Bon Koo

I. Nature of the Relationship and Services: Description of Services: A clear outline of the specific financial planning services to be provided (e.g., comprehensive financial planning, investment management, retirement planning, estate planning, risk management, etc.). Scope of Engagement: Defines the boundaries of the planner's responsibilities and what is not included in the engagement. For example, some planners may only provide a plan, while others will also implement and monitor it. Client Responsibilities: What the client is expected to provide (e.g., accurate financial information, timely communication, review of documents). Fiduciary Duty Statement: A clear statement that the planner acts as a fiduciary, meaning they are legally and ethically obligated to act in the client's best interest at all times. This is a cornerstone for many financial planners. II. Compensation and Fees: How the Planner is Compensated: A detailed explanation of the planner's fee structure (e.g., fee-only, fee-based, commission-based, hourly, AUM-based). This is incredibly important for transparency. Additional Costs: Disclosure of any other costs the client may incur (e.g., product management fees, surrender charges, sales loads, trading fees, custodian fees). Third-Party Compensation: If the planner receives compensation from third parties for recommending certain products or services, this must be clearly disclosed. III. Conflicts of Interest: Material Conflicts of Interest: A thorough disclosure of any potential or actual conflicts of interest that could influence the planner's recommendations. This might include: Proprietary Products: If the planner or their firm offers their own financial products (e.g., mutual funds, insurance policies), and how this might create a conflict. Referral Fees: If the planner receives fees for referring clients to other professionals (e.g., attorneys, accountants, real estate agents). Commissions: If the planner earns commissions on the sale of certain investment products or insurance policies. Compensation Differences: If the planner's compensation varies significantly based on the products or services they recommend. How Conflicts are Managed: Explanation of how the planner mitigates and manages these conflicts to ensure they are still acting in the client's best interest. IV. Investment-Related Disclosures (if applicable): Investment Risks: A general disclosure that all investments involve risk, including the potential loss of principal. Specific risks related to certain investment types (e.g., market risk, interest rate risk, liquidity risk, credit risk, inflation risk) may also be mentioned. Past Performance: A disclaimer that past investment performance is not indicative of future results. Market Volatility: A statement acknowledging that market values can fluctuate. Limitations of Financial Projections: Disclosures that financial projections are hypothetical in nature and do not guarantee future performance. They are based on assumptions that may not materialize. Custody of Assets: Information on where client assets will be held (e.g., with a third-party custodian) and how they are protected. V. Legal and Regulatory Disclosures: No Guarantee of Results: A statement that the planner cannot guarantee specific financial outcomes. Not Tax or Legal Advice: A crucial disclaimer that the financial planner does not provide legal or tax advice, and clients should consult with qualified tax or legal professionals for such matters. Any tax information provided is for illustrative purposes only. Regulatory Status: Information about the planner's and firm's regulatory registrations (e.g., with the SEC or state securities authorities) and how clients can verify their credentials (e.g., through BrokerCheck or IAPD). Privacy Policy: A statement outlining how the planner handles and protects the client's non-public personal information. Complaint Procedures: Information on how a client can file a complaint with the firm or relevant regulatory bodies. Updates to Information: An ongoing obligation to provide updated information to clients about material changes to the firm or the planner. VI. Technology and Data Disclosures: Use of Technology: If the planner uses specific software or tools for analysis, reporting, or communication, a disclosure about their use and any associated security measures. Data Accuracy: A statement that the planner relies on the accuracy of information provided by the client and third parties (e.g., custodians, banks) and does not independently verify all of it. Important Considerations for Financial Planners: Clarity and Simplicity: Disclosures should be written in plain language that clients can easily understand, avoiding jargon. Timeliness: Disclosures must be provided to clients at or before the time of engagement, and updated promptly if there are material changes. Documentation: Planners should maintain records demonstrating that disclosures were provided to clients. Regulatory Compliance: Planners must adhere to all applicable regulations from bodies like the SEC, FINRA, and the CFP Board, which have specific requirements for disclosures