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Disclosure Statement

As an Investment Adviser, our firm is required to file with the Arizona Corporation Commission and to make the information contained in that registration available to actual and prospective advisory clients. This is a summary of information related to our advisory services and asset management activity. Individuals may request a copy of our registration, if we were required to file one in the state of residence of the person making the request. This information material is frequently referred to as a “brochure.”

DESCRIPTION OF SERVICES

We provide asset management services to manage and supervise all, or a portion, of a client’s investment portfolios for a fee based on a percentage of assets under management, or a percentage of assets under management and performance fees. In addition, we provide various levels of comprehensive personal investment planning for a fixed or hourly fee, as well as various specialized analysis billed on a time and disbursements basis.

We do manage accounts on a limited discretionary basis; however, we do not take custody or hold personal securities or funds of any kind. We do not assume the responsibility of continuously monitoring the performance of client investments unless we are retained by the client for asset management services.

ASSET MANAGEMENT

Asset Management services provide continuous supervision and management of all capital assets under management on the client's behalf. Asset Allocation techniques are utilized to provide safety through diversification as well as potentially increased long term total return with decreased portfolio volatility.

Asset allocation, long-term returns, diversification, and investment style must be properly assessed for each client’s needs and risk profile, whether they are an individual or an institution. Different strategies must be applied to an investor seeking wealth preservation compared to an investor seeking aggressive growth.

We believe in a disciplined approach to investing and utilize our proprietary quantitative methods to achieve our results. All our strategies are not only created from the ground up to serve specific objectives, but they are also thoroughly back tested in some cases over thousands of stocks over several decades to minimize, or if possible completely eliminate, curve-fitting.

Although our proprietary quantitative strategies differ markedly from each other, they all focus on risk adjusted returns, and can be divided into conservative strategies, which seeks beta (return from passively holding a portfolio), and active strategies, which seeks alpha (value-added return from active management).

Assets generally managed include, but are not limited to, publicly traded large- and medium-capitalization equities, mutual funds, AAA municipal- and corporate bonds, government bonds, and REITs.

We manage accounts on a limited discretionary basis; however we do not hold or take custody of personal securities or funds of any kind.

Clients receive a quarterly accounting of their account through a Combined Portfolio Statement, Asset Allocation, Transaction Ledger, and Deposits & Withdrawals. In addition, the custodian, Schwab Institutional, issues monthly statements to the clients.

COMPREHENSIVE INVESTMENT PLANNING

Comprehensive personal investment planning is provided to clients pursuant to a written agreement and fee schedule. In general, the client agrees to complete our data gathering questionnaire and provide other relevant information and authorizations. We agree to prepare a written plan which describes the current situation, identifies needs and opportunities and makes recommendations designed to help the client achieve his or her goals. Comprehensive personal investment planning is primarily an analytical process designed to help the client articulate and quantify goals, organize financial data, identify needs and opportunities and evaluate alternative courses of action. It includes an analysis of the client’s goals and objectives, assets, liabilities, current net worth, income taxes, cash flow, investments, employee benefits, estate and gift tax planning and risk management. The effects of any recommendation(s) will be illustrated including the effect that certain financial products will have on any plan recommended to the client. The financial planning process results in a written plan which includes the analysis, recommendations and their effect with the aid of financial projections.

While comprehensive investment planning includes investment advice concerning securities, it also includes investment advice with respect to products that may not constitute “securities,” such as life insurance. It also takes into consideration tax and estate planning issues which may not constitute “investment advice.” We do not assume the responsibility of continuously monitoring the performance of client investments unless we are retained by the client for asset management services.

SPECIALIZED ANALYSIS

In addition to comprehensive financial planning, we provide specialized services which focus on particular client needs. These services are provided on a time and disbursements basis, pursuant to a written agreement. The kinds of services listed below are representative of those which may be requested by clients:

v Investment plan updates v Retirement plan design and analysis v Analysis of life, health and disability insurance v Analysis of investment portfolios v Business valuation v Retirement plan disbursement analysis

FEES

Our regular fees consist of both fixed and variable fees. Investment advisory fees start at $995 for the initial consultation, while money management fees range from 0.5% to 2% per year of assets under management and for certain strategies up to an additional 20% in performance fees.

All fees are due quarterly, except for our assets invested in our Active or Aggressive strategies, which are due monthly.

TYPES OF SECURITIES EVALUATED

On a comprehensive plan, we will evaluate the appropriateness of any securities or other investments owned, proposed for ownership or which we think could assist the client in achieving personal goals. Such investments may include, but are not limited to equities, corporate debt, municipal bonds, government securities, options, commodities, certificates of deposit, life insurance, annuities, mutual funds and limited partnership interest designed for certain tax benefits.

METHOD OF ANALYSIS AND INFORMATION SOURCES

Primarily, evaluation of individual securities is based on quantitative analysis. In addition, we use fundamental and technical analysis to monitor market conditions in general. We also keep abreast of general business conditions and changes in the law, taxation and various investment products. To this end, we review general business publications, tax services, technical journals, historical computer databases, research materials prepared by others, corporate rating services, economic advisory services, inspections of corporate and business activities and other materials relevant to the services provided.

INVESTMENT STRATEGIES

Asset allocation, long-term returns, diversification, and investment style must be properly assessed for each client’s needs and risk profile, whether they are an individual or an institution. Different strategies must be applied to an investor seeking wealth preservation compared to an investor seeking aggressive growth.

We believe in a disciplined approach to investing and utilize our proprietary quantitative methods to achieve our results. All our strategies are not only created from the ground up to serve specific objectives, but they are also thoroughly back tested in some cases over thousands of stocks over several decades to minimize, or if possible completely eliminate, curve-fitting.

Although our proprietary quantitative strategies differ markedly from each other, they all focus on risk adjusted returns, and can be divided into conservative strategies, which seeks beta (return from passively holding a portfolio), and active strategies, which seeks alpha (value-added return from active management).

REVIEW AND MANAGEMENT OF ACCOUNTS

Accounts under management are generally managed using investment strategies such as diversification and asset allocation, based on the Modern Portfolio Theory and the Capital Markets Theory. Advisor personnel and management review accounts under the management of our asset management services on a regular basis. A formal review of client accounts is conducted on at least a quarterly basis, if not more frequently.

Client accounts will be managed according to the strategies agreed upon with the client, according to their objectives and risk tolerance.

CODE OF ETHICS

Fundamental to the Advisers Act is an advisor’s fiduciary obligation to act in the best interest of its clients and to place its clients’ interests before its own. As such a fiduciary, Carl F. Petersen, Inc. has a duty of utmost good faith to act solely in the best interests of each of our clients. Our clients entrust us with their funds, which in turn places a high standard on our conduct and integrity. Our fiduciary duty compels all employees to act with the utmost integrity in all of our dealings. This fiduciary duty is the core principle underlying this Code of Ethics and Personal Trading Policy, and represents the expected basis of all of our dealings with our clients.

This Code of Ethics consists of the following core principles:

1) The interests of clients will be placed ahead of the firm’s or any employee’s own investment interests. 2) Employees are expected to conduct their personal securities transactions in accordance with the Personal Trading Policy and will strive to avoid any actual or perceived conflict of interest with the client. Employees with questions regarding the appearance of a conflict with a client should consult with the CCO before taking action that may result in an actual conflict 3) Employees will not take inappropriate advantage of their position with the firm. 4) Employees are expected to act in the best interest of each of our clients. 5) Employees are expected to comply with federal securities laws.

PERSONAL TRADING POLICY

Matters to Consider Before an Employee Places a Trade

1) Whether the amount or nature of the transaction will affect the price or market for the security; 2) Whether the employee will benefit from purchases or sales being made for any client; 3) Whether the transaction is likely to harm any client; and 4) Whether there is an appearance or suggestion of impropriety.

Personal Trading Restrictions

Employees are expected to purchase or sell a security for their personal accounts only after trading of that same security has been completed in client accounts. Personal accounts of the employee include all accounts for family members living within the employee’s household and accounts over which the employee has authority even though the account owner does not live within the same household as the employee. a) Any employee contemplating a trade to the contrary must consult with the CCO before conducting his or her personal trade. b) It is the employee’s responsibility to know which securities the firm is trading. The employee may consult with the CCO to determine whether a security is an appropriate purchase by the employee.

CONFLICTS OF INTEREST

Whenever our firm, any associated person or any family member would receive economic benefit from the transactions of clients, whether or not recommended in our plan, a potential “conflict of interest” exists. As a matter of law and professional ethics, in all such cases we advise our clients of the circumstances.

PROXY VOTING POLICY

Carl F. Petersen, Inc. strives to vote all proxies in the best economic interests of its clients. The decision of how to vote follows the same criteria Carl F. Petersen, Inc. uses in managing client accounts – to vote for proposals in such a manner that, in our opinion, the vote will increase shareholder value.

Carl F. Petersen, Inc. will generally support management’s recommendations on proxy issues, since management’s ability is a key factor we consider in selecting equity securities for client portfolios. We believe a company’s management should generally have the latitude to make decisions related to the company’s business operations. However, when Carl F. Petersen, Inc. believes the company’s management is acting in an inconsistent manner with our clients’ best interests, we will vote against management’s recommendations.

In evaluating a particular proxy proposal, Carl F. Petersen, Inc. takes into consideration, among other items: Carl F. Petersen, Inc.’s determination of how the proxy proposal will impact our clients; the period of time over which shares of the company are expected to be held in the client’s portfolio; the size of the position; the costs involved in the proxy proposal; and management’s assertions regarding the proxy proposal.

INTEREST IN INSURANCE TRANSACTIONS

In the course of our planning, we may recommend the purchase of insurance. Annette Petersen is licensed in Life and Disability, however, neither she, nor Carl F. Petersen, Inc., sell insurance. In general, as per the clients wishes, the client is referred to Northwestern Mutual, from which neither Annette Petersen, nor Carl F. Petersen, Inc., receives any commission or other form of compensation.

BUSINESS AFFILIATIONS

We have an agreement with Schwab Institutional, wherein Schwab Institutional acts as custodian, houses the accounts, and handles securities transactions. Schwab Institutional charges commissions on equity transactions, while mutual funds and fixed income transactions for the most part are commission free. Most mutual fund transactions placed through Schwab Institutional are handled on a no-load, no-transaction fee, non-commissionable basis, although, as stated above, there are some exceptions. We do not receive any compensation, fees, or commissions from Schwab Institutional.