Client Relationship Summary (ADV Part 3)
Client Relationship Summary (ADV Part 3)
Kaizen Financial Advisors, LLC
Kaizen Financial Advisors, LLC is an investment adviser registered with the Securities and Exchange Commission. Investment advisory services and fees differ from brokerage services and fees and it is important for you to understand the differences. Investor.gov/CRS is a website that provides free and simple tools to research firms and financial professionals. It also provides videos and educational materials that explain the difference between investment advisers and broker-dealers and provides general investing education. We encourage you to check out the site, watch the videos, and ask us questions to better understand how we work with clients. To start the conversation, see our question call-out boxes throughout this document.
What investment services and advice do we provide?
Kaizen offers wealth management services to retail investors. Wealth management is an investment advisory service that encompasses many financial services to address the needs of affluent clients. It is a consultative process whereby the adviser gleans information about the client's wants and tailors a strategy to help optimize your financial outcomes. We look at all things financial which includes but is not limited to investment management, proactive tax planning, estate planning, risk management, employee benefits (including stock options and RSUs), and real estate analysis. Our overriding objective is to understand you and tailor our recommendations to your unique needs. To start the relationship, we have you fill out a questionnaire, upload pertinent documents, and we’ll prepare a financial review. Doing this we hope to gain an understanding of your financial situation, your goals, and your current financial strategies. We use this information to make recommendations that we believe will help optimize your wealth and grow your net worth more expeditiously.
Our Investment Committee reviews and set the firm’s overall investment philosophy and underlying mix of asset classes and securities. Our individual financial advisors recommend investments and use allocation models to manage your portfolio. We continuously monitor client portfolios as part of an ongoing process with regular account reviews.
Given my financial situation, should I choose an investment advisory service? Why or why not?
What is your relevant experience, including your licenses, education, and other qualifications? What do these qualifications mean?
How will you choose investments to recommend to me?
We manage portfolios on a discretionary basis. When you grant us discretionary authority, it means we don’t need to call you before buying or selling securities in your account. We obtain discretionary authorization when you sign our advisory agreement. As part of our process you will have an Investment Policy Statement (IPS) customized to your situation. The IPS is our agreement as to how we will manage your money. The agreement identifies the asset allocation, accounts we are managing, expected withdrawals and deposits, and your commitments to save. The IPS is reviewed during our meetings and updated as your situation changes. Although we primarily use ETFs in our portfolio, we offer advice on different types of securities. We do not impose a minimum account size.
For more detailed information about our services, please request a copy of our Form ADV, Part 2A brochure. Our brochure can also be found here: Kaizen Financial Advisors ADV Part 2A.
What fees will I pay?
We provide comprehensive wealth management and portfolio management for a single, comprehensive fee. Our fee is based on your total assets under management with us. This fee starts at 1.25% and gradually drops to .15% for assets over $25 million. We bill our fee quarterly in advance, usually deducted automatically from your account. Given the time and resources spent on initial planning and implementation, our minimum fee is $1,250 per quarter or $5,000 per year. Because we charge asset-based fees, the more assets we manage, the more you will pay in management fees. We therefore have a financial incentive to encourage you to increase the amount of assets we manage for you.
We offer hourly services in specific circumstances for a limited engagement. Administrative tasks (bookkeeping and organizational type tasks) are billed at $150 per hour and higher level, financial consulting tasks (those performed by your advisory representative) are billed at $300 per hour. Our fees are negotiable based on the circumstances.
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?
There may be other small fees charged to you by third parties. Examples of such costs are fees charged by our custodian Charles Schwab or fees charged by the investment companies we recommend. For example, Charles Schwab charges $20 for a wire transaction and exchange traded funds and mutual funds charge internal management fees. We do not receive any portion of these fees.
Keep in mind, you will pay fees and costs whether you make or lose money on your investments. Fees and costs reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying. Our Form ADV, Part 2A (Item 5 and Item 12) contains more detailed information about fees and costs.
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 are a fiduciary. This means we act in your best interest and put your interest ahead of ours. At the same time, the way we make money creates some conflicts with your interests.
How might your conflicts of interest affect me, and how will you address them?
The primary conflict of interest with asset-based fees structures is asset accumulation and retention. To illustrate, if you asked for a recommendation comparing paying down outstanding debt or making charitable contributions, versus keeping those funds in your accounts with us, we will always make the recommendation that we believe is in your best interest. At the same time, there is an inherent conflict of interest in making the recommendation because we earn more advisory fees if you keep the assets in your account.
We use Charles Schwab & Co., Inc. (“Schwab”) as our custodian and we receive benefits, such as access to research, technology services, and seminars through our relationship with them. This too can be construed as a conflict of interest.
Our Form ADV, Part 2A contains detailed information about our conflicts of interest.
How do your financial professionals make money?
Our financial professionals receive variable compensation related to the number of clients served and total advisory fees generated. This creates a financial incentive to solicit and retain existing clients. In addition, our investment advisory representatives are also individually licensed insurance agents with various insurance providers. For sales of insurance products, they earn customary commissions. You are under no obligation to purchase insurance products through our advisory representatives.
Do you or your financial professionals have legal or disciplinary history?
No. Visit Investor.gov/CRS for a free and simple search tool to research our firm and our financial professionals.
Who is my primary contact person? Is he or she a representative of an investment adviser or a broker-dealer? Who can I talk to if I have concerns about the service I am receiving?
For more detailed information about our investment advisory services, or to request another copy of this Relationship Summary, please contact us at (425) 321-5800 and speak to your advisory professional or our Chief Compliance Officer. You may also visit the SEC’s public disclosure website at www.adviserinfo.sec.gov.