Tag Archives: SEC

“Client Relationship Summary” Form, New Form Mandated by SEC … We like it!

No Action is necessary by you! This is a new template summary mandated by the SEC, mostly designed for new clients, but also mandatory delivery to current.  The goal is to help prospective new clients attempt to understand the GIGANTIC variances in services within the Financial Industry. It’s really hard to check all the boxes and make it clear for everyone, but we like what they are doing….

 

In compliance to new rules established by the Securities and Exchange Commission, Form CRS (Client Relationship Summary) is as follows.

Item 1 : Introduction:

J.K. Financial, Inc. is a Registered Investment Advisor (RIA), who is registered with the Security and Exchange Commission. As an RIA, we charge management fees for our services as opposed to brokerage fees which are generally charged per transaction.

There are free and simple tools available to research firms and financial professionals at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.

Item 2 : Relationship and Services:

“What investment services and advice can you provide me?”

As an investment advisor with no proprietary products, we provide not only investment management services, with a general $1 million minimum (but not steadfast) which we monitor in house and non-in house assets via our digital vault on a discretionary basis, but also Financial Planning, Estate Planning, Planning, complete Insurance Review, concentrated wealth strategies as well as Trust planning, We have dubbed this our Total Wealth Planning Practice. Please see here for a more detailed and comprehensive list of our service and please see Form ADV II for a more details of our firm.

“Given my financial situation, should I choose an investment advisory service? Why or why not?”

If you wish assistance with your complete financial situation, an investment advisory service may be best for you. If you do not need assistance or prefer making financial decisions on your own and investment advisor relationship is likely not good for you.

“How will you choose investments to recommend to me?”

The firm specializes in total wealth financial planning, and proactively selects individual equities, ETFs, low cost mutual funds, option hedging strategies, and individual bonds for client portfolios, on a fully discretionary basis.

“What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?”

John Kvale has 32 years of experience and is a Chartered Financial Analyst (CFA) as well as Certified Financial Planner CFP certificate holder. Donald Capone is a Chartered Financial Analyst (CFA).

The CFA certification is a very deep and extensive multiple part exam dealing primarily with investments and investment management. The CFP certification is a very deep and extensive multiple part exam dealing with a very broad coverages of personal financial planning.

Please see here item ADV II 2B page 8 for a more descriptive explanation of the certifications.

Item 3: Fees, Cost, and Standard of Conduct:

“What fees will I pay?” “Help me understand how these fees and costs might affect my investments. If I give you $10,000 to invest, how much will go to fees and costs, and how much will be invested for me?”

J.K. Financial, Inc. is a fee only capital management and financial planning firm, and does not accept commissions, soft dollars, or order flow rebates. Fees are determined on a case by case basis but generally range from .50% to 1.75% based on individual need and complexities and are charged through Limited Power of Attorney from client assets. Costs from packaged investments such as Mutual Funds and ETF’s are netting from client accounts by the respective investment company i.e. Vanguard or other like, and generally are not itemized on client statements and are not paid in any way to J.K. Financial, Inc. In addition, please see Brokerage Practices page for additional details. Costs associated with outside qualified custodian i.e. Commissions, wire fees or the like are itemized on client account statements and are not paid in any way to J.K. Financial, Inc.  The more assets there are in a retail investor’s advisory account, the more a retail investor will pay in fees, and the firm may therefore have an incentive to encourage the retail investor to increase the assets in his or her account, see conflicts below. Please see item 12 (page 4) of this link for more information. You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.

“What are your legal obligations to me when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?”

When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. We have an incentive to help you make your money grow thereby increasing our fees.

“You should understand and ask us about these conflicts because they can affect the investment advice we provide you. Here are some examples to help you understand what this means.”

“How might your conflicts of interest affect me, and how will you address them?”

While it may seem like a more aggressive investment posture would be more profitable, as a long term conservative firm and philosophy we regularly avoid very aggressive individuals or investors.

“How do your financial professionals make money?”

All professionals are paid on a salary basis, with regular reviews for good service and bonuses.

Item 4 : Disciplinary History:

“Do you or your financial professionals have legal or disciplinary history?”

No we do not. Feel free to visit Investor.gov/CRS for a free and simple search tool to research of our complete firm.

Item 5 : Additional Information:

Please go to our website at www.jkfinancialinc.com for more information on our firm and a copy of this summary as well as call our office at 214-706-4300.

Questions to ask us:

“Who is my primary contact person?  John Kvale

“Who can I talk to if I have concerns about how this person is treating me?”  Any team member or directly to John Kvale

J.K. Financial, Inc ADV

 

Fiduciary …..A note to the SEC from John Kvale of J.K. Financial, Inc.

Occasionally the Securities and Exchange (SEC) asks for comments on certain areas of the financial industry.

a Recent Comment Request by the SEC on FIDUCIARY

Fiduciary is one of the most lightening rod terms ever used in the industry. It represents liability and a higher level of accountability. Many years ago (20+ now) I found myself working for the company and the client in conflict. That was a deciding point in my career to leave the conflicted world and work as a Fiduciary for the client, and only the client.

It is impossible for all Capital Participants to be a Fiduciary

The capital markets cannot work as we know it if everyone is a Fiduciary. This is fine by us, there are companies that are for profit and that is great. Not being a Fiduciary is not a terrible thing. Our only request is that investors understand the difference.Fiduciary

Here is my comments to the SEC as we take our industry and the future of it very seriously. We hope you like your representation through our voice.

Have a Great Monday!

John Kvale

214-706-4300

http://www.jkfinancialinc.com

8222 Douglas Ave # 590
Dallas, TX 75225

Vote of Confidence….SEC says “OK” to Twitter, Facebook and others….J.K. Financial, Inc. Opens Comments

As we first stumbled into our writings several years ago (raw then…we are learning now…..some may say still raw…..numbers people…haha), comments here on our site, were, and have been, turned off, UNTIL NOW.  The SEC, embracing social technology, has changed their view and ours!Comment

www.street-cents.com Comments are turned on!

In a sign of the times, the SEC has allowed publicly traded companies to begin sending information via twitter (we are huge fans and have a network of folks we follow) Facebook and other social sites. Certainly this is a game changer of confidence and a sign of the times.

You may be asking why so late?

We are conservative by nature, and as such would rather be safe than sorry.  Holding off on comments until greater acceptance gave us comfort until social gained further acceptance.

Our promise to you on your comments

If a comment adds value to a post or is with merit, reasonable, and polite, it will be posted.  If a question is asked we will have a personal professional answer by one of us.

So let the comments begin, we look forward to your thoughts!

Have a Great Day!

John Kvale

http://www.jkfinancialinc.com
8222 Douglas Ave # 590
Dallas, TX 75225
214-706-4300

Leveraged ETF’s, Not For Us, and Maybe Not for Much Longer!

Since the introduction of leveraged ETF’s we have been a very strong critics of the use of such instruments, now the SEC is opening an opinion period, which we intend on voicing our concerns.

Recall, ETF’s are mostly baskets of investments, mimicking indexes, that trade during the day, very similar to stocks. When these instruments began to attract investor attention we championed some of them as the liquidity, tax efficiency, and pure investment focus, was, and still is, in some cases, very appealing to us.

Here is a chart of the elder statesman of ETF’s, the SPY, with its target twin index, the S&P 500. There are two lines on the chart, however they are so closely related it is hard to tell.

S&P 500 V SPY

Not Very Many James Bond Sequels!

Excluding one of my favorites, James Bond’s 20 plus, rarely does even a second generation sequel produce the quality of it’s parent. ETF’s are not much different, as leveraged ETF’s are, in our opinion, the flop sequel to their parent.

The following is a chart of a leveraged 3 x ETF, versus the Russell 2000, it’s target base twin.

Direxion 3X V Russell

Of course a 3X levered ETF should not exactly match it’s twin index, however, is should nearly replicate it, except with 3 x the movement, which in this chart you can see, is not happening. In addition to bad matching, and possibly most importantly, these products, we believe, are adding to the volatility of the capital markets.

Bottom line, we fear more investors are being hurt than helped by these leveraged ETF’s, and as such, are happy the SEC is opening a comment period.  We will let you know if our comments are posted by the SEC.

Have a Great Day!

JK

Lunch with Scott Patterson, Author of “The Quants” and An Evening of Ethics Discussions with the SEC

Yesterday I had the opportunity to have lunch with and listen to Scott Patterson, author of “The Quants”  in a group setting here in Dallas. 

While I have not read the book, Scott, who also is a reporter for the Wall Street Journal, and a very shy gentleman, mentioned many interesting points concerning the roots of Quantitative mathematicians and their influence on the capital markets. Some favorite places for Quants to operate in the markets, in Scott’s opinion, are in the fixed income arena. Quants original place in the capital markets, to provide liquidity, may have gone too far, and may be contributing to much of the dramatic movement over the past few years, and most recent days, again in Scott’s opinion.

Later in the evening, through the CFADFW (CFA Society of Dallas Fort Worth), which my tenure as president is almost over, I

Sec Seal

 attended a function that included Ethics discussions concerning the investment community, with a special guest speaker from the Fort Worth Office of the Securities and Exchange Commission. Most of you who know our firm understand the importance we place on ethical behaviour and ethics within the industry. An interesting observation in the meeting last night, were the large number of younger, future investment professionals, asking terrific questions and somewhat criticizing recent events. The future looks very bright for all of us if the actions fall in line with many of the questions from last night.

Have a Good Day!

JK

Uptick Rule Quietly Implemented; Positive Step Towards Capital Market Confidence

As we had mentioned in our prior post, the SEC voted, and approved, 3-2 (surprisingly close) to re-instate the Uptick/Downtick/Short Selling rule.

We applaud the reinstatement and are slightly disappointed in the meager fan fare it has received up to this point. Comments on the subject will most likely include quotes from prominent short-sellers who have negative comments on the subject, stemming from the fact that the repeal of this rule was not the reason the markets cascaded downward over the past two years.

The repeal of this rule was not the only reason for negative market movements, but in our opinion, was one of a series of events that contributed to it, a perfect storm of events, so to speak. In our opinion, protection, and stability,  for long term confidence in the markets is extremely important,  and the re-instatement of this rule is helpful in achieving this.

New Rule Facts-

  • Take effect again in six months (Most firms will implement sooner in order to gain compliance)
  • Rules are triggered once a stock drops 10% (Prior rules had no such band)

Have a Good Day!

JK