Important Public Disclosure
TO: Valued Clients and Prospects
FROM: Norman R. Smith, CPA/PFS/CFP
DATE: April 2008 REVISED
As Registered Investment Advisors, the Securities and
Exchange Commission requires nrSmith
and Associates, PS to furnish clients and prospective clients with a written
disclosure of our business practices. This
Important Public Disclosure
is an alternative brochure that summarizes Form ADV, Part II, which is
available to you upon request. These
business practices, as summarized below, are also available on our website at http://www.NRSmith.com (end of the Firm
Profile section under Important Public Disclosure):
Ø
Furnish personal
financial planning services and newsletters to clients as an integral dimension
of the practice of public accounting. As
an extension of this personal financial planning, we provide specific
investment management services with assets held by Charles Schwab & Co.,
Inc. under an institutional agreement.
Investment management fees are based on specific gross assets under
management.
Ø
Furnish advice to
clients on matters not involving securities.
The above services are
provided as an adjunct to rendering public accounting services, including
accounting and auditing, management advisory services, technology consulting,
income tax planning and preparation, and general personal financial planning.
All services, except
investment management services, are rendered on an hourly basis determined on
the experience and technical level of employees involved. All billings are rendered on an ongoing basis
with invoices due upon receipt.
An
investment advisory agreement is executed before commencing services. nrSmith
and Associates, PS refers to the services described above as "financial
planning" or some similar term. The
firm generally provides investment advice to individuals, pension and profit
sharing plans, trusts, estates, charitable organizations, and corporations or
business entities other than those mentioned.
An investment advisory agreement may be terminated by written notice
according to the terms set forth in each client agreement.
The fee for investment
portfolio management is .25% per quarter of the first $500,000; .1875% on the
next $200,000 and .125% of the amount in excess of $700,000, which amounts to
1%, .75% and .50% respectively of the total portfolio assets under management
on an annual basis. Whereas, the hourly
rates for personal financial planning services range from $120 to $140 per hour
and the clerical rate is $52 per hour.
Satisfaction is guaranteed for services provided and billings
rendered. If a client is not satisfied,
we make every effort to resolve the situation and will negotiate our fee
accordingly.
Types of Investments
nrSmith and Associates, PS offers advice on the
following:
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Ø Equity securities:
exchange-listed and securities traded over-the-counter |
Ø
Corporate debt
securities (other than commercial paper) |
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Municipal
securities |
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Registered investment
company securities: mutual fund shares |
Ø
Warrants |
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Interests in
partnerships investing in: real
estate, oil and gas interests, and partnerships having economic merit and
positive tax consequences such as equipment leasing |
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Methods of Analysis, Sources of Information and
Investment Strategies
nrSmith and Associates, PS security analysis methods
include:
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Fundamental |
Ø Technical |
The main sources of
information used include:
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Financial
publications |
Ø
Corporate
rating services |
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Inspections of
corporate activities |
Ø
Research
materials prepared by others |
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Ø
Annual reports,
prospectuses, and filings with the Securities and Exchange Commission |
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The investment strategies
used to implement any investment advice given to clients include long-term
purchases (securities held at least a year).
Education and Business Standards
Those
involved in determining or giving investment advice to clients are required by nrSmith and Associates, PS to meet
specific education requirements and be certified as, or be in the process of
becoming, a Certified Public Accountant and/or Certified Financial
Planner. Further, they must meet the
continuing education requirements of Certified Public Accountants for
President's Education and Background
Norman
R. Smith began his career with Coopers & Lybrand (now known as
Pricewaterhouse Coopers) where he spent one year as a staff accountant. He advanced to supervisor with Peterson,
Sullivan & Company, CPAs. After five
years of growing responsibility, he moved from
Norman R. Smith's education
and memberships includes:
College for Financial Planning,
Member of National
Association of Personal Financial Advisors
American Institute of
Certified Public Accountants – PFP Section
Norman R. Smith obtained his certification and license
as a Certified Public Accountant in 1971.
He has served on the Personal Financial Planning Committee of the
Washington Society of Certified Public Accountants for the last twelve years
and was chair for the 1995-97 years. He
became a Personal Financial Specialist in 1996.
He was appointed to the Ethics Committee of the Washington Board of
Accountancy in 1996. He became an
Associate Member of the Association of Certified Fraud Examiners in 2000. In 2000, he was admitted membership in the
National Association of Personal Financial Planners. He has conducted numerous technical training
sessions including sessions sponsored by Washington Society of Certified Public
Accountants.
Certified Financial Planner’s Education and Background
Deborah Kelley began her
public accounting career in 1978. She
joined the firm in 1990 and became a Certified Financial Planner in 1993.
Deborah Kelley's education
and memberships includes:
College
of Financial Planning,
Member of National Association of Personal Financial
Advisors
As a registered investment
advisor and financial planner, the firm does not establish a specific minimum
dollar value of assets or other conditions for starting or maintaining an
account.
nrSmith and Associates, PS is incorporated as a
professional service organization and is not related nor involved in any
partnership in which clients are solicited to invest.
Review of Accounts
Any
financial planning which nrSmith
and Associates, PS is engaged to perform is reviewed with the client to
determine change in objectives, actual performance versus projected
performance, and possible adjustments necessary as a result of change in
objectives or investment performance.
Accounts are reviewed by the President of the Corporation in connection with
income tax and management planning at least annually or at the request of the
client.
Nature and Frequency of Reports to Clients on Their
Accounts
Upon development of a
client's initial financial plan, recommendations will be developed and reported
to the client at that time. Clients will
receive quarterly reports containing the information described above.
Proxies
nrSmith and Associates, PS will not vote proxies and
will not be required to take action and/or render any advice with respect to
voting of proxies solicited by or with respect to the issuers of securities in
which assets in client accounts may be invested from time to time. In addition, nrSmith and Associates, PS will not take any action or render
any advice with respect to any securities held in client accounts, which are
named in or subject to class action lawsuits.
nrSmith and Associates
will, however, forward any information received regarding class action legal
matters involving any security held in client accounts.
nrSmith and
Associates, PS has discretionary authority to determine:
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Ø
Securities to
be bought or sold |
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Amount of the
securities to be bought or sold |
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Broker or
dealer to be used |
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But, not commission
rates paid (to broker or dealer) |
nrSmith and
Associates, PS does not have any arrangements, oral or written, where it is
paid cash or receives an economic benefit (including commissions, equipment, or
non-research services) from a non-client in connection with giving advice to
clients. In addition, the firm does not
directly or indirectly compensate any person for client referrals.
nrSmith and Associates, PS recommends that clients
establish brokerage accounts with the Schwab Institutional division of Charles
Schwab & Co., Inc. (Schwab), a registered broker-dealer, member SIPC, to
maintain custody of clients’ assets and to effect trades for their
accounts. nrSmith and Associates, PS is independently owned and
operated and not affiliated with Schwab.
Schwab provides nrSmith
and Associates, PS with access to its institutional trading and custody
services, which are typically not available to Schwab retail investors. These services generally are available to
independent investment advisors on an unsolicited basis, at no charge to them
so long as a total of at least $10 million of the advisor’s clients’ assets is
maintained in accounts at Schwab Institutional.
Schwab's services include brokerage, custody, research, and access to
mutual funds and other investments that are otherwise generally available only
to institutional investors or would require a significantly higher minimum
initial investment.
For nrSmith and Associates, PS clients'
accounts maintained in our custody, Schwab generally does not charge separately
for custody but is compensated by account holders through commissions or other
transaction-related fees for securities trades that are executed through Schwab
or that settle into Schwab accounts.
Schwab also makes available to nrSmith and Associates, PS other products and services that
benefit nrSmith and Associates,
PS but may not benefit our clients' accounts.
Some of these other products and services assist nrSmith and Associates, PS in managing and administering
clients' accounts. These include
software and other technology that provide access to client account data (such
as trade confirmations and account statements); facilitate trade execution (and
allocation of aggregated trade orders for multiple client accounts); provide
research, pricing information and other market data; facilitate payment of nrSmith and Associates, PS fees from
our clients' accounts; and assist with back-office functions, recordkeeping and
client reporting. Many of these services
generally may be used to service all or a substantial number of nrSmith and Associates, PS accounts,
including accounts not maintained at Schwab Institutional. Schwab Institutional also makes available to nrSmith and Associates, PS other
services intended to help nrSmith
and Associates, PS manage and further develop our business. These services may include consulting,
publications, and conferences on practice management, information technology,
business succession, regulatory compliance, and marketing. In addition, Schwab may make available,
arrange, and/or pay for these types of services rendered to nrSmith and Associates, PS by
independent third parties. Schwab
Institutional may discount or waive fees it would otherwise charge for some of
these services or pay all or a part of the fees of a third party providing
these services to nrSmith and
Associates, PS. While as a fiduciary, nrSmith and Associates, PS endeavors to
act in our clients’ best interests, and nrSmith
and Associates, PS recommendation that clients maintain their assets in
accounts at Schwab may be based in part on the benefit to nrSmith and Associates, PS of the
availability of some of the foregoing products and services and not solely on
the nature, cost or quality of custody and brokerage services provided by
Schwab, which may create a potential conflict of interest.
As Certified Public Accountants/Financial Planners, we will not release personal identifiable information except as provided in professional codes conduct, ethics, and governing rules related thereto. This means we will not release your information as part of the sale of marketing data. We do not sell marketing data. Before we provide any data to obtain information on specific financial products on your behalf, we will obtain your permission. We retain only those documents for active clients, as we deem appropriate. To comply with the Internal Revenue Code, we will keep copies of tax returns prepared by us for at least three years. Some records will be in electronic format. Our Code of Ethics is based on a few basic principles that pervade all investment related activities of all employees, personal as well as professional: (1) the interests of our clients/investors come before the firm’s or any employee's interests; (2) each employee's professional activities and personal investment activities is monitored regularly to be consistent with this Code and avoid any actual or potential conflict between the interests of clients/investors and those of the firm or the employee; and (3) those activities are conducted in a way that avoids any abuse of an employee's position of trust with and responsibility to nrSmith and Associates, PS and its clients/investors, including taking inappropriate advantage of that position.
Copies of our Privacy
Policy, Code of Ethics, Records Retention Schedule, and Form ADV Parts I
and II are available upon request or examination at our office. Please retain this Important Public Disclosure
for future reference. Questions or concerns regarding the content should be
directed to our Chief Compliance Officer, Norman Smith, nrSmith and Associates, PS, at
t:main/forms/Public Disclosure_April 2008.doc