FIRM BUSINESS
FIRM MISSION STATEMENT
FINANCIAL PLANNING SERVICES
INVESTMENT ADVISORY SERVICES
money market vehicles, and/or other security types. The design of the portfolio
is dependent upon your needs, goals, time horizon, and risk tolerance.
o FINANCIAL SUPERVISION: This is a service that compliments some
clients’ total investment strategy and estate planning. This unique service
allows you to have assets not managed by The Consulate, under our non-
discretionary supervision. This allows you to manage a portion of your
total portfolio as you choose but consolidate all investments for ease of
transition in the case of a death or disability.
• RETIREMENT PLAN PARTICIPANT ACCOUNT MANAGEMENT: This service
includes perpetual discretionary, non-discretionary investment management,
and/or plan or participant account investment consultation. The Financial
Consulate designs managed portfolios using a blend of individual stocks, mutual
funds, exchange traded funds, bonds, alternative investments, certificates of
deposit, money market vehicles, and/or other security types. The design of the
portfolio is dependent upon the plan’s or participant’s needs, goals, time horizon,
regulatory requirement, and risk tolerance.
The Financial Consulate, Inc. can custom tailor a relationship to blend both
management and supervision. This allows a client to maintain total control of a pre-
determined portion of the portfolio. This also creates optimal flexibility and
accountability.
• RETIREMENT PLAN MANAGEMENT: This service was developed to help guide
our corporate clients in adopting and operating retirement plans for their
employees. We work with employers to help identify the appropriate type of
retirement plan, identify and retain other service providers, enroll employees as
plan participants, and manage plan investments.
• CORPORATE SEMINARS: Members of The Consulate have been providing local
and regional companies and municipalities with educational seminars for over
20 years. Each seminar is based on the Financial Physical® methodology and
catered to each company’s specific employee benefits package and audience.
• GENERAL: The Consulate may provide a la carte analysis not included in the
above referenced services for an hourly charge of $200. This is done at the
discretion of management on a case-by-case basis. Services provided in this form
will generally be an exception to our standard operating practices.
SPECIALTY SERVICES
• RETIREMENT PLAN ROLLOVER RECOMMENDATIONS: When The Financial
Consulate provides investment advice about your retirement plan account or
individual retirement account (“IRA”) including whether to maintain
investments and/or proceeds in the retirement plan account, roll over such
investment/proceeds from the retirement plan account to a IRA or make a
distribution from the retirement plan account, we acknowledge that The
Financial Consulate is a “fiduciary” within the meaning of Title I of the Employee
Retirement Income Security Act (“ERISA”) and/or the Internal Revenue Code
(“IRC”) as applicable, which are laws governing retirement accounts. The way
The Financial Consulate makes money creates conflicts with your interests so
The Financial Consulate operates under a special rule that requires The
Financial Consulate to act in your best interest and not put our interest ahead of
you.
Under this special rule’s provisions, The Financial Consulate must as a fiduciary
to a retirement plan account or IRA under ERISA/IRC:
• Meet a professional standard of care when making investment
recommendations (e.g., give prudent advice);
• Never put the financial interests of The Financial Consulate ahead of you
when making recommendations (e.g., give loyal advice);
• Avoid misleading statements about conflicts of interest, fees, and
investments;
• Follow policies and procedures designed to ensure that The Financial
Consulate gives advice that is in your best interest;
• Charge no more than is reasonable for the services of The Financial
Consulate; and
• Give Client basic information about conflicts of interest.
To the extent we recommend you roll over your account from a current
retirement plan account to an individual retirement account managed by The
Financial Consulate, please know that The Financial Consulate and our
investment adviser representatives have a conflict of interest.
We can earn increased investment advisory fees by recommending that you roll
over your account at the retirement plan to an IRA managed by The Financial
Consulate. We will earn fewer investment advisory fees if you do not roll over
the funds in the retirement plan to an IRA managed by The Financial Consulate.
Therefore, our investment adviser representatives have an economic incentive
to recommend a rollover of funds from a retirement plan to an IRA which is a
conflict of interest because our recommendation that you open an IRA account
to be managed by our firm can be based on our economic incentive and not
based exclusively on whether or not moving the IRA to our management
program is in your overall best interest.
We have taken steps to manage this conflict of interest. We have adopted an
impartial conduct standard whereby our investment adviser representatives
will (i) provide investment advice to a retirement plan participant regarding a
rollover of funds from the retirement plan in accordance with the fiduciary
status described below, (ii) not recommend investments which result in The
Financial Consulate receiving unreasonable compensation related to the rollover
of funds from the retirement plan to an IRA, and (iii) fully disclose compensation
received by The Financial Consulate and our supervised persons and any
material conflicts of interest related to recommending the rollover of funds from
the retirement plan to an IRA and refrain from making any materially misleading
statements regarding such rollover.
When providing advice to your regarding a retirement plan account or IRA, our
investment advisor representatives will act with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, based on the investment
objectives, risk, tolerance, financial circumstances, and a client’s needs, without
regard to the financial or other interests of The Financial Consulate or our
affiliated personnel.
• TAX PREPARATION: The Consulate provides tax services for Individuals,
LLCs, Corporations, Partnerships, and Trusts & Estates.
• BOOKKEEPING & WRITE-UP SERVICES: The Consulate provides bookkeeping
and financial write-up services.
• QUICKBOOKS® SERVICES: The Consulate provides QuickBooks® installation
and support services.
The Consulate tailors its advisory services to the individual needs of each client. Financial
planning and investment management services are predicated on the values and goals of
TAX & ACCOUNTING SERVICES
FIRM PRACTICES
each client. Also incorporated are the client’s tolerance and capacity for investment risk,
specific investment objectives, and time horizons regarding distributions. As time
progresses and clients provide feedback on financial planning recommendations and their
investment portfolio’s response to various market and economic stimuli, The Consulate
may adjust recommendations and/or investment strategy accordingly. Clients are also
invited and encouraged to provide such feedback in annual Personal Financial Reviews.
Clients may also place specific restrictions on the type and allocation of investments; such
instructions must be given in writing.
As of December 31, 2023, The Consulate had $782,269,600 under management on a
discretionary basis.
Individual Separately Managed Accounts by investment management companies that
participate in Charles Schwab & Co., Inc. and/or Fidelity Investments’ managed account
program. These accounts normally require large starting amounts with 100 thousand
dollars being the minimum account size. Many companies require a 250 thousand dollar
minimum. These types of managed accounts are best for clients with more than 1 million
dollars of invested assets as the minimums are substantial and The Consulate desires ample
diversification of managers.
Use of Mutual and Exchange Traded Funds
Most mutual funds and exchange traded funds are available directly to the public. Therefore,
a prospective client can obtain many of the funds that may be utilized by The Consulate
independent of engaging The Consulate as an investment advisor. However, if a prospective
client determines to do so, he/she will not receive The Consulate’s initial and ongoing
investment advisory services.
In addition to The Consulate’s investment advisory fee described below, and transaction
and/or custodial fees discussed below, clients will also incur, relative to all mutual fund and
exchange traded fund purchases, charges imposed at the fund level (e.g., management fees
and other fund expenses).
Independent Managers
The Consulate may allocate a portion of the client’s investment assets among unaffiliated
independent investment managers in accordance with the client’s designated investment
objective(s). In such situations, the Independent Managers shall have day-to-day
ASSETS UNDER MANAGEMENT
OTHER INVESTMENTS AVAILABLE
IMPORTANT DISCLOSURES
responsibility for the active discretionary management of the allocated assets, including, to
the extent applicable, proxy voting responsibility. The Consulate shall continue to render
investment supervisory services to the client relative to the ongoing monitoring and review
of account performance, asset allocation and client investment objectives. Factors that The
Consulate shall consider in recommending Independent Managers include the client’s
designated investment objective(s), management style, performance, reputation, financial
strength, reporting, pricing, and research. The investment management fee charged by
Independent Managers is separate from, and in addition to, The Consulate’s investment
advisory fee disclosed at Item 5 below
Interval Funds/Risks and Limitations
Where appropriate, The Consulate may utilize interval funds (and other types of securities
that could pose additional risks, including lack of liquidity and restrictions on withdrawals).
An interval fund is a non-traditional type of closed-end mutual fund that periodically offers
to buy back a percentage of outstanding shares from shareholders. Investments in an
interval fund involve additional risk, including lack of liquidity and restrictions on
withdrawals.
During any time periods outside of the specified repurchase offer window(s), investors will
be unable to sell their shares of the interval fund. There is no assurance that an investor will
be able to tender shares when or in the amount desired. There can also be situations where
an interval fund has a limited amount of capacity to repurchase shares and may not be able
to fulfill all purchase orders. In addition, the eventual sale price for the interval fund could
be less than the interval fund value on the date that the sale was requested.
While an internal fund periodically offers to repurchase a portion of its securities, there is
no guarantee that investors may sell their shares at any given time or in the desired amount.
As interval funds can expose investors to liquidity risk, investors should consider interval
fund shares to be an illiquid investment. Typically, the interval funds are not listed on any
securities exchange and are not publicly traded. Therefore, there is no secondary market for
the fund’s shares.
Because these types of investments involve certain additional risk, these funds will only be
utilized when consistent with a client’s investment objectives, individual situation,
suitability, tolerance for risk and liquidity needs. Investment should be avoided where an
investor has a short-term investing horizon and/or cannot bear the loss of some, or all, of
the investment. There can be no assurance that an interval fund investment will prove
profitable or successful. In light of these enhanced risks, a client may direct The Consulate,
in writing, not to purchase interval funds for the client’s account
Portfolio Activity
The Consulate has a fiduciary duty to provide services consistent with the client’s best
interest. As part of its investment advisory services, The Consulate will review client
portfolios on an ongoing basis to determine if any changes are necessary based upon
various factors, including, but not limited to, investment performance, fund manager tenure,
style drift, account additions/withdrawals, and/or a change in the client’s investment
objective. Based upon these factors, there may be extended periods of time when The
Consulate determines that changes to a client’s portfolio are neither necessary nor prudent.
Clients nonetheless remain subject to the fees described in Item 5 below during periods of
account inactivity.
Cash Positions
The Consulate treats cash as an asset class. As such, unless determined to the contrary by
The Consulate, all cash positions (money markets, etc.) shall be included as part of assets
under management for purposes of calculating The Consulate’s advisory fee. In addition,
while assets are maintained in cash, such amounts could miss market advances. Depending
upon current yields, at any point in time, The Consulate’s advisory fee could exceed the
interest paid by the client’s cash positions.
Cash Sweep Accounts
Certain account custodians can require that cash proceeds from account transactions or
new deposits, be swept to and/or initially maintained in a specific custodian designated
sweep account. The yield on the sweep account will generally be lower than those available
for other money market accounts. When this occurs, to help mitigate the corresponding
yield dispersion The Consulate shall (usually within 30 days thereafter) generally (with
exceptions) purchase a higher yielding money market fund (or other type security)
available on the custodian’s platform, unless The Consulate reasonably anticipates that it
will utilize the cash proceeds during the subsequent 30-day period to purchase
additional investments for the client’s account. Exceptions and/or modifications can and
will occur with respect to all or a portion of the cash balances for various reasons, including,
but not limited to the amount of dispersion between the sweep account and a money market
fund, the size of the cash balance, an indication from the client of an imminent need for such
cash, or the client has a demonstrated history of writing checks from the account.
The above does not apply to the cash component maintained within a The Consulate
actively managed investment strategy (the cash balances for which shall generally remain in
the custodian designated cash sweep account), an indication from the client of a need for
access to such cash, assets allocated to an unaffiliated investment manager and cash
balances maintained for fee billing purposes.
The client shall remain exclusively responsible for yield dispersion/cash balance decisions
and corresponding transactions for cash balances maintained in any The Consulate
unmanaged accounts.
Client Obligations
In performing its services, The Consulate shall not be required to verify any information
received from the client or from the client’s other professionals and is expressly authorized
to rely thereon. Moreover, each client is advised that it remains their responsibility to
promptly notify The Consulate if there is ever any change in their financial situation or
investment objectives for the purpose of reviewing, evaluating or revising The Consulate’s
previous recommendations and/or services.
Cybersecurity Risk
The information technology systems and networks that The Consulate and its third-party
service providers use to provide services to The Consulate’s clients employ various controls,
which are designed to prevent cybersecurity incidents stemming from intentional or
unintentional actions that could cause significant interruptions in The Consulate’s
operations and result in the unauthorized acquisition or use of clients’ confidential or non-
public personal information. Clients and The Consulate are nonetheless subject to the risk of
cybersecurity incidents that could ultimately cause them to incur losses, including for
example: financial losses, cost and reputational damage to respond to regulatory
obligations, other costs associated with corrective measures, and loss from damage or
interruption to systems. Although The Consulate has established procedures to reduce the
risk of cybersecurity incidents, there is no guarantee that these efforts will always be
successful, especially considering that The Consulate does not directly control the
cybersecurity measures and policies employed by third-party service providers. Clients
could incur similar adverse consequences resulting from cybersecurity incidents that more
directly affect issuers of securities in which those clients invest, broker-dealers, qualified
custodians, governmental and other regulatory authorities, exchange and other financial
market operators, or other financial institutions.
o Financial Physical®: $5,000
Clients who engage the Financial Consulate for Financial Management,
Supervision, or a combination thereof will receive a billing credit towards those
services in the amount of the financial planning fee paid.