Professional Documents
Culture Documents
Firm Brochure
(Part 2A of Form ADV)
This brochure provides information about the qualifications and business practices of Callahan Financial Planning Company (CFPC). If you have any questions about the contents of this brochure, please contact us at (402) 341-2000 or clientservice@callahanfp.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission (SEC) or by any state securities authority. Additional information about Callahan Financial Planning is also available on the Securities and Exchange Commission website at www.adviserinfo.sec.gov. Brochure as of January 1, 2013
Callahan Financial Planning Company 3157 Farnam Street Suite 7112 Omaha, NE 68131 402.341.2000 T 402.881.8324 F clientservice@callahanfp.com www.callahanfp.com
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2. Change in Hourly and Asset Management Pricing and Range of Fees Charged
CFPC modified some of its annual rates for ongoing asset management, its hourly rate for financial planning, and provided a range of all fees charged to all investment management clients. The fee schedule details begin on page 7. 3. Further Explained Financial Planning Process in Steps Additional clarification has been added to explain CFPCs process for new clients receiving financial planning and investment management services. These details begin on page 11.
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Small business financial planning services may include, but are not limited to: Financial analysis related to asset management, cash flow projections, business funding and start-up planning, stock offerings and related planning. Benefit planning and management related to risk management, employee education, equity and other benefits.
Clients may impose restrictions on investing in certain securities. In these situations, CFPC will honor the clients request for restriction of ownership as long as we believe it is a reasonable request and is in the clients best interest. As of December 31, 2012 CFPC had a total of $27,168,003 in assets under management. Of the total, $26,766,141 was on a discretionary basis, and $401,862 was non-discretionary. Clients are under no obligation to act upon CFPCs recommendations.
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CFPC does not receive income from any form of commissions, sales charges, revenue sharing agreement or any other agreement with another financial institution. We are not compensated conditionally for the performance or outcome of a specific transaction, or by recommending a specific financial product or institution. Hourly Rate or Fixed Fee We prepare a comprehensive financial plan for both those with specific concerns they would like addressed today, and those who desire to create a precise plan for their long-term financial safety. A financial plan addresses several aspects of your financial safety, including general retirement planning and feasibility, potential risks, a proper budget, estate and investment planning and more. The hourly rate for our service is $210, with most initial consultations billed at a flat rate of $299. This may be waived for clients based on the complexity of their inquiry. If a client and their CFPC financial planner agree further work would be appropriate, the $299 is applied as a credit towards their financial plan cost. Completing a personal financial plan generally takes 7-15 hours and consists of two or more meetings with a Financial Planner, and the cost of these is generally included in this estimated range. Before beginning, each client receives a specific estimate with a guaranteed maximum cost based on the initial requested service. We will generally ask for a deposit of the lower amount of hours estimated to a client prior to beginning. The remainder of the fees will be due upon completion of work and presentation to the client. Fees that are charged in advance may be refunded based on the prorated amount of work completed at the point of termination. Clients may terminate their contracts with written notice without penalty at any time. Client fees are set in the signed client agreement, and may only be changed with a written acknowledgement provided in advance that details the applicable changes or by signing a new agreement. CFPC may also perform contract work on an as-needed basis for certain projects. This may be billed at an hourly rate or fixed fee different than what is shown above, and will be quoted in advance of performing the service.
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Ongoing Management Ongoing planning and investment management is the portion of any financial plan that requires continued examination and adjustment. This service includes implementing investment recommendations, ongoing research, updates, guidance, trading and rebalancing necessary to manage your investment portfolio and financial plan on a continuous basis. It includes regular review meetings with a financial planner, full access to our entire team to answer your questions and periodic testing of your financial plans safety based on any changes that occur in your life. Our Applicable Range of Annual Rates 1.24% - 1.60% 1.10% - 1.45% 0.90% - 1.25% 0.80% - 1.00% 0.60% - 0.75% 0.50% - 0.65%
Amount Managed $0 - $100,000 $100,001 - $250,000 $250,001 - $1,000,000 $1,000,001 - $2,500,000 $2,500,001 - $10,000,000 $10,000,001 +
Fee schedules are negotiable on a case-by-case basis in light of the complexity of Client's financial situation and the time required to manage the account(s). Client may group multiple accounts of immediate family members together for the potential benefit of a lower rate. CFPC may also offer negotiated fee discounts to employees or members of certain employers or organizations who internally market the advisory services of CFPC to their employees or members. Fees are billed monthly at a rate of 1/12 of Clients applicable annual rate in their investment advisory agreement. At Clients election, fees are either deducted automatically from the account(s) chosen by Client, or invoiced to Client for payment. Fees are paid monthly in arrears using the previous months ending balance. Clients may terminate their contracts in accordance with Section XII of their agreement. Upon termination, Client will be billed a pro-rated portion of any advisory fees earned, but not yet paid, prior to the Termination Date as provided in Section XII of their agreement. There is an aggregate minimum for new clients of $100,000.00, which may be waived by CFPC without charge, based on the needs of Client and the complexity of Client's financial situation. Occasionally, outside financial custodians and institutions may assess a commission that would be solely paid to them. We analyze these costs and only make recommendations that would be consistent with a prudent expected outcome for our client. We are conscious of the negative impact such costs can have on our clients wealth accumulation if they are not contemplated when conducting transactions. As we seek to reduce our clients cost of doing business with various financial institutions, we will often make specific recommendations as to where the funds are placed. This is done based on a variety of factors, and is further described in Item 11. As we do not receive any financial incentives for this placement, our recommendations are based solely on the benefits expected for our clients.
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Part Three: Implementation (clients typically have most, but not necessarily all of those shown below)
Agreement and acceptance of risk levels and desired hedging Selection of underlying investment securities to be initially implemented Agreement as to the role and review schedule with each client and their financial planner Opening new accounts Transferring securities / funds between accounts Reallocation of investments Refinancing of debt Applying for new insurance policies Any other steps as recommended by the financial planner
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Equities
Fixed Income
Risk
Return
Develop Portfolio
Underlying Securities
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4. Develop Portfolio
Once we have arrived at the target balance of risk and reward that is both acceptable in terms of timeline and necessity of return, we can then begin assigning the underlying securities that support the financial plans allocation. This is an ongoing proce ss that works in a continuous cycle of design and testing. We implement our clients investment strategies by conducting ongoing research for securities that most closely match our ass et class needs. As the most common deployment consists of mutual funds and ETFs, it must be tested on a scheduled basis for valuation, asset class drift, allocation adjustments and changes in the financial plans timeline. Valuing the financial markets, identifying risk and return and developing investment targets is all done as a part of the initial financial plan preparation. Portfolio recommendations and development are an ongoing event, not available as a one-time service, given the ongoing nature of the service provided.
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Risks All investing involves risk. The following list is intended to provide several examples of common risks an investor should always be aware of:
Economic Risk An investment risk associated with the overall health of the economy. Inflation Risk The risk of loss of future purchasing power due to rising prices of goods and services. Interest Rate Risk The possibility that the value of your investment decreases due to an increase in interest rates. Credit Risk The possibility that a debt issuer may not be able to repay you for your investment principal or interest
owed to you.
Reinvestment Risk The risk that an investor faces when an investment matures and the new interest rates
available are less than they were previously. Currency Exchange Risk A form of risk that comes from the change in price of one countrys currency against another. Management Risk Also referred to as company risk, this is the risk of owning one or only a few investments in specific companies. The opposite of diversification, this risk comes from management missteps, fraud and competition whether real or perceived. Leverage Risk This risk comes from using debt, or margin, to fund investments. Because the debt typically has to be repaid regardless of the performance of your investment, leverage multiples your losses or gains to the extent you use it. Liquidity Risk The risk that your investment cannot be converted into cash when you would like. Market Risk The risk to a specific investment or portfolio that the value may decline due to general market conditions not specifically related to a particular company. These may include real or perceived adverse economic conditions now or in the future, changes in the outlook for earnings (profits), changes in interest rates or currency exchange rates.
Our investment process is designed with an awareness of the risks listed above and others. It is impossible to eliminate all of the risks of investing, and is best viewed as a balancing act that is different for each investor. There can be no assurance of success in investing, and attempts at addressing risk may also be unsuccessful. CFPC will work with clients during their initial financial planning process and regularly afterwards in follow-up to help clients understand the risks they may face and how the portfolio may be managed with these in mind.
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Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
CFPC has a written Code of Ethics that covers the following areas: Prohibited Purchases and Sales Insider Trading Personal Securities Transactions Exempted Transactions Prohibited Activities Conflicts of Interest Gifts and Entertainment Confidentiality Service on a Board of Directors Compliance Procedures Compliance with Laws and Regulations Procedures and Reporting Certification of Compliance Reporting Violations Compliance Officer Duties Training and Education Recordkeeping Annual Review Sanctions
CFPC has a copy of the written Code of Ethics that is available to any client or prospective client upon request. CFPC has clients who also own Preferred Stock of CFPC with the option of conversion into voting Common Stock. As a registered investment advisor providing portfolio guidance and financial planning, our services to these clients may include guidance on this investment. When advising shareholders on their portfolios outside this investment, they will pay for any services rendered in the same manor non-shareholder clients do.
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From time to time, representatives of CFPC may buy or sell securities for themselves that they also recommend to clients. CFPC will always document any transactions that could be construed as conflicts of interest and will transact client business before their own when similar securities are being bought or sold. CFPC will do everything possible to mitigate these conflicts by disclosing to the client any possible conflict interest. CFPC will always act in a fiduciary manner and in the clients best interest.
Client Expenses and Cost Minimization Broker Dealer Client Service Standards and Quality Overall Ability to Meet Clients Needs Transaction Execution Performance
CFPC determines the reasonableness of a custodians compensation by examining transaction costs, commission rates, potential penalties and overall costs of doing business. CFPC does not utilize research or other products or services, other than execution, from a broker-dealer or a third party in connection with client securities transactions. CFPC does not receive soft dollar benefits and any such benefits available would not be a factor in choosing a broker-dealer for clients. CFPC has specific compliance procedures to ensure there are no soft dollar arrangements made. Reviews of the firms soft dollar arrangement are to be conducted by the Chief Compliance Officer on an annual basis. Interi m reviews may be conducted in response to changes in the firms soft dollar arrangements or other updates as needed.
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Item 15 Custody
A custodian is the institution that holds for safekeeping a clients investments and/or deposits, while allowing withdrawals, transfers, purchases and sales to be facilitated. Custodial services are provided by a bank, brokerage, trust or insurance company that is independent of CFPC. CFPC does not maintain custody of client funds. Custodians are chosen based on a combination of their transaction fees, safety, customer service quality, best execution, and suitability to individual client needs. Clients may be eligible for various protection levels for their financial assets, including those offered by the FDIC or SIPC programs, or private insurance policies. Clients and prospective clients should discuss with their financial planner the insurance protection applicable, if any, for each of their investment accounts. When a client is looking for a low cost custodian, CFPC generally recommends TD Ameritrade Institutional or Scottrade, but may also work directly with certain other custodians as requested by the client that are able to work directly with CFPC. Clients of CFPC are occasionally limited in their choice of custodian. This typically, but is not limited to, cases where we are managing an investment portfolio within an employer sponsored plan account for an individual employee (our client). In cases such as this, CFPC was not involved in the selection of the custodian or the list of available securities in the plan. CFPC will, acting as a fiduciary only for their clients, make recommendations on investments within these restrictions. The recommendations in these cases are not likely the same as if a client were able to openly choose investments in a brokerage account.
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This brochure supplement provides information about: William A. Callahan, CFP Reuben J. Brauer This supplements the brochure for Callahan Financial Planning Company (CFPC). You should have received a copy of that brochure. Please contact us if you did not receive both Part 2A and 2B of the brochure or if you have any questions about the contents of this supplement. 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. Additional information about Callahan Financial Planning is also available on the Securities and Exchange Commission website at www.adviserinfo.sec.gov. Brochure as of January 1, 2013
Callahan Financial Planning Company 3157 Farnam Street Suite 7112 Omaha, NE 68131 402.341.2000 T 402.881.8324 F clientservice@callahanfp.com www.callahanfp.com
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Name: William A. Callahan, CFP CERTIFIED FINANCIAL PLANNER Professional Title: President & Chief Investment Officer Born: 1983 Educational Background University of Nebraska (Omaha, NE) Course of Study: Bachelor of Science in Business Administration, with a specialization in Business Finance, Banking and Financial Markets, Investment Science and Portfolio Management New York University (New York, NY) Course of Study: Certified Financial Planner Professional Program
Business / Employment Experience (for previous five years) Callahan Financial Planning Company President, Chief Investment Officer (2010 Present) U.S. Bancorp Investments, Inc. Financial Advisor (2007 2010) Treynor State Bank Financial Advisor (2005 2007)
Disclosure Statements William A. Callahan has never been in an arbitration claim alleging damages. William A. Callahan has never been the subject of a civil, self-regulatory organization, or administrative proceeding. William A. Callahan has never been the subject of a bankruptcy petition. William A. Callahan does not have any disciplinary history to disclose. William A. Callahan does not have any other (outside) business activities to disclose. William A. Callahan does not have any additional forms of compensation to disclose.
Supervisory policies are written and maintained by staff members of Callahan Financial Planning Company. William A. Callahan is responsible for ensuring CFPC policies are in compliance with investment advisory laws and receives outside counsel as necessary to do so. Providers of outside counsel include Stinson Morrison Hecker LLP, and Cline Williams Wright Johnson & Oldfather, L.L.P. Services rendered by outside professionals include review of internal controls and procedures, code of ethics policies, continuity planning and regulatory filings.
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Name: Reuben J. Brauer Title: Financial Planning Associate Born: 1987 Educational Background University of Nebraska (Omaha, NE) Course of study: Bachelor of Science in Business Administration with a specialization in Business Finance Enrolled at College for Financial Planning (Denver, CO) Course of Study: Certified Financial Planner Professional Program
Business / Employment Experience (for previous five years) Callahan Financial Planning Company Financial Planning Associate (2010 Present) Footprints Asset Management & Research Financial Analyst Intern (2009 & 2010) Bank of the West Customer Service Representative (2006 - 2010) 3M Company Quality Engineer Intern (2006 & 2008)
Disclosure Statements Reuben J. Brauer has never been in an arbitration claim alleging damages. Reuben J. Brauer has never been the subject of a civil, self-regulatory organization, or administrative proceeding. Reuben J. Brauer has never been the subject of a bankruptcy petition. Reuben J. Brauer does not have any disciplinary history to disclose. Reuben J. Brauer does not have any other (outside) business activities to disclose. Reuben J. Brauer does not have any additional forms of compensation to disclose.
The advisory activities of Reuben J. Brauer are supervised by the President of CFPC. The supervisor provides ongoing training and support to Reuben J. Brauer. The supervisor also reviews the associates activities through CFPCs client relationship management system, business submission reviews, email monitoring, and correspondence reviews. The person responsible for supervising the financial advisors advisory activities, William A. Callahan, President, can be reached at (402) 341-2000.