Risks Associated with using Leveraged and Inverse Mutual Funds and ETFs” of this
Disclosure Brochure for a more detailed description of the risks associated with using
inverse/enhanced investments.
Tailored Advisory Services
We tailor our advisory services to the individual needs of our clients as described above. In
addition, our clients may impose reasonable restrictions, in writing, about investing in certain
securities or types of securities.
Assets Under Management
As of December 31, 2023, our assets under management totaled:
Client Discretionary Managed Accounts ......................... $693,702,744
We do not offer non-discretionary asset management services.