«Form ADV Part 2A Investment Adviser Brochure March 2016 ® This brochure provides information about the qualifications and business practices of ...»
Item 1: Cover Page
Form ADV Part 2A
Investment Adviser Brochure
This brochure provides information about the qualifications and business practices of Paraklete
Financial, Inc. If you have any questions about the contents of this brochure, please contact Thomas N.
Tillery, Vice President and Chief Compliance Officer at 678-290-3930, ext. 103 or
email@example.com. The information in this brochure has not been approved or verified by the
United States Securities and Exchange Commission or by any state securities authority. Registration as an investment advisor does not imply a certain level of skill or training.
® Additional information about Paraklete Financial, Inc. is also available on the SEC’s website at www.adviserinfo.sec.gov. You may search this site using a unique identifying number, known as a CRD ® number, Paraklete Financial, Inc.’s CRD Number is 142323.
1230 Valley Reserve Drive NW Kennesaw, GA 30152-4846 Tel: 678-290-3930 Fax: 678-290-3901 firstname.lastname@example.org www.parakletefinancial.com Item 2: Summary of Material Changes Annual Update In this Item of Paraklete® Financial, Inc.’s (Paraklete® or the Firm) Form ADV 2, the Firm is required to discuss any material changes that have been made to Form ADV since the last Annual Amendment, dated March 10, 2015.
Material Changes since the Last Update Since the last ADV Annual Amendment filing, there are no material changes to report.
Full Brochure Available Paraklete®’s Form ADV may be requested at any time, without charge by contacting Thomas N. Tillery, Vice President and Chief Compliance Officer at 678-290-3930 or email@example.com.
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Item 3: Table of Contents Item 1: Cover Page 1 Item 2: Summary of Material Changes 2 Item 3: Table of Contents 3 Item 4: Advisory Business 5 Item 5: Fees and Compensation 7 Item 6: Performance-Based Fees and Side-by-Side Management 8 Item 7: Types of Clients 8 Item 8: Methods of Analysis, Investment Strategies and Risk of Loss 9 Item 9: Disciplin
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Requirements for State Registered Advisers 21 4 Paraklete® Financial, Inc.
Item 4: Advisory Business Firm Description and Types of Advisory Services Paraklete® Financial, Inc. (Paraklete®) was founded with one very important underlying mission – to eliminate the burden of economic mismanagement by facilitating financial stewardship.
Paraklete® is the Koine Greek word for Advocate. Its primary meaning was "one who is called to someone’s aid, as a helper or counselor." It is also the term for Holy Spirit in the New Testament. The word has a rich history and has been transliterated for use in many other languages; Arabic and Hebrew are two examples.
By acting as a "Paraklete" for our clients, we help them navigate the maze of financial decisions that are presented to them on a daily basis. Our advocacy reduces the "financial mistakes" which lead to the "economic mismanagement" of resources. Our advocacy also increases our clients’ greatest asset, available time. Having more time enriches the quality of life for both our clients and their families.
Paraklete® is unique in that it is a true fee-only integrated financial planning firm; there are no products sold and no assets managed. Our primary focus is to financially educate our clients. They are then empowered with the knowledge they need to make correct choices regarding their individual financial situations. Paraklete® coordinates the activities of a client’s investment, legal, tax and insurance advisers to develop an overall integrated plan.
Paraklete® is marketed exclusively through a network of select professionals (CPAs, attorneys, bankers and financial advisers).
Paraklete® was founded in 2006, and is principally owned by Susan M. Tillery, CPA/PFS, CFP®, President/CEO and Thomas N. Tillery, CFP®, AEP®, Vice President/CCO. Together, Susan and Tom have over 50 years of experience in integrated financial planning, asset protection, estate planning, risk management, investments, philanthropy, and retirement and tax planning.
Financial Planning We may prepare a written financial plan for our clients. Our financial planning services may involve consultation, analysis, and recommendations in the six areas of financial planning, which include (1) financial situation; (2) income taxes; (3) insurance; (4) investments; (5) retirement planning; and (6) estate planning.
In order to determine a suitable course of action for an individual client, we will perform a review of the variables that are presented. This review may include, but would not necessarily be limited to, investment objectives, consideration of your overall financial condition, income and tax status, personal and business assets, risk profile, and other factors unique to your particular circumstances.
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We will review your present financial situation and issue a written analysis and report of recommendations in accordance with your goals and objectives. This service may include an initial consultation and subsequent follow-up visits. The services provided in
this regard may include but would not be limited to the following:
• Prepare an annual net worth statement;
• Create a cash flow statement;
• Review current investments and make recommendations thereon;
• Review client’s most recent tax returns and provide tax planning advice or tax preparation services;
• Review client’s life insurance and disability insurance and make recommendations thereon;
• Review client’s estate plan and make recommendations thereon;
• Complete a retirement analysis; and
• Provide education planning advice.
Tailored Relationships To the fullest extent possible, we endeavor to tailor our advisory services to meet the specific needs of each and every client. In order to determine a suitable course of action for an individual client, we review our clients’ financial circumstances and other factors that may influence the investment recommendations we may make from time to time. Such review may include, but would not necessarily be limited to, investment objectives, consideration of a client’s overall financial condition, income and tax status, personal and business assets, risk profile, and other factors.
In making investment recommendations on behalf of a client, we will rely on a data gathering document or other questionnaire, which would be completed based on information provided by a client.
Our clients are free to impose any restrictions or other conditions with regard to how we provide our advisory services. If we agree to such restrictions and/or conditions, please be advised that restrictions and guidelines that you impose on our investment management functions may affect the composition and performance of custom portfolios (as a result, performance of custom portfolios within the same investment objective may differ and you should not expect that the performance of a custom portfolio will be identical to any other individual’s portfolio performance) as well as any recommendations provided to you.
Wrap Fee Programs Paraklete® does not participate in a Wrap Fee Program.
Client Assets Paraklete® does not manage client assets.
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Compensation – Financial Planning
Financial Planning fees will be charged as follows:
Annual, flat/fixed fees Our annual fee (flat/fixed) for our financial planning services ranges from $6,000 to $150,000.
Paraklete® collects annual fees in three (3) separate installments.
• The first installment is calculated as 50% of the total annual fee. (Note that 50% of the financial planning services are provided within 90 calendar days.) The initial payment is due upon a client’s engagement of Paraklete® and an invoice is sent to client with their copy of the engagement letter.
• The second installment is calculated as 25% of the total annual fee. Paraklete® will issue an invoice for the second installment 90 calendar days after the client’s initial engagement of Paraklete®.
• The third installment is calculated as 25% of the total annual fee. Paraklete® will issue an invoice for the third installment 210 calendar days after the client’s initial engagement of Paraklete®.
After the first 12 months, the annual fee is reassessed and ranges from $2,000which will be invoiced in advance on a quarterly basis.
Non-annual, flat/fixed fees Our non-annual, flat/fixed fees are calculated based on a pre-determined hourly rate and the anticipated number of hours associated with the work to be performed. Hourly fee rates will vary from project to project, however, the standard hourly fee range spans from $150 to $650. We require 50% of the total non-annual, flat/fixed fee up front and the balance upon project completion. (Note that most non-annual, flat/fixed fee engagements are completed within 90 calendar days.) Engagement Terms In the event a client terminates the engagement within 7 calendar days of having signed the engagement letter, the client will be entitled to a prorated refund, equal to (83/90*initial installment).
After the first 7 calendar days, the entire first installment is deemed earned and therefore, non-refundable to the client, and no further installments will be due. If the client terminates the engagement after the 90th calendar day but before the 210th calendar day, Paraklete® will deem any previously collected fees as earned and will not 7 Paraklete® Financial, Inc.
issue a refund to the client. Further, any uninvoiced, uncollected fees will not be pursued by Paraklete®.
Other Compensation Neither Paraklete® nor any of its supervised persons (employees) accept compensation for the sale of securities.
General Information on Compensation and Other Fees Specific fee arrangements will be set forth in your engagement letter with us. All fees are due within two (2) weeks of the date of delivery of the invoice to the client.
In certain circumstances, fees are negotiable depending on the time involved, complexity of the engagement, special skills needed to solve problems, the application of experience and knowledge of the client’s situation.
In addition to our fees, you may be charged other fees by parties independent from us as part of the implementation of your financial plan. Investment management fees may be charged by investment managers. Brokerage fees/commissions charged to you for securities trade executions may be billed to you by the broker-dealer or custodian of record for your account, not us. Any such fees are exclusive of, and in addition to our compensation. You will be solely and directly responsible for all fees, including fees other than those we may bill directly to you.
Clients should note that similar advisory services may (or may not) be available from other registered investment advisers for similar or lower fees.
Item 6: Performance-Based Fees and Side-by-Side Management
Performance-Based Fees Neither Paraklete® nor any of its Supervised Persons (employees) accepts performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client).
Paraklete® does not use a performance-based fee structure because of the potential conflict of interest. Performance-based compensation may create an incentive for the adviser to recommend an investment that may carry a higher degree of risk to the client.
Item 7: Types of Clients Types of Clients We will generally provide our services to individuals, high net worth individuals, trusts, estates, and business or corporate entities.
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Item 8: Methods of Analysis, Investment Strategies and Risk of Loss Methods of Analysis Paraklete® provides advice on asset allocation and recommends other investment advisors for ongoing management. Paraklete® does not engage in the analysis of publicly-traded securities or recommend specific individual securities or fixed income instruments.
Investment Strategies The investment strategy for a specific client is based upon the objectives stated by the client during consultations. The client may change these objectives at any time.
Paraklete® provides clients with research on various asset classes including common stocks, bonds, hedge funds, private equity, real estate and timberland. Paraklete®’s primary emphasis is on finding the best managers, regardless of asset class.
Paraklete® provides clients with asset allocation advice on mutual funds, separately managed accounts, limited partnerships and limited liability corporations.
Paraklete® does not engage in these investment strategies itself – clients may request an investment manager to assist in these strategies at Paraklete®’s suggestion.
Risk of Loss Investing in securities involves risk of loss that clients should be prepared to bear,
• Interest-rate Risk: Fluctuations in interest rates may cause investment prices to fluctuate. For example, when interest rates rise, yields on existing bonds become less attractive, causing their market values to decline.
• Market Risk: The price of a security, bond, or mutual fund may drop in reaction to tangible and intangible events and conditions. This type of risk is caused by external factors independent of a security’s particular underlying circumstances. For example, political, economic and social conditions may trigger market events.
• Inflation Risk: When any type of inflation is present, a dollar next year will not buy as much as a dollar today, because purchasing power is eroding at the rate of inflation.
• Currency Risk: Overseas investments are subject to fluctuations in the value of the dollar against the currency of the investment’s originating country. This is also referred to as exchange rate risk.
• Reinvestment Risk: This is the risk that future proceeds from investments may have to be reinvested at a potentially lower rate of return (i.e. interest rate). This primarily relates to fixed income securities.
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