Financial Planning Fee Agreement
MetLife Securities, Inc. 1095 Avenue of the Americas New York, NY 10036 1. CLIENT INFORMATION:
Client Name:*
* Enter Corporation Name if Corporate Entity is Client
DOB: SSN or Tax
Payer ID:
-Client #2
Name: DOB: SSN or Tax Payer ID:
-Street Address: City: State/Zip:
Phone: ( ) Alternate Phone: ( ) Email: Client 1 or Client 2 is an agent, representative, or employee of MetLife or an affiliate Yes
No
2. SERVICES: 3. PLANNING FEE: Software Tool:
NaviPlan or eMoney
Planning Service:
ProAdvice Signature® ProAdvice Select®
ProAdvice Select® Situational*(Choose Modules below) ProAdvice Master®
ProAdvice Master® Situational*(Choose Modules below)
Fee Information* Do not complete if hourly fee charged Flat Fee1 $________________
Amount Paid (minimum 50%) $________________ Balance Due Upon Delivery $________________ 1If the Fee is greater than $10,000, Financial Planner must submit a completed Elements of Complexity Form with this form.
* For Situational Plans, choose up to 3 modules:
Retirement
Investment
Estate
Other Goal Planning _______________ Business Continuity (Master only)
Employee Benefits (Master only)
Retirement Distribution Planning (Select Only)
(The RDS Plan is a stand-alone situational plan and may not be combined with other modules.)
Progress Report (Select only)
Include client website
This is an Update Plan (if applicable)
Hourly Fee Addendum Attached
CORPORATE AGREEMENTS
If applicable, check if client is an employee of:
a MetLife Advice client Enter Employer/Group Name:
__________________________________________
a retirewise® (RSG) client Enter Employer/Group Name:
__________________________________________
4. CLIENT SIGNATURE:
By signing below, I acknowledge that I have received, read, understood and agree to be bound by the Financial Planning Fee Agreement. I acknowledge receipt of the Financial Planning Privacy Notice and Financial Planning ADV Part 2A, and I agree to pay in full any Fee balance due noted above upon delivery of my plan. I also acknowledge my understanding that my plan must be completed and delivered within 180 days, as evidenced by either client’s signature on the Delivery Acknowledgment form, unless otherwise requested.
Client #1: Signature Date: City/State: Client #2: Signature Date: City/State
x
5. PAYMENT METHOD: Complete the appropriate section based on the client’s payment method. CHECK: A check, made payable to MetLife Securities, Inc. (MSI), in the amount of $_____________is remitted for financial planning services. This amount is for: The total planning fee or The initial deposit (minimum 50%) of the total fee CREDIT/DEBIT CARD: The card number below will be charged $________________for financial planning services. Charge as: The total fee or The initial deposit only or Final payment only or 50% deposit today & final payment at delivery
Type of Card: Card Number: Code Number: Expiration Date:
Visa MasterCard AMEX
Name (as it appears on credit card) PRINT CLEARLY:
Address: City: State/Zip: I understand that my credit/debit card will be used to pay the amount noted above when my financial planner submits this form, along
with any other required documents, for processing. In the event that the card company listed above does not authorize this charge, I agree to provide an alternate means of payment immediately upon request from my financial planner or MSI. I further understand that MetLife Securities, Inc.’s responsibility is limited to the processing of fees associated with my financial plan and that my credit/debit card information will not be used for any other purpose.
Client Signature
Date:
WITHDRAWAL from WEALTH MANAGEMENT SERVICES (WMS) or MSI BROKERAGE ACCOUNT:
I (we) request that $ for financial planning services be withdrawn from my WMS investment advisory account #__________________ or from my MSI Brokerage account #__________________.
This amount is for: The total planning fee or The initial deposit of the total fee or Final payment of the fee balance I(we) understand that if I(we) want additional funds withdrawn from my(our) WMS or brokerage account in order to pay the balance of the financial planning fee, I(we) must sign another request to do so. In the event of a cancellation of the planning service, a refund in the form of a check will be provided directly to me.
I (we) understand that, if the account referenced above is a qualified retirement account, withdrawing money to pay the financial planning fee may result in unfavorable tax consequences and/or other penalties and that I must also complete and submit an IRA Brokerage Account Withdrawal Form.
Note: If you desire to use funds from your WMS or brokerage account to pay for any portion of your financial planning fee, the account must be titled in the same name(s) as the signature(s) on page 1 of this Agreement and on this page. If the signature(s) on page 1 and this page do not match the name(s) on the account, a Signature Guarantee is required.
Client #1 Signature Date: Client #2 Signature Date: Planner Signature Date:
CORPORATE PAYMENT: This section must be completed if a Business Entity is paying for a plan on behalf of an employee, who is listed as ‘Client’ on page 1. A separate fee agreement must be submitted for EACH employee plan contracted.
Business Name: Tax ID: -
-Address: City: State/Zip:
Bus. Telephone: ( ) Officer/Agent of Business:
Officer Signature Date:
6. PLANNER INFORMATION:
Planner 1 Printed Name: DAI
(Lead) Signature: Agency
By signing above, I acknowledge that I witnessed my client’s signature
By signing above, I acknowledge that I did not witness my client’s signature
Planner 2 Printed Name: DAI
Signature: Agency
Planner 3 Printed Name: DAI
Signature: Agency
Planner 4 Printed Name: DAI
Signature: Agency
Associate 1 Printed Name: DAI
Signature: Agency
Associate 2 Printed Name: DAI
Signature: Agency
7. PLAN COMPENSATION: Plan Count will automatically be calculated based on the fee split %. Individual Percentage Split
Planner 1 (Lead) %
Planner 2 %
Planner 3 %
Planner 4 %
Associate 1 % Total of all Associates %
Associate 2 % May Not Exceed 50%
TOTAL 100 %
8. MANAGEMENT APPROVAL:
I acknowledge my review of this Agreement for fee suitability and planning services contracted, as well as verification that any Associate is properly licensed (IAR). If the Financial Planning Specialist (FPS) is acting as a planner for his/her own client, the Managing Director must approve and sign below.
Managing Director or Designee Name (PLEASE PRINT): Agency
Manager Signature: Date
NOTE: Incomplete Fee Agreements will not be accepted. Please ensure that ALL appropriate sections, including the Management Approval Section above, are completed in their entirety prior to submitting this Agreement.
Andres M. Romero
O8E
6401
MSI Financial Planning Privacy Notice
This Privacy Notice is given to you on behalf of MetLife Securities, Inc. This Privacy Notice Tells You:
• Why and how we gather information about you
• How we protect what we know about you
• How we use and disclose your information
• What your rights are
Why We Need Information: We need to know about you so that we can provide the insurance, and other products and services you’ve requested. We may also need it to administer your business with us, evaluate claims, process transactions and run our business. And we need information from you and others to help us verify identities in order to help prevent money laundering and terrorism.
What we need to know includes address, age and other basic information. We may also need more information. This may include information about finances, employment or business conducted with us, with other MetLife companies (our “affiliates”) or with other companies. Our affiliates currently include life, car and home insurers, securities firms, other broker-dealers, a bank, a legal plans company and financial advisors.
How We Get Information: What we know about you we get mostly from you. But we may also have to find out more from other sources to make sure that what we know is correct and complete. Those sources may include adult relatives, employers, consumer reporting agencies and others. Some sources may give us reports and may disclose what they know to others.
How We Protect Information: Because you entrust us with your personal information, we treat what we know about you confidentially. Our employees are told to take care in handling your information. They may get information about you only when there is a good reason to do so. We also take steps to make our computer databases secure and to safeguard the information we have.
How We Use and Disclose Information: We may use what we know to help us serve you better. We may use it, and disclose it to our affiliates and others, for any purpose allowed by law. Generally, we will disclose only the information we consider reasonably necessary to disclose. For instance, we may use your information, and disclose it to others, in order to:
• Help us evaluate your request for a product or service
• Help us process claims and other transactions
• Confirm or correct what we know about you
• Help us prevent fraud, money laundering, terrorism and other crimes by verifying what we know about you
• Help us comply with the law
• Help us run our business
• Process information for us
• Perform research for us
• Audit our business
When we disclose information to others to perform business services for us, they are required to take appropriate steps to protect this information. And they may use the information only for the purposes of performing those business services. Other reasons we may disclose what we know about you include:
• Doing what a court or government agency requires us to do; for example, complying with a search warrant or subpoena;
• Telling another company what we know about you, if we are or may be selling all or any part of our business or merging with another company;
• Giving information to the government so that it can decide whether you may get benefits that it will have to pay for;
• Giving your information to someone who has a legal interest in your assets, such as someone who lent you money and holds a lien on your assets.
How we use and disclose information depends on the products and services you have with us or are covered under. It also depends on laws that apply to those products and services. Unless restricted by law, we may use what we know about you to offer you our other products and services. We may share your information with other companies to help us. Here are our other rules on using your information to market products and services:
• We will not share information about you with any of our affiliates for use in marketing its products to you, unless we first notify you. You will then have an opportunity to tell us not to share your information by “opting out.”
• Before we share what we know about you with another financial services company to offer you products or services through a joint marketing arrangement, we will let you “opt-out.”
• We will not disclose information to unaffiliated companies for use in selling their products to you, except through such joint marketing arrangements.
How You Can See and Correct Your Information: Generally, we will let you review what we know about you if you ask us in writing. (Because of its legal sensitivity, we will not show you anything that we learned in connection with a claim or lawsuit.) If you tell us that what we know about you is incorrect, we will review it. If we agree with you, we will correct our records. If we do not agree with you, you may tell us in writing, and we will include your statement if we give this information to anyone outside MetLife. You Can Get Other Material from Us: In addition to any other privacy notice we may give you, we must give you a summary of our privacy policy once each year. You may have other rights under the law. If you want to know more about our privacy policy, please visit our website, www.metlife.com, or write to your MetLife company, c/o MetLife Privacy Office - Inst, P.O. Box 489, Warwick, RI 02887-9954. When writing to us, please identify the specific product or service you have with us.
Financial Planning Services
MetLife Securities, Inc.
1095 Avenue of the Americas
New York, N.Y. 10036-6796
617-578-7009
www.metlife.com
March 31, 2011
This brochure provides information about the qualifications and business practices of MetLife Securities, Inc. If you have any questions about the contents of this brochure, please contact us at 617-578-7009. 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 MetLife Securities, Inc. also is available on the SEC’s website at
Item 2 Material Changes
This disclosure brochure (“Brochure”) contains important information about MetLife Securities, Inc. (“MSI” or “we”). This Brochure provides a description of the financial planning services we provide, the compensation we receive for such services and the conflicts of interest that arise from such services. This Brochure is a new document prepared in accordance with recent changes to the Securities and Exchange Commission’s (“SEC”) disclosure requirements and rules. As such, this Brochure contains certain new information and is structured differently than our previous disclosure brochures.
In the future, this Item will discuss only specific material changes that are made to the Brochure and provide you with a summary of such changes. This item also will reference the date of the last annual update of our Brochure.
Pursuant to new SEC rules, as long as you remain a financial planning client, we will provide you with a summary of any material changes to this and subsequent Brochures within 120 days of the close of our fiscal year. We will further provide you with a new Brochure as necessary based on changes or new information, at any time, without charge.
Currently, our Brochure may be requested by contacting Marcia Wooley, CFP®, Director of
Item 3 Table of Contents Item # Page # 1. Cover Page ……… 6 2. Material Changes ………. 7 3. Table of Contents ……… ……….8 4. Advisory Business ………9
5. Fees and Compensation ………. 14
6. Performance-Based Fees and Side-By-Side Management ………. 17
7. Types of Clients ……… 17
8. Methods of Analysis, Investment Strategies and Risk of Loss ………. 17
9. Disciplinary Information ………... 17
10. Other Financial Industry Activities and Affiliations ……….. 18
11. Code of Ethics, Participation or Interest in Client Transactions and Personal Trading ……….. 19
12. Brokerage Practices ………. 20
13. Review of Accounts ……….. 20
14. Client Referrals and Other Compensation ……… 21
15. Custody ……….. 21
16. Investment Discretion ……….. 21
17. Voting Client Securities ……… 21
Item 4 Advisory Business
MSI is a Delaware corporation and is registered as an investment adviser (“IA”) with the SEC. MSI has conducted its advisory business since 1984. Its principal place of business is 1095 Avenue of the Americas, New York, NY 10036. MSI is also registered as a broker-dealer (“BD”) with the SEC and various states. As a BD and IA, MSI is regulated by the SEC, other agencies of the United States of America, the Financial Industry Regulatory Authority (“FINRA”), as well as applicable states. Since MSI is not registered as a broker-dealer or investment adviser outside of the U.S, MSI, its investment adviser representatives (“IARs”) and financial planners are not authorized to provide advisory services to persons located outside of the U.S.
MSI is a wholly owned subsidiary of MetLife Inc. (“MetLife”). MSI, together with other affiliates (see Item 10 – Other Financial Industry Activities and Affiliations -- for additional information), provides a wide array of financial products and services to its clients. When appropriate, MSI’s representatives may recommend the purchase of one or more such products or services to assist clients in pursuing their savings, insurance, investment or other financial objectives. Typically, the products or services recommended will consist of or include products or services sponsored, issued, sold, distributed, advised, or serviced by MSI or its affiliates.
In addition to the financial planning and related advisory services described in detail in this Brochure, MSI also offers other advisory services, such as various investment advisory programs in which clients are offered investment advice, portfolio monitoring, and certain other advisory services, as well as brokerage and certain custodial services for a single “wrap fee.” If you want more information about the other advisory services available through MSI, ask your IAR.
I. Financial Planning Services in General
Financial planning is an advisory service that is designed to help clients establish a direction for their financial lives, understand the interplay of a broad spectrum of financial areas, and understand the importance of periodically making adjustments to help reach their goals and objectives. A financial plan is generally designed to provide a personalized presentation of a client’s current financial situation and alternatives, as well as recommendations based on an analysis of the data input into the financial plan. Areas that may be covered during the financial planning process include financial position, risk management, wealth accumulation, asset allocation, tax planning, business planning, retirement planning, education planning, investment planning, special needs planning, and estate planning, among others.
II. Financial Planning Services Available Through MSI A. In General
1. Nature of Financial Planning Services
MSI offers only financial planning advice at a single point in time that covers broad categories of securities, insurance, annuities, banking, trust services, and other financial investments, products, and services. MSI’s IARs that have been approved to provide financial planning services (“MSI Planners”) provide investment advice that includes strategies the client should consider, but MSI Planners do not make specific product recommendations or provide analyses of particular securities, annuities, insurance, banking products, trust services or other products. MSI Planners only make recommendations as to categories of investments or other products and identify product subcategories that are appropriate for the client (e.g., a growth-oriented mutual fund).
In developing financial plans and providing related advisory services as described in this Brochure, MSI Planners only utilize software packages and web-based programs that have been reviewed and approved by MSI (“Approved Software”). The output
from such Approved Software typically contains quantitative analyses which may include asset allocation analysis, Monte Carlo simulations, and other related financial calculations, as well as investment advice. The degree of personalization of the advice will vary depending on the service that the client contracts to receive.
2. Frequency and Updating of Financial Plans
The financial planning and related advice that MSI provides are based on your financial situation at a given point in time and are not ongoing services. Your financial plan or other written report will not be updated, nor will additional recommendations be made after the plan or report is delivered to you. In addition, once the plan or report is delivered, it is entirely your decision whether to implement the advice fully, partially, or not at all.
If you and your MSI Planner agree that your situation is appropriate for your financial plan to be updated on a periodic basis, any subsequent plan will be considered to be a new plan and will require a separate financial planning agreement.
3. Process
The financial planning process typically begins with the MSI Planner gathering all relevant data from the client. During the data gathering process, the MSI Planner assembles information regarding the client’s assets, liabilities, income, expenses, future plans, risk tolerance and any other relevant information. Through conversation and data gathering, the MSI Planner will help the client determine realistic goals, needs and objectives. A preliminary version (“draft plan”) of the plan may be provided to the client, showing the potential results of following the current course of action without any changes, based on the information the client and/or the client’s authorized agents supplied to the MSI Planner. When provided by the MSI Planner, the draft plan affords the client the opportunity to make any corrections or changes to the plan, including any underlying assumptions and data and to discuss possible strategies for attaining objectives. After any necessary corrections or changes, the final plan is developed and subsequently reviewed with the client upon delivery.
MSI Planners conclude their role as financial planners for the client as soon as the financial plan is delivered to the client. It is important for clients to review their financial plans at least annually and more frequently in response to any material changes to their situation. Such changes may significantly affect the validity or utility of the recommendations in their financial plan.
4. Limitations on the Investment Advice
Neither MSI, nor any of its planners, agents, IARs, financial service representatives or employees, are authorized or permitted to provide legal, tax or accounting advice in connection with any services they provide. If you need this type of advice, you should consult with your own personal attorneys, accountants, or tax advisors.
Since your financial plan is written based on data provided by you, the accuracy of any information provided by you is critical to the accuracy, appropriateness, and utility of the recommendations and other advice provided in the financial plan. MSI Planners rely on the completeness and accuracy of this information and do not verify it independently.
MSI and your MSI Planner are not and will not become fiduciaries as defined under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Internal Revenue Code of 1986, as amended (“The Code”). Nor will they provide investment advice as defined under ERISA and the Code, and accompanying regulations.
B. Specific Service Offerings
MSI offers a variety of financial planning services described below. Based on the information provided by you or your authorized agent(s), you and your MSI Planner will determine which type of financial plan or related advisory service best suits your individual circumstances and needs. Some MSI financial plans may be limited in availability.
Types of Fee-Based ProAdvice Financial Plans
ProAdvice Signature® The ProAdvice Signature® plan provides a summary of
the client’s current financial status in relation to the achievement of financial goals and objectives. The plan includes an overview of the client’s financial profile, a financial analysis, and automated recommendations based on an assessment of the client’s current situation and goals.
ProAdvice Select® The ProAdvice Select® plan provides an intermediate
level of planning with greater ability to tailor the plan to the client’s individual needs. The plan includes personalized recommendations based on the assessment and analysis of the client’s current situation and goals.
ProAdvice
Select®/Situational
Clients may choose to limit the scope of a ProAdvice Select® plan to up to three planning areas which may include Investment Planning, Retirement Planning, Retirement Distribution Planning, Estate Planning, Progress Report or Other Goal Planning, as described below. A ProAdvice Select®/Situational plan provides a presentation of the client’s current financial situation in relation to the client’s goals for the areas selected.
ProAdvice Master® The ProAdvice Master® plan is a cash-flow based
financial plan which provides a detailed and personalized presentation of the client’s current financial situation, alternatives, as well as customized recommendations, based on the analysis of the data and the client’s stated goals and objectives.
ProAdvice
Master®/Situational
Clients may choose to limit the scope of a ProAdvice Master® plan to up to three planning areas including Retirement Planning, Investment Planning, Estate Planning, Business Continuity Planning, Employee Benefits Planning, and/or Other Goal Planning. A ProAdvice Master®/Situational plan provides a detailed and personalized presentation of the client’s current financial situation in relation to the areas selected. This plan includes customized recommendations based on an analysis of the data and the client’s stated goals and objectives.
Situational Planning Topics
Retirement Planning Projects the estimated retirement needs and expenses
at a specified retirement date. The analysis may be focused on accumulation as well as distribution of retirement assets. The analysis considers current assets designated for retirement, estimated social security benefits and other funding sources, such as employer pension plans. Illustrations provide the client with various alternatives available, based upon factors such as different retirement dates, additional or alternative savings and investment strategies, and risk tolerance.
Retirement Distribution Planning
Focuses solely on the distribution of retirement assets and not on accumulation. The analysis projects the estimated distribution of retirement income for a specific period of time for clients who are at or near retirement. The analysis considers current assets designated for retirement, estimated social security benefits, and other funding sources such as employer pension plans. Illustrations provide the client with various alternatives available, based upon factors such as different retirement dates, additional or alternative savings and investment strategies, and risk tolerance. The Retirement Distribution Plan is available only as a
stand-alone ProAdvice Select®/Situational plan and
may not be combined with other situational modules.
Investment Planning Includes an examination of the client’s current financial
situation, which may include: net worth, income and expenditures, investment risk tolerance, and risk management analysis. An asset allocation is provided as are other illustrations which together may provide the client with alternative strategies available based on the client’s time horizon and risk tolerance.
Estate Planning Involves an analysis of a client’s goals and objectives
for the distribution of his or her property. This analysis includes an examination of the client’s current gross estate and the distribution of property based upon the client’s current estate plan. Projected estate taxes and related settlement costs based upon various assumptions are considered. The analysis explores alternatives for minimizing settlement costs such as titling assets, using trusts, gifting strategies and charitable planning. An examination of possible funding sources for providing liquidity may also be included.
Business Continuity Planning
Incorporates an analysis of the available methods of transferring ownership and operational control of a closely held business based upon various assumptions. This analysis examines the client’s current business situation and explores alternatives to satisfy the client’s objectives while minimizing transition costs (e.g., using trusts, gifting strategies, buy-sell agreements). An examination of possible funding sources to facilitate the transfer of the business and provide liquidity to meet related estate planning objectives may also be included Employee Benefits
Planning
May include an analysis of both nonqualified and qualified (i.e., tax sheltered) retirement plans for businesses and other employee benefits such as group insurance policies, bonus plans and split dollar arrangements. Analysis of nonqualified employee benefits plans include a review of available methods for providing nonqualified retirement, death and/or disability benefits to key employees, based upon various assumptions. This analysis explores alternatives to attract, reward and retain employees for both profit and non-profit entities, consistent with the client’s objectives. Review of qualified employee benefits plans provides an analysis of the tax sheltered retirement arrangements available under current tax law. This analysis examines available options based upon factors such as corporate demographics and the client’s objectives. Finally, funding sources such as life insurance and investment products, may be examined for the purpose of providing benefits to employees. This plan does not provide analysis of, or, advice on, the underlying investments held within qualified plans.
Other Goal Planning Includes a review of the capital required to meet a
specified goal (e.g. education, major purchase) and analyzes current assets designated for the specified goal. Alternate strategies may be illustrated, based on the client’s time horizon, funding options and risk tolerance.
Progress Report Available to clients who have previously completed a
ProAdvice Select plan; The plan illustrates how well the goals established in the original plan are being met through comparisons of current and previous net worth, cash flow and asset allocation mixes. Goal updates and changes in risk profile are not addressed.
Supplemental Fee-Based Services
ProAdvice Focus Advisory Services
(Available through Senior Financial Planners only). ProAdvice Focus Advisory Services are appropriate for clients who wish to analyze a specific, clearly defined financial need or goal such as analysis of a net worth statement, debt management/restructuring,
budget/cash flow analysis and/or to provide an update on a client’s progress toward goals as compared to a financial plan previously delivered by the planner. Supplemental Complimentary Services
Personal Financial View Website 1
Along with your financial plan, you may also be offered a complimentary web-based service that allows clients to access investment-related information and reports regarding their financial holdings through a “Client Website” referred to as Personal Financial View (PFV). Some ProAdvice financial planning services may be integrated with PFV, which is provided through a third party web-based platform vendor, eMoney Advisor (“eMoney” or “eMoney Advisor”). Not all MSI Planners have access to this software. The use of PFV is subject to the client’s acceptance of the Terms of Use which is included in the Financial Planning Services & Fee Agreement.
ProAdvice Navigator This complimentaryplan provides an overview of the
client’s current financial position and indicates whether the client’s goals are being met. The plan includes an overview of the client’s financial profile, a financial analysis, and limited automated recommendations based on an assessment of the client’s current situation and client goals.
Item 5 Fees and Compensation
Financial planning fees depend upon a variety of factors, including the complexity of a client’s individual financial circumstances and stated objectives, estimated time to complete the plan, regional fee differences and the fee range established by the individual MSI Planners for their clients (based in part on the planner’s experience) and are not negotiable. Fees charged by an MSI Planner for the services described above may vary by client within the fee ranges set forth in this Item and could result in your MSI Planner charging other clients a lower fee for comparable services. Clients should also be aware that other MSI Planners may provide comparable services for a lower fee than those available from your MSI Planner. Additionally, other investment advisers may provide comparable services at no cost or for a lower fee than those available through MSI. All financial planning fees and fees for supplemental services are billed to clients. There is no charge for a review and analysis of your insurance needs and
the adequacy of your current insurance products.
1
MSI and the MSI Planner’s obligations to the client are complete with respect to the financial plan once the MSI Planner has delivered and explained the financial plan to the client. Other reports may be available to the client through the Client Website or provided by the MSI Planner, and the provision of such reports by the MSI Planner is at the sole discretion of the planner. Please note that such additional reports should not be construed as updated financial planning advice or an updated financial plan with respect to the delivered financial plan, and is not intended to create any obligation on the part of MSI or the MSI Planner to provide the client with ongoing investment advice, including advice regarding the delivered financial plan.
I. Financial Planning Fees and Timing of Payment
Clients who contract for any ProAdvice Financial Plan or ProAdvice Focus Advisory Service may pay either a flat fee or an hourly fee for their financial planning services subject to mutual agreement between the MSI Planner and the client. If the planner uses the flat fee
billing method, the rate to be used must be within the range specified below and is set forth
on the signature page of the Agreement. When paying a flat fee, generally a minimum of 50% of the agreed upon fee is due at the time the financial planning agreement is signed. Any remaining balance is due upon delivery of the completed financial plan.
Some MSI Planners may offer the client the option of paying an hourly fee instead of a flat fee. If the planner uses the hourly billing method, the hourly rate to be used and estimated hours are specified on the signature page of the Agreement. Planners may establish their hourly billing rate at a specified hourly fee between $100 and $400 per hour, billable in increments of 15 minutes. The number of hours billed, which must be documented on the “Billing Worksheet,” must be at or above the minimum number of hours required to be billed for that service as described below. The MSI Planner may elect to collect a portion of the hourly fees up front. If a deposit is collected, it must not be less than $100. If a deposit is collected, the remaining balance, as evidenced on the Billing Worksheet, must be collected upon delivery of the completed financial plan. If no deposit is collected, the entire amount
billed as evidenced on the Billing Worksheet, must be collected upon delivery of the
completed financial plan.
II. Fees for Specific Types of Financial Plans
Flat Fee Range Minimum Billing Hours for Hourly Fees
ProAdvice Signature®
$300 to $3,500 Minimum - 3 hours
total fee may not exceed $3,500
ProAdvice Select® $400 to $5,000 Minimum - 4 hours
total fee may not exceed $5,000 ProAdvice
Select®/Situational
$200 to $2,000 Minimum - 2 hours
total fee may not exceed $2,000
ProAdvice Master® $1,000 to $20,000* Minimum - 10 hours
total fee generally may not exceed $20,000* ProAdvice
Master®/Situational
$1,000 to $20,000* Minimum - 10 hours
total fee generally may not exceed $20,000* * The fee may be up to $50,000 with pre-approval by MSI.
III. Fees for Supplemental Services ProAdvice Focus
Advisory Services
$100 to $3,500* Minimum - 1 hour
total fee generally may not exceed $3,500*
Financial Planning Education Seminar Fees
Flat fee to cover cost of holding the seminar
Not available
IV. Refund of Financial Planning Fees
You have the right to cancel your contracted services and receive a full refund of any fee or deposit paid by giving written notice to MSI or its planner any time prior to the date on which you sign the Delivery Acknowledgement form to acknowledge your acceptance of the financial plan. After the date on which you sign the Delivery Acknowledgement form, you may receive a full refund of any fee paid at MSI’s sole discretion.
To the extent a deposit or fee has been provided by the client, MSI may refund such deposit or fee if the financial plan is not delivered within 160 days from the date of such deposit. (Note: The relevant date is the date on the check, or the date the client signed the fee agreement if the deposit was made by credit card.)
MSI or the MSI Planner may cancel the contracted services for any reason at any time by providing written notice to the client. In such an instance, the client may be entitled to a full refund of any fee or depositpaid subject to the conditions described above.
V. Fee Discounts
If a client is a member of a group of ten (10) or more persons whose group has signed a Financial Planning Confirmation of Services or Corporate Client Agreement with MSI, the financial planning fees set forth in the table above may be reduced.
VI. How MSI Financial Planners are Compensated
MSI Planners receive a portion of the advisory fees for providing financial planning services as described in this Item. They may also receive additional compensation related to the advisory services described in this brochure from these other sources:
1. Wealth Management Services Incentive Program
Your MSI Planner may also receive additional compensation from MSI if you establish a new Wealth Management Services (“WMS”) or Fund Management Services (“FMS”) Account or make an additional deposit into an existing WMS or FMS Account. This incentive fee is $100.00 per $300,000.00 in qualifying account assets, which may be aggregated across multiple clients/accounts Accordingly, your planner has an incentive to recommend that you establish a WMS or FMS Account or make an additional deposit to an existing WMS or FMS Account (versus establishing or making contributions to other advisory programs and/or products available through MSI).
2. Referral Fees
MSI may also pay IARs of MSI who are not MSI Planners or unaffiliated investment advisers (sometimes referred to as “finders” or “solicitors”), if they refer a prospective financial planning client to an approved MSI Planner. In these cases, MSI can generally pay these IARs and unaffiliated investment advisers up to a maximum of 50% of the fee that you pay for your financial plan. If an IAR other than your planner or an unaffiliated investment adviser will be paid any compensation for a plan referral, this will be disclosed to you. You will not be charged any additional fees or expenses as a result of the referral arrangement.
3. Non-Advisory Compensation
Your MSI Planner is also a broker-dealer registered representative of MSI and an insurance agent of Metropolitan Life Insurance Company and/or other affiliated or unaffiliated insurance companies. Following completion of your financial plan, you may choose to implement your financial plan. Implementing your financial plan involves purchasing products and services, separate and apart from purchasing the financial plan itself. You can implement your financial plan through MSI or any unaffiliated financial institution of your choice by purchasing specific securities, insurance and/or other products. While you are under no obligation to purchase any products or additional
services from, or through, MSI or its affiliates, if you do purchase such products or services from, or through, MSI, or any of its affiliates, this will result in the payment of additional compensation to the MSI Planner in his/her capacity as a registered
representative and/or insurance agent as well as to MSI and/or its affiliates, and may
require the completion and execution of separate applications and agreements, which include disclosures of conflicts of interest such as compensation and marketing arrangements.
As a result of such additional compensation being paid for the sale of products or services to implement the financial plan, a conflict of interest arises. In other words, the additional compensation gives MSI Planner and MSI an incentive to recommend products and services to implement the financial plan based on the compensation received, rather than on a client’s needs. However, to help mitigate these inherent conflicts of interest, MSI Planners only make recommendations as to categories of investments or other products and identify product subcategories that are appropriate for the client (e.g., a growth-oriented mutual fund) during the financial planning process. Item 6 Performance-Based Fees and Side-by-Side Management
MSI does not pay performance based-fees to its MSI Planners with respect to the financial planning services described in this Brochure.
Item 7 Types of Clients
The advisory services described in this Brochure are generally appropriate for a variety of clients including single or married persons, non-traditional couples who share goals, expenses and income, business owners, or business entities.
Item 8 Methods of Analysis, Investment Strategies and Risk of Loss
As noted above, in developing financial plans, MSI Planners only utilize Approved Software. This software uses information and assumptions provided by you and discussed during the financial planning process to prepare an analysis that illustrates your situation at a given point in time. The output from such Approved Software contains quantitative analyses which may include automated asset allocation, Monte Carlo simulations, and other related financial calculations. Projections may be made to illustrate future results, although it is important to realize that actual results will likely vary from those illustrated. The results of the analysis are evaluated by the Planner and are used to formulate suitable recommendations based on your current situation. Some analyses may contain Monte Carlo simulations, which is a technique used to approximate the probability of certain outcomes by running multiple trials, called simulations, using random variables.
The financial planning analyses are accompanied by recommendations as described more fully in Item 4.
There is no guarantee that the client’s investment goals will be realized if a client follows all of the recommendations set forth in a financial plan,. Due to the uncertainties involved in purchasing securities and/or insurance or other products, a client can still fail to achieve their goals even if they obtain a financial plan and fully implement the plan in accordance with the recommendations provided.
Item 9 Disciplinary Information
In June 2006, MSI reached a settlement with the Office of the Mississippi Secretary of State (Business, Regulations and Enforcement Division) regarding information provided to the Division and supervision of its registered representatives. Pursuant to the settlement, MSI agreed to conduct training on certain products to all registered representatives located in
Mississippi. MSI also agreed to pay an administrative penalty of $50,000. It was alleged that MSI furnished incorrect information to the Division and failed to adequately supervise its registered representatives.
In September 2006, MSI and certain of its affiliates reached a settlement with the National Association of Securities Dealers (NASD) relating to allegations that MSI and its affiliates: executed late trades; submitted inaccurate responses to NASD regulatory inquiries; failed to establish and maintain adequate supervisory systems and written procedures to prevent and detect late trading; failed to capture the time of customer mutual fund orders; failed to produce responsive emails in a timely fashion; and, failed to retain emails for the required time period. MSI and affiliates agreed that within 30 days an officer of MSI and its affiliates certified to the NASD that the firms (I) reviewed their procedures related to email retention, recording the time of mutual fund orders, and the productions of email in response to regulatory requests and late trading, and (II) established procedures designed to achieve compliance with laws, regulations and rules concerning these matters. MSI and its affiliates also agreed to pay a fine of $5,000,000.
In November 2006, MSI reached a settlement with the National Association of Securities Dealers (NASD) relating to the sale of 529 plans. Under the terms of the settlement, MSI agreed to pay a fine of $500,000 and agreed to pay $376,000 in remediation.
In November 2009, MSI and its affiliates reached a settlement with the Financial Industry Regulation Authority (FINRA) regarding the supervision of email correspondence, and the supervision of associated persons in outside business activities and private securities transactions. MSI and its affiliates were fined $1,200,000 jointly and severally. MSI’s portion of the fine was $552,000.00.
Item 10 Other Financial Industry Activities and Affiliations
MSI is registered with the SEC as an investment adviser and a broker-dealer. MSI sells general securities (including stocks and bonds), mutual funds, REITs, interests in trust funds and registered limited partnerships to the public. MSI and its principal executive officers are principally engaged in the securities brokerage business. As part of this business, MSI provides a broad range of securities brokerage services to customers, including persons who have enrolled in one of MSI’s investment advisory programs. MSI effects securities transactions for these brokerage customers for compensation and may recommend that customers buy or sell securities or other investment products in which MSI or its officers, directors, employees or registered representatives (“related persons”) have a financial interest or may themselves purchase or sell. For example, MSI may recommend that brokerage customers purchase, among other investments, variable annuity or variable life insurance contracts issued by MSI’s affiliate, New England Financial, or MetLife, its ultimate parent company.
A. Relationship with Affiliates
As noted above, following completion of your financial plan, you may implement your financial plan. Implementing your financial plan involves purchasing products and services, separate and apart from the financial plan itself. You can implement your financial plan through MSI or any unaffiliated financial institution of your choice. In this respect, the financial planning relationship terminates upon delivery and explanation of the financial plan to you. Any implementation through your MSI Planner is done in the planner’s capacity as a registered representative of MSI or one of its affiliates and/or an insurance agent of Metropolitan Life Insurance Company and/or other affiliated or unaffiliated insurance companies. In acting in these other capacities your MSI Planner is acting as a salesman.
While you are under no obligation to purchase any products or additional services from, or through, MSI or its affiliates, if you do purchase such products or services from, or
through, MSI, or any of its affiliates, this will result in the payment of additional compensation to the MSI Planner in his/her capacity as a registered representative
and/or insurance agent as well as to MSI and/or its affiliates. Such compensation
typically takes the form of commissions and other payment streams tied to the sale of products. As a result of such additional compensation being paid for the sale of products or services to implement the financial plan, a conflict of interest arises. In other words, the additional compensation gives MSI Planner and MSI an incentive to recommend products and services to implement the financial plan based on the compensation received, rather than on a client’s needs.
In addition, when your MSI Planner acts as a registered representative of an affiliated broker-dealer or as an insurance agent of an affiliated insurance company and sells securities or insurance products issued, sponsored, advised, underwritten, distributed, or serviced by MSI or one or more of its affiliates, then one or more of MSI’s affiliates is receiving compensation in addition to the commission and/or other compensation paid to MSI and your planner in connection with such securities or insurance products. Thus, your MSI Planner has a conflict of interest when recommending the sale of affiliated
securities or insurance products as a registered representative or as an insurance agent. For more information on the foregoing compensation arrangements and the conflicts raised thereby please the Investment Account Agreement and Disclosures or other applicable disclosure, which is provided to you prior to any sale of such products, and speak to your MSI Planner.
Item 11 Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
A. Confidentiality
MSI treats the information gathered during the financial planning process as strictly confidential and any such information will only be used in conformity with the terms and conditions set forth in a privacy notice that is provided to you. Information will be used only for business purposes related to the relationship the client has established with MSI. The information obtained will not be disclosed to any unaffiliated third party unless such information is required by law or regulatory process, as authorized by the client in writing, or is otherwise disclosed in the Privacy Notice.
B. Code of Ethics
To help manage conflicts of interest, the Firm has adopted an Investment Adviser Code of Ethics (the "Code") pursuant to Rule 204A-1 under the Investment Advisers Act of 1940, as amended. As a general summary, the Code, among other things, requires all IARs to observe guidelines regarding fiduciary responsibilities and observe restrictions in the giving and receipt of gifts. The Code also requires certain persons of the Firm periodically report certain personal securities holdings and transactions, periodically certify that they understand their obligations under the Code and the firm’s Investment Adviser Compliance Manual and observe restrictions in the giving and receipt of gifts. Some of these persons who are authorized to provide specific advisory services are required to move certain of their personal securities accounts and other accounts under their control or beneficial ownership to a brokerage account at MSI or one of its affiliates, and to observe blackout restrictions and other limitations with respect to those accounts. A copy of the Code will be made available to all clients and prospective clients upon request to their MSI Planner or by writing to the following address: MetLife, One MetLife Plaza, Long Island City, New York 11101, Attn: Corporate Ethics and Compliance.
The Firm or its IARs may give advice or take action in performing their duties for other clients or for their own accounts that differs from the advice provided, or in the timing and nature of action taken, with respect to clients in the Program. In addition, the Firm and its
IARs may give advice or take action in performing their duties for one client in the Program that differs from the advice provided, or in the timing and nature of action taken, with respect to another client in the Program.
As noted, MSI effects securities transactions for brokerage customers for compensation and may recommend that customers buy or sell securities or other investment products in which MSI or its related persons have a financial interest or may themselves purchase or sell. For example, MSI may recommend that brokerage customers purchase, among other investments, variable annuity or variable life insurance contracts issued by MSI’s affiliate, New England Financial, or MetLife, its ultimate parent company.
In implementing your financial planning MSI’s related persons may, as broker-dealer registered representatives, invest in the same securities that are recommended to you or recommend that you buy or sell securities at or about the same time that they buy or sell the same securities for their own accounts.
MSI does not effect any principal or agency cross securities transactions for client accounts. The Firm will also not cross trades between client accounts. Principal transactions are generally defined as transactions where an adviser, acting as principal for its own account or the account of an affiliated broker-dealer, buys securities from or sells any security to any advisory client. An agency cross transaction is defined as a transaction where a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlling, controlled by or under common control with the investment adviser, acts as broker for both the advisory client and for another person on the other side of the transaction. Agency cross transactions may arise where an adviser is dually registered as a broker-dealer or has an affiliated broker-dealer.
Item 12 Brokerage Practices
The financial planning relationship terminates upon delivery and explanation of the financial plan to you. Any implementation through your MSI Planner is done in the planner’s capacity as a registered representative of MSI or one of its affiliates and/or an insurance agent of Metropolitan Life Insurance Company and/or other affiliated or unaffiliated insurance companies. MSI provides advisory services other than financial planning that are described in other disclosure brochures in which MSI’s brokerage practices are described.
Item 13 Review of Accounts
MSI oversees the financial planning services provided by its financial planners.
Plan reviews and reviewers. MSI’s corporate home office reviews most ProAdvice financial
plans prior to delivery to the client. Additionally, a percentage of financial plans are reviewed after delivery to the client. Reviewers are part of a designated unit which is responsible for verifying plan accuracy and ensuring sound quality of advice based on the information presented to them for review. Reviewers have been trained in preparing and reviewing plans, and most have at least 3 years of industry experience and at least one designation that MSI has deemed to be indicative of industry experience.
Frequency of reviews. Most plans are reviewed as completed. A percentage of all plans,
generally 10%, are reviewed post-delivery on a periodic basis. A percentage of plans are also reviewed quarterly to verify that the fee charged was appropriate based on the type of plan, the client’s financial situation, and other relevant factors.
Number of reviewers, titles and functions. There are 6-10 reviewers with the title of “Case Consultant” or “Senior Case Consultant”. The primary difference is that Senior Case Consultants generally have more experience and have earned at least one industry financial
services designation or degree. Case Consultants prepare plans, review plans, and provide training on fee based financial planning software and quality of advice standards.
Number of financial plans reviewed. Each Case Consultant reviews between 1-10 plans per
week depending on the complexity and volume of plans. Item 14 Client Referrals and Other Compensation
An IAR of either MSI who is not an MSI Planner or an unaffiliated investment adviser, may refer a prospective financial planning client to an approved MSI Planner in return for a portion of the fee that you pay for your financial plan, generally to a maximum of 50% of the fee. In this capacity, the IAR or un affiliated adviser is acting as a “finder” or “solicitor.” If a referral fee is to be paid for a plan referral, this compensation must be disclosed to the client. In addition, clients will be provided with copies of Part 2 of MSI’s Form ADV, a separate statement disclosing the nature of the marketing or referral arrangement (including compensation features), and any other document required to be provided under applicable law.
The fees that MSI pays to third parties under these referral arrangements are not passed on to referred clients (i.e., the client is not charged any additional fees or expenses as a result of the referral arrangement) but depending on the circumstances, the existence of such marketing or referral arrangements may affect the amount of MSI’s overall fees or its willingness to negotiate fee reductions in particular instances.
As discussed in Item 10 above, MSI is registered as a broker-dealer in addition to being an investment adviser and your MSI Planner also is a registered representatives and an insurance agent in addition to being an IAR. MSI and your planner receive cash and non-cash compensation for selling securities and insurance products to implement your financial plan after the investment advisory relationship with you has terminated with the delivery and explanation of your financial plan. A description of the cash and non-cash compensation that MSI and your MSI Planner receive when acting in these sales-related capacities appears in the Investment Account Agreement and Disclosures or other applicable disclosure, which is provided to you prior to any sale of such products.
In addition, MSI provides a variety of investment advisory services other than financial planning that are described in separate disclosure brochures.
Item 15 Custody
MSI and your MSI Planner do not have custody of client funds or securities in connection with the financial planning services described herein.
Item 16 Investment Discretion
MSI and your MSI Planner do not have investment discretion over client assets in connection with the financial planning services described herein.
Item 17 Voting Client Securities
MSI and your MSI Planner do not exercise voting authority over securities in connection with the financial planning services described herein.
Item 18 Financial Information
MSI and your MSI Planner do not have any financial information that is required to be disclosed under this item.
