June 10, 2006

 

Joan Smith
3232 Corel Avenue, #4
Cranford, New Jersey 07016

Re: Financial Planning Engagement

Dear Joan:

We are looking forward to working with you to address your financial planning needs.  The financial planning process is an important step toward ultimately achieving your financial goals and improving the financial quality of one’s life. 

At Shapiro Financial Security Group, Inc., the underlying core value is that our service should not be investment or product driven, but client defined & customized to individualized situations.  We are passionate about adhering to sound and proven financial planning processes and techniques to achieve the desired result for our clients.  We will not compromise the quality of the end result by taking shortcuts along the way.

This letter highlights the activities involved in developing, implementing and maintaining your financial plan. It also con­firms the objectives, limitations & terms of our engagement.

Engagement Objectives

The primary objective of our engagement is to prepare a review of your personal financial situation. This review will emphasize your personal financial goals and objectives, and will include strategies to attain them, if possible. Our analysis and recommendations are based on information you provide, and as such, we will be relying upon your representations.

As part of this comprehensive review, you have specifically asked us to assist in structuring an investment portfolio to satisfy your future retirement & liquidity needs.  We will also provide business consultation for managing your real estate properties and strategies for the tax efficient liquidation of the holdings.  

To accomplish this goal, we will prepare and analyze your monthly cashflow and review alternative funding strategies.  We will prepare a tax projection to determine your tax liabilities for the next few years and review your existing insurance coverages in comparison to an “insurance needs analysis”.  We will also review the status and provisions of your final wills, power of attorney, and medical directives.

Highlights of Activities

The initial phase involves accumulating and organizing facts about your current financial status, identifying specific goals and objectives, and agreeing upon planning assumptions. This information will be obtained during a preliminary meeting or conversation with you, and/or from the use of a data-­gathering questionnaire.  We will also review copies of pertinent documents, such as wills, company-provided fringe benefit booklets, prior tax returns, and insurance documents.

After the information has been received, the data will be analyzed utilizing appropriate technology, with “base-line” projections compared with desired results.  A meeting will be held at this stage to verify the accuracy of the data and to allow you to validate the assumptions used in the projections.  We will also outline possible alternative strategies or courses of action to meet your immediate and long-term goals and to mitigate problems uncovered.

Following the analysis and discussion with you, the projections will be updated for corrections noted, and the effect of the alternative recommendations will be reviewed.  We will prepare and discuss with you a written report that includes the recom­mendations selected to address your financial goals. Where appropriate, we will include financial illustrations and projections for greater understanding of the potential outcomes of the alternatives. 

At the conclusion of the engagement, we will work with you to finalize choice of strategies, set time goals, and establish responsibilities for the implementation of the plan.

Although the responsibility for choosing a specific strategy is yours, we will aid you in the decision-making process, and assist you to understand how well each alternative meets your financial planning objectives.  You will, of course, be free to follow or to disregard, in whole or in part, any recommendations we make.

Implementation Activities

The procedures or methods that you follow for the implementation of the financial planning recommendations are totally discretional on your part.  You will be responsible for any and all decisions regarding implementation of the recommendations. 

We are available, as a separate engagement, to directly assist you in full or in part, with implementing the strategies that have been agreed upon or to coordinate implementation with other financial professionals of your choosing.  As part of this separate engagement, we can be available on an ongoing basis to answer questions, monitor activities, or to make new recommendations regarding your financial matters.

Your plan should be reviewed with us informally on a quarterly basis and more formally at least annually. These update sessions are vital so that adjust­ments can be made for changes in your personal circumstances, overall economic conditions, and future tax law revisions.

If we are retained to assist with implementing your plan, we agree to fully disclose any fees, commissions, or other remuneration or compensation paid to us or any related party, from third parties associated with any investment, insurance product, or service purchased by you.

The specific nature and extent of our involvement with implementation services will be mutually determined upon completion of the financial planning process, or earlier if desired. 

Engagement Constraints

Our services are designed to supplement your own planning analysis and aid you in fulfilling your financial objectives.  The services are not designed and should not be relied upon as a substitute for your own participation and use of judgment.  Nor are they meant to mitigate the necessity of your personal review and analysis of a particular recommendation. 

The plan will include financial projections based on assumptions about future events. The projections will be prepared from information you provide.  You are also responsible for communicating to us any significant changes to the information that might affect the ultimate realization of the projected results.

The suggestions and recommendations included in your financial plan will be advisory in nature, and we cannot guarantee the performance of any investment or insurance products which may be purchased to implement recommendations in your plan.  We will also not express any form of assurance on the achievability of the projec­tions or reasonableness of the underlying assumptions, as the assumptions about future events may prove not to be accurate.

The planning process is independent of any investment advisor services.  While investment strategies may be developed as part of the financial plan, specific investment recommendations designed to satisfy the strategy will be covered under a separate Investment Advisory engagement agreement or should be discussed with the investment advisor you choose to engage.

Our engagement is not designed to discover errors, irregularities, illegal acts, or misrepresentations made in materials provided to us.   We also cannot be responsible for the acts, omissions, or solvency of any broker, agent, or independent contractor or other advisor selected in good faith to negotiate or consummate a transaction for your account.  We will, however, inform you of any such matters that come to our attention.