85 Beach Street,
KEY QUESTIONS TO ASK
Ask our financial professional these key questions about our investment services and accounts:
1. Given my financial situation, why should I choose an advisory account? Why should I choose a brokerage account?
If you choose an advisory account, First Financial Advisory Services, Inc. (FFAS) will provide investment advisory services based on the analysis and evaluation of a Client Profile, a client-completed questionnaire. Portfolio management, the practice of making decisions about investment mix in accord with policy, matching investments to objectives, allocating assets among security types, and weighing risk against performance, is a key service provision of an advisory account. FFAS may furnish you with a personalized proposal of investment policy and assist you in the selection of a model portfolio consisting of various asset classes that will be funded by securities suggested by FFAS, within any limitations you establish. FFAS will maintain ongoing periodic communications with you to determine whether there has been any significant change in circumstances and financial needs, and whether the account continues to conform to your investment objectives and requirements. In addition, FFAS will provide quarterly evaluation reports analyzing the performance of the account in relation to various market indices.
If you choose a brokerage account, FFAS will, as appropriate, given your reported investment goals and objectives, recommend the purchase or sale of specific investments. If any investment recommendation is accepted by you, FFAS will be responsible for promptly arranging execution of such purchase or sale in the appropriate account. Monthly account statements will be provided to you for any months with account activity. In the absence of monthly account activity, at a minimum, a quarterly account statement will be provided.
Disclosures: Asset allocation, which is driven by complex mathematical models, should not be confused with the much simpler concept of diversification. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.
2. Do the math for me. How much would I pay each year for an advisory account? How much for a typical brokerage account? What would make those fees more or less? What services will I receive for those fees?
If you open an advisory account, you will pay an ongoing, asset-based advisory fee each quarter. Fees are calculated and collected quarterly based on the account balance and the advisory fee rate (generally 1.5%). The account balance as of the market close on the last day of each quarter is multiplied by the advisory fee rate, and then by 0.25 to generate the fee for the upcoming quarter. In addition to this asset-based fee, a transaction fee of $14.00 per trade is charged (plus an additional $0.01 per share if the traded security is listed on the New York Stock Exchange). The transaction fee for each mutual fund trade (buy/sell/redeem) is $20.00.
If you open a brokerage account, you will pay a transaction-based fee every time you buy or sell an investment. Current minimum commission rates begin at $65.00 per trade for listed equities. The commission charges are based on the number and value of shares being traded. Typically, commissions range between 1% and 3% of the transaction amount. However, low-sum transactions may result in commission charges that fall significantly above 3% of the transaction cost, while high-sum transactions tend to produce commissions below 1% of the transaction cost. The commission for a mutual fund transaction (purchase/sell/redeem) is $30.00 per trade.
The decision to open a brokerage or an advisory account should be based on your account balance, trade frequency, and the level of service you desire from your advisor. This decision should be based on which type of account will be more cost effective to you, given your individual investment style.
3. What additional costs should I expect in connection with my account?
There are investment-related fees, which include commissions on listed equities and exchange-traded funds, mark-ups or mark-downs on bonds and load fees on mutual fund shares. In addition, processing fees on transactions include a service fee of $7.50 per trade, and $1.25 if you elect to receive a paper trade confirmation. Account-based fees include $95.00 for any transfer, $50.00 inactivity fee for any account with no trading activity for a 12-month period, and account maintenance fees of $40.00 per year for any retirement account. The fee to close an account is $50.00
Disclosure: Investing in mutual funds is subject to risk and loss of principal. There is no assurance or certainty that any investment strategy will be successful in meeting its objectives.
Investors should consider the investment objectives, risks and charges and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds. Contact our office at the name, address and phone number listed below to obtain a prospectus, which should be read carefully before investing or sending money.
4. Tell me how you and your firm make money in connection with my account. Do you or your firm receive any payments from anyone besides me in connection with my investments?
Advisory representatives of FFAS earn commissions from insurance companies for the sale of insurance products. This includes fixed and variable annuities, as well as for the sale of life insurance policies and medical/prescription drug supplements. For investments made in brokerage accounts, mutual fund load fees are paid to financial advisors. In advisory accounts, these fees are waived and returned to the client. The amount of the load fees varies depending upon the type of shares purchased. Alternative investments often pay an up-front commission to the financial representative based on the value of the investment made.
Note regarding Variable Annuities: There is a surrender charge imposed generally during the first 5 to 7 years that you own the contract. Withdrawals prior to age 59½ may result in a 10% IRS tax penalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the financial strength of the underlying insurance company. Investment sub-account values will fluctuate with changes in market conditions.
An investment in a variable annuity involves investment risk, including possible loss of principal. Variable annuities are designed for long-term investing. The contract, when redeemed, may be worth more or less than the total amount invested. Variable annuities are subject to insurance-related charges including mortality and expense charges, administrative fees, and the expenses associated with the underlying sub-accounts. Investors should consider the investment objectives, risks and charges and expenses of the variable annuity carefully before investing. The prospectus contains this and other information about the variable annuity. Contact our office phone number and address below to obtain a prospectus, which should be read carefully before investing or sending money.
5. What are the most common conflicts of interest in your advisory and brokerage accounts? Explain how you will address those conflicts when providing services to my account.
Accepting compensation for the sale of investment products presents an inherent conflict of interest, as it gives an incentive to make recommendations based on compensation received rather than client needs. This conflict of interest exists particularly whenever a significant difference in compensation results from implementing a specific investment over other investment choices, and/or in determining for which account to actually implement a given suggestion. As a fiduciary, each FFAS advisor is committed to holding your best interest as a client above all else and consequently must disregard any consideration of personal enrichment when developing suggestions.
FFAS and its advisors mitigate these potential conflicts by fully disclosing the nature of them in the Advisory Services Agreement, and by refusing to let anything other than the client’s best interest dictate the suggested course of action. Additionally, FFAS has implemented the following strategies to ensure that fees charged to clients are both reasonable and in alignment with industry standards:
No client is obliged, under any circumstance, to accept any suggestion or engage FFAS to act on a given suggestion, if accepted. Any decision by the client to act directly or indirectly on any suggestion made by FFAS shall be made fully and solely by the client. Clients also have the option to purchase investment products that we recommend through other brokers or agents that are not affiliated with FFAS. Account fees and transactions charges may be higher or lower at First Allied than at other broker/dealers offering similar services.
6. How will you choose investments to recommend for my account?
Your Advisor will collaborate with you to obtain qualitative and quantitative information concerning your personal and financial circumstances, as well as an understanding of your tolerance for investment risk and the objectives for your account. Your advisor will analyze this information to assess your personal and financial circumstances. Your advisor will develop and present you with investment recommendations that are suitable and appropriate for your risk tolerance and financial objectives. Your Advisor will implement promptly any investment recommendations that you accept
7. How often will you monitor my account performance and offer investment advice?
Account performance is monitored on an ongoing and periodic basis. In advisory accounts, there is generally a more active management philosophy since trading costs are low. In a brokerage account, the cost of executing the trade must be weighed with the benefit of making the trade. At least quarterly, account statements are reviewed by your advisor and the performance is evaluated.
Disclosure: Past performance is not an indication or guarantee of future results.
8. Do you or your firm have a disciplinary history? For what type of conduct?
There is no history of any disciplinary action for First Financial Advisory Services, Inc. as a Registered Investment Advisory firm, or for any Independent Advisory Representative of FFAS. Further information regarding FFAS and its advisors can be found on Broker Check at www.brokercheck.com or on the SEC Investor.gov website at www.adviserinfo.sec.gov.
9. What is your relevant experience, including your registrations, education and other qualifications? Please explain what the abbreviations in your registrations are and what they mean.
Additional information can be found regarding each FFAS advisor at www.brokercheck.finra.org.
Geraldine B. Cunningham (CRD 1093600), CHMC, ChFC, CLU. Registrations/exams: SIE, Series 7, 63, 24 & 51
Matthew J. Cunningham (CRD 5298864) , CFP®, CWS®. Registrations/exams: SIE, Series 4, 7, 63 & 65
Peter B. Robinson (CRD 6153017), CFP®, CWS®. Registrations/exams: SIE, Series 7 & 66
Registration and Examinations:
SIE – Securities Industry Essentials Examination
Series 4 – Registered Options Principal Examination/Registration
Series 7 – General Securities Representative Examination/Registration
Series 24 – General Securities Principal Examination/Registration
Series 51 – Municipal Fund Securities Principal Examination/Registration
Series 63 – Uniform Securities Agent State Law Examination/Registration
Series 65 – Uniform Investment Adviser Law Examination/Registration
Series 66 – Uniform Combined State Law Examination/Registration
CWS® - The Certified Wealth Strategist® program incorporates three competencies required to be productive and effective as a wealth advisor: Creating business routines, applying client interaction and relationship skills and obtaining competency in the technical wealth management issues faced by the High-Net-Worth market. Participants achieve significant levels of mastery and business growth by integrating financial advice competency with the ability to deliver expertise from multiple real-world perspectives. The candidate must complete two instructor-led training sessions, self-directed study on numerous wealth management issues, and a capstone project. Three years of experience in the financial services industry with direct client interaction, and a 4-year degree from an accredited college or university are prerequisite requirements.
CFP® - Certified Financial Planner is a formal recognition of expertise in the areas of financial planning, taxes, insurance, estate planning, and retirement. Owned and awarded by the Certified Financial Planner Board of Standards, Inc., the designation is awarded to individuals who successfully complete the CFP Board's initial exams, then continue ongoing annual education programs to sustain their skills and certification. Earning the CFP designation involves meeting requirements in four areas: formal education, performance on the CFP exam, relevant work experience, and demonstrated professional ethics. The candidate must hold a bachelor’s or higher degree from an accredited college or university.
10. Who is the primary contact person for my account, and is he or she a representative of an investment advisor or a broker-dealer? What can you tell me about his/her legal obligations to me? If I have concerns about how this person is treating me, who can I talk to?
Your designated financial advisor is your primary contact for your account. Each FFAS advisor is both an Independent Advisory Representative of FFAS, as well as a registered representative of First Allied Securities, Inc.
A financial advisor stands in a special relationship of trust and confidence with, and therefore is a fiduciary to, its clients. As a fiduciary, an investment advisor has an affirmative duty of care, loyalty, honesty, and good faith to act in the best interests of its clients. The advisor must not put his/her own interests above the interest of the client. The parameters of an investment advisor’s duty depend on the scope of the advisory relationship and generally include:
(1) the duty at all times to place the interests of clients first; (2) the duty to have a reasonable basis for its investment advice; (3) the duty to seek best execution for client securities transactions where the advisor directs such transactions; (4) the duty to make investment decisions consistent with any mutually agreed upon client objectives, strategies, policies, guidelines, and restrictions; (5) the duty to treat clients fairly; (6) the duty to make full and fair disclosure to clients of all material facts about the advisory relationship, particularly regarding conflicts of interest; and (7) the duty to respect the confidentiality of client information.
If you have concerns about how your financial advisor is treating you, you can contact the Securities and Exchange Commission's office of investor assistance at 800-732-0330 to ask questions or file a complaint.
The more you make trades in a brokerage account, the more we charge you commissions. To some, this dynamic appears to create an incentive for your Registered Representative (RR) to promote frequent or numerous transactions.
The dangers of that conflict of interest are held in check capably by:
The more assets you have in an advisory account, including cash, the more you will pay us (since the quarterly fee rises in proportion with a hike in the account value). To some, this dynamic appears to create an incentive for your Investment Advisor Representative (IAR) to promote strategies to augment the account value and/or dissuade you from withdrawing your assets to use or allocate otherwise.
Disclosure: For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither First Allied Securities nor any of its representatives may give legal or tax advice.