Pasadena Financial Planner -- Pasadena, California

Your Family Financial Planning

10 Financial Planning Steps in the Right Direction

Families need an objective financial planning process. In addition, they need to be in control — whether or not they have a family financial planning consultant. With a well-designed and personal financial plan, you can optimize your financial affairs over your lifetime. You can greatly reduce the waste of your money and your time. I recommend the 10 steps below for personal financial planning and personal investment management.

To find an in depth article for each step, just click on the Sitemap link at the top of this page and look for the articles numbered from 1 to 10. You can reach us by using the contact form below. Please enjoy reading this article. Thank you!

1 – Personal Financial Planning

Because you must live with the results, you need to take full responsibility for your financial and investment success or failure. Delegating financial planning and investment decisions to advisers largely on faith can be very dangerous. Naive hope without adequate personal financial knowledge, attention, and control can be very risky to your personal and family welfare. The only practical solution is for you to increase your personal financial planning and investment knowledge and skills.

Educating clients about scientific investment and financial planning is extremely important to me. As such, I have written many educational materials that are of interest to my clients and the general public. My objective financial publications on The Skilled Investor website and blog are often the reason that people learn about my fee only independent financial planner and investment advisor services.

Your questions are important to me, and you should expect there to be a factual basis for any strategies and recommendations that I make. Please ask any and all of your questions, as we work together. During the course of developing a comprehensive, personalized plan for you, if you are interested, I can provide copies of educational materials that I have written and copies of original scientific finance papers that are particularly applicable to your situation.

2 – Financial Planning Tools

The single most significant financial lever that individuals control directly is their management of personal expenditures. The second is their lifetime effort to obtain sufficient income. Most people simply do not save enough of their current income to fund adequately their future needs.

To analyze your financial affairs in detail, we will use VeriPlan. VeriPlan is a very sophisticated and customizable computer planning model that I have developed. VeriPlan enables you to view graphical projections of your family’s income, expenses, assets, and debts across your lifetime. Data inputs reflect your particular situation and include all your assets, including cash, bonds, equities, property, real estate, private equities, and business interests.

Step 2 is a very important step, because this is where we construct your baseline financial plan and measure your current financial circumstances and goals and intentions for the future. To develop your customized lifecycle model, we will work together to gather information, adjust assumptions, and evaluate the effects of different financial decisions across your lifecycle. For more information about VeriPlan, see: Personal Finance Software for Your Lifetime.

VeriPlan can vary future expected investment returns by asset class, and it automatically analyzes the details of your taxes and investment expenses. Any and all assumptions can be changed for instant “what-if” testing. The model’s risk analysis capabilities evaluate how well your future assets would cover normal and extraordinary expenses, if market or personal circumstances were to disrupt your plans.

Excessive and unnecessary investment costs can substantially undermine your lifetime investment returns. VeriPlan automatically projects the returns you will waste with such fees, if you do not choose more cost-efficient investments.

3 – Investment Risk Tolerance

Investors with different levels of risk tolerance are more satisfied investment strategies that are better aligned with their risk preferences. Differences in risk tolerances mean that more risk-averse investors are personally more satisfied with a lower risk portfolio despite its lower expected returns. Less risk-averse investors are more satisfied with portfolios characterized by higher risk and higher expected returns.

While there are a variety of approaches to the measuring relative investment return and risk preferences, we do not believe that a simple “check-a-few-boxes” survey is sufficient. Therefore, you can expect that we will discuss your feelings about risks and rewards. We will assess together your likely behavior in the face of financial risks that might actually materialize.

We will also discuss the implications of adopting a particular investment risk profile relative to that of the average investor. Furthermore, we will test the financial projection implications of your risk preferences using VeriPlan. With VeriPlan modeling your particular financial situation, you can better appreciate the projected outcomes of different investment allocations associated with your risk preferences.

4 – Investment Diversification Strategy

Diversification is genuinely a financial planning and investment “free lunch.” A fully diversified portfolio is a key contributor to improved investment risk management. Diversification has become an axiom of personal investing, because the specific risks of businesses and other investment entities can be reduced or eliminated from a portfolio without reducing expected returns. As such, our investment recommendations will usually focus on very low cost mutual funds and very low cost exchange-traded fund (ETF) investments.

A significant portion of a portfolio may sometimes become concentrated in a single investment entity, which increases the overall risk of the portfolio. While undesirable, there sometimes are good or unavoidable reasons for investment concentration. In such circumstances, we will provide recommendations on possible ways to ameliorate the associated risk. If there are not good reasons to maintain the current level of concentration, then we will discuss how to reduce this concentration.

5 – Investment Asset Allocation

Your risk preference relative to the average investor with the average portfolio will influence your asset allocation. Appropriately setting your personal asset allocation in line with your personal risk tolerance is a critical decision for every investor. Because the average risk-averse investor holds the average portfolio asset allocation, this becomes the starting point in determining how a specific individual’s portfolio might diverge from that average allocation.

VeriPlan supports several mechanisms for allocating assets permitting a comparison of projections based upon different asset allocations. Anticipating allocation adjustments that may be needed in the coming year, we will also discuss how near-term net income might be invested to reduce the need to reallocate some of your portfolio in the future. If asset withdrawals are required to cover anticipated retirement expenses or other living expenses, we will recommend how to do this most cost and tax efficiently. Our goals will be to establish a durable approach to asset allocation and to minimize costs and taxes.

See Part 2 — Pasadena California Financial Planning >>>

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Financial Planning Pasadena CA

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Larry Russell, Managing Director

MBA – Stanford University, MA – Brandeis University, and BS – M.I.T.

Lawrence Russell and Company Pasadena, California 91103

(626) 399-9579

A California Registered Investment Adviser — Certificate 133101

KNOWLEDGE — OBJECTIVITY — HONESTY — DILIGENCE — SATISFACTION

A truly independent financial planner and fee only investment advisor

(Regarding how I am compensated, I work only on a hourly fee or fixed fee for service basis, and only under a contract agreed upon with you. You will not have to pay any asset fees. Furthermore, to avoid all conflicts-of-interest, I do not accept compensation or commissions of any type from the financial industry.)

Start a conversation today — Send a message using this contact form

Financial Planning Consultants in Pasadena California

Find the best personal financial planning consultant for those who need financial planning help in the Pasadena area including residents of Altadena, Arcadia, Baldwin Hills, Baldwin Park, Burbank, Eagle Rock, Glendale, La Canada Flintridge, La Crescenta, Monrovia, and Pasadena.

Your Family Financial Planning Process

<<< Go Back to Part 1 (Steps 1 to 5) — Family Financial Planning Pasadena

To find an in depth article for each step, just click on the “Pasadena Financial Planners Sitemap” link at the top of this page and look for the articles numbered from 6 to 10. Note that you can reach us by using the contact form below. Please enjoy reading this article. Thank you!

6 – Personal Investment Strategy

Given the extremely large number and variety of available securities, investors need a rational basis to select among them. Without rational selection criteria and a good understanding of which factors are more or less likely to increase risk-adjusted returns, investors will make poor decisions based on false assumptions.

We will begin with the presumption that portfolio investment strategy would focus on broad-based, market oriented financial investments that can be acquired economically and held inexpensively in your portfolio for an extended period. We will provide a set of recommended investment vehicles and percentage allocations including a recommended minimum number of investment positions within each particular area. Consideration will be given to domestic versus international, value versus growth, small versus large capitalization, and other investment vehicles that may move the portfolio away from a broad market orientation. Of course, investment cost and tax implications will heavily influence these recommendations.

Consideration will be given to your existing investment portfolio to determine what parts should remain and what should change. We will discuss a transitional plan for those parts that we recommend to change, and our recommendations will consider the cost and tax implications of making such changes. When appropriate, recommendations will also address adjustments that counterbalance any financial concentration that you may have elsewhere in your portfolio.

7 – Investment Management Fees

Even with optimal investment strategies, there is still substantial room to improve upon net investment performance through continued and vigilant focus on controlling investment costs and tax realization. The investment fees extracted by the financial securities industry are grossly excessive. Excessive costs imposed on “retail investors” have increased substantially during the past several decades on both a total cost and a percentage of returns basis.

At the same time industry deregulation, market innovation, and increased competition have provided many new and useful mechanisms for investors to manage their assets in a much more cost- and tax-efficient manner. It is not hard to cut your investment costs, but you have to be conscientious and vigilant. I will help you to become an extremely cost-conscious investor, and I will help you to remove all those hands that may currently be in your family’s financial wallet.

For your current asset holdings and for new investments we will model details of taxation and investment expenses in the projections. Recommendations will be provided which are designed to reduce investment costs, to reduce and defer tax recognition, and to shift tax realization toward lower tax rates.

Recommendations for new investment will focus on very low cost, passively managed investment vehicles. A very wide variety of very low cost cash, fixed income, and equity investments are available through low cost channels, and there is no reason to purchase more expensive vehicles that are not expected to provide any better return or risk reduction.

8 – Insurance Risk Management

The world is fraught with numerous potential risks – financial and otherwise. Insurance can be purchased for a wide variety of situations, but the issue is always value and affordability. Many people could spend all their investable capital on insurance and have nothing left to invest and build a financial cushion for the future. Therefore, we can discuss a budget for insurance expenses and your preferences for risks you are willing to bear and risks you wish to ensure.

While value, affordability, risk exposure, and risk tolerance should affect insurance purchase decisions, insurance is often sold and purchased emotionally. The issue is where to set a rational rather than emotional balance between expected risk and return.

9 – Efficiency of Personal Investing Strategies

Time in life is the most precious and perishable asset that a person has. It should be spent enjoyably and efficiently. Scientific investment strategies that rely on relatively efficient financial markets allow people to minimize their time commitment to personal financial planning and personal investment management. Yet, on average, you can still expect to obtain optimal risk-adjusted portfolio returns that are near the market’s return

We recommend an annual review of your personal finance and investment plan on approximately the anniversary of your initial plan. At that time we will update your personal financial planning model and recommend any appropriate changes. In the interim, we can work together to implement recommendations that you accept and to perform other financial planning services that you want.

10 – Independent Investment Counselors and Financial Advisors

Pick financial planning and registered investment advisors solely to obtain objective and high quality advice. Specific investment advice is potentially of high quality, if it is carefully customized to your particular needs and is given by an adviser who is very knowledgeable, highly competent, and completely independent. If you agree with the advice being given, then buy the recommended financial products through the most inexpensive channel possible.

We do comprehensive personal financial planning exclusively. We do not sell securities and do not hold assets in custody. We do not sell insurance, nor do we provide accounting services or legal advice. However, as part of our business development and networking efforts we make efforts to become acquainted with high quality professionals who can provide specialized assistance. In developing a plan for you, part of our focus will be on providing you with recommendations on how to acquire appropriate professional services both easily and economically.

See: Personal Financial Planning Pasadena CA >>>

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Pasadena California Financial Planning

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Larry Russell, Managing Director

MBA – Stanford University, MA – Brandeis University, and BS – M.I.T.

Lawrence Russell and Company Pasadena, California 91103

(626) 399-9579

A California Registered Investment Adviser — Certificate 133101

KNOWLEDGE — OBJECTIVITY — HONESTY — DILIGENCE — SATISFACTION

A truly independent financial planner and fee only investment advisor

(Concerning my compensation, I perform services solely on a hourly fee or fixed fee for services basis, and only under a contract agreed upon with you. You do not have to pay any form of asset fee. Furthermore, to avoid all conflicts-of-interest, I do not accept compensation or commissions of any kind from the financial industry.)

Start a conversation today — Send a message using this contact form

Pasadena Financial Planning

Benefit from the best fee only investment advisor helping for those in the West Los Angeles area, including Altadena, Arcadia, Baldwin Park, Burbank, Eagle Rock, Glendale, Glendora, Hollywood, Irwindale, La Canada Flintridge, and Pasadena.

Financial Planning Reading List

The Pasadena Financial Planner has written extensively about personal financial planning and investment management on a variety of websites. When I work with clients to develop their customized lifetime financial and investment plans, they often ask what they should read to improve their financial literacy.

This article provides a list of recommended reading from among the many hundreds of articles that I have authored in the past several years. Note that I have personally written all the content that you will find on the six personal finance and investment websites referenced below. You can reach us by using the contact form below.

Enjoy!

The Skilled Investor website

Note that you can find all of my other financial websites, by going to The Skilled Investor website and clicking on the red colored links in the left hand column on any page of The Skilled Investor website.

On the front page of The Skilled Investor website you will find an index of pages with major categories and subcategories. Within the subcategories there are lists of articles and the front page tells you how many articles are in any subcategory. There are many articles in addition to those listed below, which you can find by clicking on the subcategory links below that have arrows in front of them.

Here are some suggested personal financial planning and investment management articles within the major categories and subcategories. Article titles are descriptive and should help you decide which articles you want to read first.

Personal Investment Management

  • Asset Allocation and Personal Investment Risk Tolerance Articles
  • Cost Control and Investment Performance Improvement Articles
  • Investment Asset Diversification Articles — Reducing Your Portfolio Risk
  • Investment Luck versus Investing Skill Articles
  • Investment Returns and Securities Market Risk Premiums Articles
  • Financial Planning and Investment Management Personal Efficiency Articles
  • Scientific Investment Best Practices Articles
  • How Stock and Bond Markets Value Investment Securities

    • Personal Financial Planning

    This is a much shortened list of available articles, because there are many other personal financial planning articles posted on The Pasadena Financial Planner website. See a selected list below.

  • Financial Decision Rules
  • Retirement Planning
  • About VeriPlan — Personal Finance Software for Your Lifetime

    • Financial Advisors, Investment Counselors, and the Financial Industry

    Are Your Best Interests the Same as the Financial Services Industry?

    Payment of Investment Advisors, Financial Planners, and Investment Counselors

    Selecting a Financial Planning Advisor or Investment Adviser

    Regulation of Financial Advisors and Investment Advisers

    Frauds and Scams by Financial and Investment Advisers

    Best No Load Funds website

    Click “Sitemap” in top banner for a list of articles. Suggested reading:

    To find articles that focus on each of these seven selection criteria, either click on the numbered headings within this article or go to the Sitemap.

    No Load Bond Funds website

    Click “Sitemap” in top banner for a list of articles. Suggested reading:

    The Skilled Investor Blog

    (associated with The Skilled Investor website)

    You could read these selected articles:

    Low Cost S&P 500 Index Funds website

    You could read these selected articles:

    The Pasadena Financial Planner website

    Click “Sitemap” in top banner for a list of articles.

    Suggested reading:

    The two articles above summarize “10 Financial Planning Steps in the Right Direction,” a recommended personal financial planning process. There are individual articles with more details about each of these 10 steps. You can find them by clicking on the bold section headers within the two articles above, or you can find them by clicking the “Sitemap” link on any page and looking for the articles that are numbered 1 through 10.

    In addition to these financial planning process articles, read:

    .

    See: Fee Based Pasadena Investment Advisor >>>

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    Pasadena Financial Planning

    .

    Larry Russell, Managing Director

    MBA – Stanford University, MA – Brandeis University, and BS – M.I.T.

    Lawrence Russell and Company Pasadena, California 91103

    (626) 399-9579

    A California Registered Investment Adviser — Certificate 133101

    KNOWLEDGE — OBJECTIVITY — HONESTY — DILIGENCE — SATISFACTION

    A truly independent financial planner and fee only investment advisor

    (Regarding compensation, I provide financial planning services only on a fixed fee or hourly fee for services basis, and solely under a contract that we agree upon. I do not charge any form of asset fee. In addition, to avoid all conflicts-of-interest, I do not accept commissions or compensation of any type from the financial industry.)

    Start a conversation today — Send a message using this contact form

    Financial Planning Pasadena CA

    Use the top fee only financial advisor — helping clients in Southern California, including Altadena, Tujunga, Walnut, West Covina, La Canada, West Hollywood, West Los Angeles, West Toluca Lake, and Pasadena.

    Independent Investment Advisor Form ADV

     

     

     

    Lawrence Russell and Company

    Adviser Brochure:  Form ADV Part 2

    March 1, 2012

     

    Lawrence J. (Larry) Russell

    President and Managing Director

     

    Lawrence Russell and Company

    1077 Prospect Blvd.

    Pasadena, CA 91103

    A CALIFORNIA REGISTERED INVESTMENT ADVISER

    CERTIFICATE #133101

     

    This brochure provides information about the qualifications and business practices of Lawrence Russell and Company. If you have any questions about the contents of this brochure, please contact us. 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. “Registered investment adviser” refers to registration with regulatory authorities and does not imply a certain level of skill or training. Additional information about Lawrence Russell and Company is available on the SEC’s website at www.adviserinfo.sec.gov.

    2:  Material Change to Annual Update

    Since Lawrence Russell and Company’s previous annual Form ADV update, we do not believe that there are material changes to the substance of this Form ADV Part 2 brochure. However, the language, level of detail, and formatting of this information has changed significantly since last year, because the SEC and FINRA have instituted a revised brochure format. The purpose of this new format is to provide clients with a brochure in narrative format that is written in plain English and provides a full and truthful disclosure. This new format permits a much more detailed description of our services and our obligations to be a fiduciary to our clients. Lawrence Russell and Company welcomes this revised brochure format.

    Disclosure Obligations as a Fiduciary: Under federal and state law, Lawrence Russell and Company is a fiduciary and must make full disclosure to clients of all material facts relating to the advisory relationship. As a fiduciary, Lawrence Russell and Company also must seek to avoid conflicts of interest with our clients, and, at a minimum, make full disclosure of all material conflicts of interest between us and you, which could affect the advisory relationship. This obligation requires us to provide you with sufficiently specific facts so that you can understand any conflicts of interest we may have and business practices in which we engage, so that you can give informed consent to our practices or reject them.

    Lawrence Russell and Company’s position regarding its fiduciary obligations toward clients is simple:

    Lawrence Russell and Company will have no conflicts of interest of any kind with respect to the fiduciary interests of our clients. We will always put the interests of our clients first, and we will not engage in any practice that would involve a conflict of interest with respect to our clients.

     

    3:  Table of Contents

    1:  Cover Page.

    2:  Material Change to Annual Update.

    3:  Table of Contents.

    4:  Our Advisory Business.

    4A:  Our Comprehensive Lifetime Financial Planning Process.

    4B:  Our Typical Investment Recommendations.

    5:  Our Fees and Compensation.

    6:  No Performance-Based Fees.

    7:  The Types of Clients We Serve.

    8:  Our Methods of Analysis and Investment Strategies and the Risk of Loss.

    9:  Disciplinary Information.

    10:  Other Financial Industry Activities and Affiliations.

    11:  Code of Ethics, Participation or Interest in Client Transactions and Personal Trading.

    12:  Brokerage Practices.

    13:  Review of Client Accounts.

    14:  No Client Referral Fees and Other Compensation.

    15:  Clients Retain Full Account Custody.

    16:  No Investment Discretion.

    17:  Clients Vote Their Own Securities.

    18:  Financial Information.

    19:  Additional Information Required for State-Registered Advisers.

     

    4:  Our Advisory Business

    Lawrence Russell and Company provides fee-only financial and investment planning services that are tailored to the particular needs of our clients. Our firm is a California Registered Investment Adviser.

    Lawrence Russell and Company helps individuals and families to improve their personal financial planning knowledge, practices, and self-reliance. We specialize in analyzing particular personal financial situations and in developing comprehensive, durable, and client-managed lifetime financial and investment plans that our clients can implement themselves cost-effectively. We help our clients with the knowledge, strategies, and tactics that they can use over the long-term to improve their financial practices and financial position.

    Lawrence Russell and Company provides personalized financial analysis and advisory services ranging from answering specific questions through developing comprehensive lifetime financial plans. Our goal is to provide completely objective advice on any personal financial planning and investment topic of interest to our clients. We are particularly focused on helping our clients to understand what to do and why they should do it. Financial education is a significant part of our services, and one of our goals is to help all clients to become more knowledgeable and more self-sufficient.

    Larry Russell is the Managing Director who prepares all financial plans for our clients. Larry holds a BS from MIT, an MA from Brandeis University, and an MBA from Stanford University. He also has 20+ years of financial, business development, and corporate development experience working in managerial and executive roles with major corporations, including HP and Sun Microsystems, and with start-ups. The number of clients who can be served by our firm is limited by the hours required by our clients and by Larry Russell’s available time.

    As a separate business venture, which takes about one-quarter to one-third of Larry Russell’s time, Lawrence Russell and Company also develops lifetime financial planning and retirement software that is licensed to individuals who wish to do their own personal financial planning without an adviser. This lifetime cash flow and asset projection modeling software is licensed under the trade name VeriPlan through the website: http://www.myfinancialfreedomplan.com/  Lawrence Russell and Company also publishes financial articles on our web sites for a general Internet audience.

    Larry and his wife, Karen F. Deacy-Russell, who is an administrative Managing Director and is not a financial adviser, established Lawrence Russell and Company in 2001 to provide consulting services under contract. In 2004, Lawrence Russell and Company began to offer investment advisory services and to develop automated lifetime financial planning software. In 2007, we began to develop comprehensive lifetime financial plans for clients.

     

    4A:  Our Comprehensive Lifetime Financial Planning Process

    For clients interested in comprehensive lifetime financial planning, this outlines the typical process:

    As appropriate, a comprehensive written financial plan can address:

    a) earned income and other income,

    b) living expenses and expense tracking methods,

    c) savings rates,

    d) retirement timing,

    e) pensions, social security, and retirement income,

    f) debt management,

    g) real estate assets,

    h) investment diversification,

    i) investment risk preferences,

    j) investment asset allocation,

    k) investment cost control,

    l) low-cost index investment fund alternatives (mutual funds for every client, plus exchange-traded funds (ETFs) for experienced clients who understand how to trade),

    m) investment tax optimization,

    n) emergency cash management,

    o) tax-advantaged retirement investment strategies,

    p) risk exposures,

    q) identity theft,

    r) projected estate sizes, and any other special topics that are pertinent to the client.

    This comprehensive written plan is delivered to our clients for their careful reading and evaluation. After a client has had time to read and understand their written plan, a final meeting is held to discuss the plan, to clarify any remaining topics, and to answer any questions about implementation.

     

    4B:  Our Typical Investment Recommendations

    In the great majority of cases, Lawrence Russell and Company will recommend the direct purchase of low-cost, broadly-diversified, passively-managed mutual funds direct from mutual fund families that deal directly with the public. We recommend to our clients that they invest in such mutual funds in accordance with their chosen asset allocation plan and policies developed in consultation with us. In general, we recommend that clients buy and hold broadly diversified cash, bond, and stock mutual funds that they purchase directly from low-cost mutual fund companies.

    We help our clients to find cost-effective financial products in the marketplace. Excessive financial fees and expenses are rampant in the financial industry. There is almost always a superior, low-cost alternative that individuals can buy directly. A broad and general reading of research literature indicates the lack of any consistent and reliable ways for investors to identify investments before the fact that deliver superior net risk-adjusted returns over the long-term — except by reducing dramatically costs and fees related to asset management, trading, sales, and custody and by minimizing associated taxes.

    Only for those clients who have experience in trading through a broker do we suggest that they continue to do so, if they have a preference for using low-cost, broadly-diversified, passively-managed exchange-traded funds, instead of similar mutual funds. We encourage all of our clients to invest through investment funds and to avoid more costly and less diversified portfolios composed of individual securities, unless there is a good reason to do so. When experienced brokerage clients with trading experience only have a relationship with a full service broker and do not already have a brokerage relationship with one of the major discount brokers, we encourage them to open such an account to reduce their trading costs.

    Unless there is a reason to do so, in general, we discourage the use of investment strategies involving frequent trading, futures, options, derivatives, borrowing, and other “zero-sum” strategies and asset classes.

     

    5:  Our Fees and Compensation

    Lawrence Russell and Company is paid solely and directly by our clients either on a fixed fee for project basis or on an hourly basis. We never accept any compensation, commission, or fee in any form from any third party related to the advisory work that we do on behalf of our clients.

    Prior to the delivery of any service we will discuss with our clients the scope, milestones, and deliverables of any particular project. Then, the adviser will quote a fixed fee for that service. Project quotes are written into a formal planning contracts signed by Larry Russell and our clients. Advisory services are also provided at an hourly rate or fraction thereof. The current hourly rate is $150.

    Fees depend on the scope of the work wanted and the complexity of the financial issues involved. Limiting the scope of a project and the estimated number of adviser hours that will be applied is the extent to which advisory fees for financial and investment planning projects are negotiable.

    Fixed rates to develop a comprehensive family financial and investment plan range from $1,250 to $2,350. Lawrence Russell and Company also offers investment planning fixed rate services which range from $750 to $1,250. An investment plan covers only the investment portions of a comprehensive family financial and investment plan.

    Price variation for any fixed rate service is related to the degree of planning complexity involved and the expected time needed to complete the assignment. Typically, the hourly work commitment on a comprehensive financial and/or investment plan will significantly exceed the number of hours that would be implied by dividing the total fee by the standard hourly rate. A modest fee may be added for travel time and expenses for the adviser to travel to the client’s home or other location for meetings.

    During a typical planning engagement, about one-third of the adviser’s time commitment consists of meeting with a client in their home. The remainder of the time is focused on researching special issues related to the client’s financial affairs, building the client’s lifetime cash flow and asset appreciation projection model, and/or writing the comprehensive financial plan or investment plan.

    Hourly projects usually focus on one to several of the dozen or so subjects that are involved in a typical comprehensive financial plan. After speaking with the client about their needs, the adviser can also specify the number of hours needed to complete any hourly assignment. If the client wants a fixed quote for an hourly billing project, the adviser will provide one. When a fee for a fixed number of hours is quoted, then billing will not exceed those hours, even if the engagement takes longer than anticipated.

    Negotiated retainer arrangements are also available. Calendar quarter retainer arrangements are available for the client to engage us based upon our current hourly services rate. If an activity conducted for the client is clerical or administrative, then an hourly fee of up to $100 will be charged.

    Full payment for a particular service is due and payable upon delivery of that service. For larger projects with interim deliverables that the client and advisor have agreed to, the client may be billed for work that has been performed to date. With written notice the advisory contract is cancelable by either party at any time without cause. If the client cancels the contract, the client will pay for any completed or partially completed work prior to notice of cancellation. No prepayments of more than $500 and 6 months or more in advance are required in any financial arrangement with any client.

     

    6:  No Performance-Based Fees

    Lawrence Russell and Company and its management and employees do not participate in any performance-based fee or any side-by-side investment management arrangement of any kind with any third party. No incentives would cause us to favor one investment product over another in our recommendations.

     

    7:  The Types of Clients We Serve

    Lawrence Russell and Company focuses on providing financial planning and investment advice to individuals and families. We do not charge asset fees, and we have no requirements about assets or wealth related to our clients.

     

    8:  Our Methods of Analysis and Investment Strategies and the Risk of Loss

    Recommendations developed by Lawrence Russell and Company are based upon Larry Russell’s professional judgment. Lawrence Russell and Company bases its financial and investment planning services on the scientific finance literature. Academics and analysts who focus on financial economics have published an extensive body of scientific finance research papers. These papers report developments in financial theory and practice, and they provide statistical results that test these theories and practices. We believe that sound financial and investment planning advisory services should be guided by a broad, collective reading of these objective, scientifically constructed, and peer-reviewed studies.

    The future is fundamentally unpredictable, and any person’s financial success or failure depends upon numerous personal factors over which he or she has greater or lesser control. Furthermore, neither the client nor the adviser has any control over a wide variety of market, currency, economic, political, business, natural, and other risks. As much as clients would like to have inexpensive guarantees against risks, there can be no guarantees with respect to any recommendation that we provide.

    No person and no tool can predict or assess probabilities about what will happen in the future. Clients should never develop any false comfort that anyone can predict the future for them, nor should they expect that any financial plan can predict the future. Furthermore, clients should understand that financial products that purport to provide some form of guarantee usually do so at some cost that is often quite high.

    Given the fundamental uncertainty of the future, Lawrence Russell and Company generally favors proactively increasing income and moderating consumption when necessary to insure substantial rates of savings and rates of debt reduction during working years. Our clients are more likely to build long-term financial security, when their substantial ongoing savings are invested according to an asset allocation strategy that is appropriate to their risk tolerance. Furthermore, when our client’s increasing assets are held continuously in securities that have been demonstrated a potential to pay risk premiums and appreciate in value, they can further improve their financial circumstances. By building up assets, clients can provide protection and choice in an uncertain future and can fund future expenses when income sources decline.

    By investing in low-cost, broadly-diversified, passively-managed investments, clients are more likely to keep a greater portion of whatever returns the securities markets may produce over time. By holding very broadly-diversified fund investments, investors can significantly reduce the non-systematic risks associated with holding less diversified assets. Systematic securities risk caused market, currency, economic, political, business, natural, and other systemic risks will still persist. Nevertheless, from an investment standpoint, Lawrence Russell and Company believes that the general investment approach outlined above in this section is more likely to deliver optimal risk-adjusted investment returns and thus more likely to support our clients’ lifetime financial planning goals.

     

    9:  Disciplinary Information

    Lawrence Russell and Company and its managers and employees have not been involved in any federal, state, or local criminal, civil, or disciplinary event or proceeding of any kind that would have anything to do with our advisory business or our integrity.

     

    10:  Other Financial Industry Activities and Affiliations

    Lawrence Russell and Company is completely independent. Lawrence Russell and Company and its managers and employees have no affiliation with any other firm.

     

    11:  Code of Ethics, Participation or Interest in Client Transactions and Personal Trading

    When Lawrence Russell and Company makes any recommendation for any financial product or service, that recommendation is based solely upon what we believe would be in the best interests of our clients. Lawrence Russell and Company receives no compensation of any kind related to the recommendations that we make to our clients. We pay no compensation to anyone related to our clients.

    Lawrence Russell and Company’s ethical conduct standards are determined by Lawrence J. Russell, Managing Director. This Form ADV Part 2 serves as our written code of conduct. Lawrence J. Russell is the only manager or employee of Lawrence Russell and Company who is permitted to make specific recommendations to clients regarding securities and other financial products.

    We maintain complete financial independence from other financial firms. Beyond providing advice and recommendations and related assistance, we are not directly involved in the financial and investment affairs of our clients. Our only involvement in clients’ transactional affairs is to make recommendations regarding financial products and to assist clients concerning how to effect any such transaction, should they need and ask for assistance.

    We never act as a custodian and never commingle finances. We never act as any kind of financial intermediary between our clients and the financial firms with which they transact and that act as custodians of our clients’ assets.

    As a firm, Lawrence Russell and Company owns no securities or investments of any kind, except cash or cash equivalents for working capital. Its managers and employees may and do hold investments in some of the same low-cost, broadly-diversified, passively-managed funds that we recommend to our clients.

     

    12:  Brokerage Practices

    Lawrence Russell and Company has no relationships with any broker that involves any kind of direct or indirect compensation, commission, benefit, or soft-dollar arrangement for suggesting that a client use any particular broker. We always encourage clients to minimize their trading expenses though buy-and-hold investments in low-cost accounts using low-cost, passively-managed investment funds with low turnover.

     

    13:  Review of Client Accounts

    After a client’s initial plan is complete, Lawrence Russell and Company may perform annual reviews for clients, upon their request. This process would involve updating client-specific data and reevaluating their financial situations and preferences at that time. More frequent services on special topics would be provided upon client request.

    Because we do not manage client’s accounts, clients will instead receive reports directly from their fiduciaries at whatever frequency those firms are required to report to their clients.

     

    14:  No Client Referral Fees and Other Compensation

    Lawrence Russell and Company does not pay and does not receive any compensation in any form for either client referrals to us or for our referrals to any other firm or professional.

     

    15:  Clients Retain Full Account Custody

    Lawrence Russell and Company does not manage our clients’ investment asset accounts. We do not charge fees related to our client’s assets, and we have no involvement in the custodial relationships that our clients have with any financial firms.

    Our clients retain full custody of their own accounts and receive investment reports directly from their financial asset fiduciaries, which of course, they should always read carefully and check for correctness.

     

    16:  No Investment Discretion

    Our clients are in no way obligated to make any purchases of securities or any other investments through Lawrence Russell and Company. At all times, our clients may unilaterally decide to follow or ignore completely or in part, any information, recommendation, or counsel given by us.

    Lawrence Russell and Company never seeks to have investment selection discretion in any client account. Our clients retain absolute discretion over all investment and implementation decisions at all times.

     

    17:  Clients Vote Their Own Securities

    Lawrence Russell and Company has no involvement in the voting of client securities related to proxies or other solicitations. Clients will receive their proxies or other solicitations directly from their custodian or a transfer agent. They can make their own decisions about these matters and vote directly.

    Should any of these votes seem significant to any client, we can evaluate the matter and offer a recommendation to that client. We are unlikely to be involved in these matters, simply because we encourage clients to hold broadly-diversified, low-cost, passively-managed investment funds that track market indexes rather than to hold a self-managed portfolio of individual securities that may not be adequately diversified.

     

    18:  Financial Information

    No prepayments of more than $500 and 6 months or more in advance are required. Full payment for a particular service is due and payable upon delivery of that service. As such, Lawrence Russell and Company is not required to publish its balance sheet. The firm holds no investment assets beyond cash working capital. Lawrence Russell and Company has never been the subject of a bankruptcy petition.

     

    19:  Additional Information Required for State-Registered Advisers

    Lawrence Russell and Company believes that clients with sophisticated financial and investment planning needs should be served by an advisor who has extensive executive-level business experience and a college and graduate level education in economics, finance, investments, accounting, probability, statistics, survey research, and computer modeling. Larry Russell has this business and educational background.

    Larry Russell (born 1952) is a Managing Director of Lawrence Russell and Company. He provides all advisory services to clients that require financial and investment planning knowledge and judgment. Larry holds degrees from MIT (BS – 1975), Brandeis University (MA – 1979), and Stanford University (MBA – 1982). Prior to Lawrence Russell and Company, Larry Russell was a business and corporate development executive with technology firms and start-ups.

    For most of his career, he contributed to the Hewlett-Packard Company (1982-1989), IntelliCorp (1989-1991) and to Sun Microsystems, Inc. (1991-1999). During his corporate career, Larry specialized in business and corporate development and acquired externally developed products via negotiated licenses and companies through mergers and acquisitions. As Director of Corporate Development at Sun Microsystems from 1995 to 1999, Larry was responsible for leading the evaluation of all investment proposals submitted to Sun’s Executive Committee members. He provided mergers and acquisitions support to business units, oversaw the corporation’s equity investment portfolio, worked with venture investment partners, and managed strategic partners.

    In 1999, Larry left Sun to co-found Codexa Corporation in Altadena, and later Pasadena, California. At Codexa, he was EVP and CFO, recruited the management team, and led the firm’s finance, accounting, human resources, legal affairs, product marketing, and business development efforts. This venture funded firm provided advanced information filtering services for securities market professionals. As a consultant under contract following Codexa, Larry served as Interim CEO and President while forming VRVS Global Corporation, a Caltech startup.

    Karen Deacy-Russell (born 1955) is Managing Director of Lawrence Russell and Company, and she provides administrative services to clients. Karen has been Managing Director of Lawrence Russell and Company since 2001. For the period 1995 to 2000 she was a homemaker. During the prior two decades she held administrative and/or marketing communications positions in Silicon Valley at the San Jose Police Department, Syntex Corporation, Software Publishing Corporation, and Adobe Systems, Inc. Karen holds a Bachelor of Arts degree from San Jose State University (1980).

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