WatchDog Planning LLC
923 Haddonfield Rd
3rd Floor, Building B2
Cherry Hill, NJ 08002
Date of Disclosure Brochure: January 2020
This disclosure brochure provides information about the qualifications and business practices of WatchDog Planning LLC (also referred to as we, us and WatchDog Planning throughout this disclosure brochure). If you have any questions about the contents of this disclosure brochure, please contact Nancy Nawn at 610-364-5838 or firstname.lastname@example.org. The information in this disclosure brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
Additional information about WatchDog Planning is also available on the Internet at www.adviserinfo.sec.gov. You can view our firm’s information on this website by searching for WatchDog Planning LLC or our firm’s CRD number 289978.
*Registration as an investment adviser does not imply a certain level of skill or training.
Watchdog Planning has made the following material changes since the previous annual filing of this brochure:
- Our office has moved from Havertown, PA to Cherry Hill, NJ.
- Items 4 and 5 have been enhanced in regards to our One-Time and Ongoing Comprehensive Financial Planning services.
- Items 4, 5, 12, and 14 have been updated to describe the addition of Investment Management Services Through the Use of XYIS as Sub-Advisor.
- Items 12 and 14 have been updated to disclose our use of Betterment.
- Item 16 has been revised to state that we maintain discretion over any client accounts utilizing Investment Management Services Through the Use of XYIS as Sub-Advisor.
In the future, this item will discuss only specific material changes that are made to the disclosure brochure and provide readers with a summary of such changes. We will also reference the date of the last annual update of this disclosure brochure.
We will ensure that you receive a summary of any material changes to this and subsequent disclosure brochures within 120 days after our firm’s fiscal year ends. Our firm’s fiscal year ends on December 31, so you will receive the summary of material changes no later than April 30 each year. At that time, we will also offer or provide a copy of the most current disclosure brochure. We may also provide other ongoing disclosure information about material changes as necessary.
WatchDog Planning is an investment adviser located in New Jersey, registered with the States of New Jersey and Pennsylvania, and is a limited liability company (LLC) formed under the laws of the State of New Jersey.
- Nancy Nawn is the Chief Compliance Officer (CCO) and a Managing Member of WatchDog Planning. Frank Fisher is a Managing Member of WatchDog Planning. Nancy Nawn and Frank Fisher each own 50% of WatchDog Planning. Full details of the education and business backgrounds are provided at Item 19 of this Disclosure Brochure.
- WatchDog Planning currently reports no discretionary and no non-discretionary assets under management as of December, 2019.
The investment advisory services of WatchDog Planning are provided to you through an appropriately licensed and qualified individual who is an investment adviser representative of WatchDog Planning (referred to as your investment adviser representative throughout this brochure).
Types of Advisory Services
The following are descriptions of the primary advisory services available through WatchDog Planning. Please understand that a written agreement, which details the exact terms of the service, must be signed by you and WatchDog Planning before we can provide you the services described below.
One-Time Comprehensive Financial Plan
This service involves working one‑on‑one with a financial planner over a 6-month time period. By paying a pre-determined fee, clients get to work with a planner to create a comprehensive financial plan. Clients will establish their goals and explore their values around money. They will be required to provide information in order to complete the following areas of analysis: net worth, cash flow, insurance, employee benefits, retirement planning, investments, risk tolerance, debt management, estate planning, social security/medicare and education planning (see descriptions below). Once the client’s information is reviewed, their plan will be built and analyzed, and then the findings, analysis and potential changes to their current situation will be reviewed with the client. Clients subscribing to this service will receive an electronic report, providing the client with financial statements, methods of analysis, recommended plan changes and action items designed to achieve his or her stated financial goals and objectives.
Ongoing Comprehensive Financial Planning
This service involves working one‑on‑one with a financial planner over an indefinite time period. By paying a fixed monthly subscription fee OR a qualified assets under management (AUM) fee, clients get to work with a planner throughout the year to create and maintain a comprehensive financial plan. Clients will establish their goals and explore their values around money. They will be required to provide information in order to complete the following areas of analysis: net worth, cash flow, insurance, employee benefits, retirement planning, investments, risk tolerance, debt management, estate planning, social security/medicare and education planning (see descriptions below). Once the client’s information is reviewed, their plan will be built and analyzed, and then the findings, analysis and potential changes to their current situation will be reviewed with the client. Clients subscribing to this service will receive an electronic report, providing the client with financial statements, methods of analysis, recommended plan changes and action items designed to achieve his or her stated financial goals and objectives. Clients will also have regularly scheduled meetings based on a service calendar established by WatchDog Planning, as well as those tailored to their specific situations. Meetings will be conducted via face‑to‑face, video conferencing and/or phone consultations.
The plan and the client’s financial situation and goals will be monitored throughout the year and follow‑up phone calls and emails will be made to the client to confirm that any agreed upon action steps have been carried out. The client is expected to inform WatchDog Planning when changes or concerns arise and to provide the necessary information to use in our analysis. On an annual basis there will be a full review of this plan to ensure its accuracy and ongoing appropriateness. Any needed updates will be implemented at that time.
Ongoing Comprehensive Financial Planning Services AND Investment Management
WatchDog Planning will provide ongoing comprehensive financial planning services, as described above, as well as investment management services on a discretionary basis. When given discretionary authority, WatchDog Planning is authorized to conduct trades in a client’s account and give instructions to the account’s custodian, without prior consent of the client. Investment advisory services may involve developing an asset allocation strategy to meet clients’ financial goals and risk tolerance, providing information on investment vehicles and strategies, and reviewing company stock ownership. The strategies and types of investments we may recommend are further discussed in Item 8 of this brochure.
Under this service, our firm provides continuous advice to a client regarding the investment of client funds based on the individual needs of the client. Through personal discussions in which goals and objectives based on a client’s particular circumstances are established, we develop a client’s personal investment policy statement or an investment plan with an asset allocation target. From there, we create and manage a portfolio based on that policy and allocation targets. We may also review and discuss a client’s prior investment history, as well as family composition and background.
Account supervision is guided by the stated objectives of the client (e.g., maximum capital appreciation, growth, income, or growth, and income), as well as tax considerations. Clients may impose reasonable restrictions on investing in certain securities, types of securities, or industry sectors. Fees pertaining to this service are outlined in Item 5 of this brochure.
WatchDog Planning will NOT provide investment management services for clients unless they complete a comprehensive financial plan under our guidance.
Use of Third Party Managers, Outside Managers, or Sub-Advisors (TAMPs)
We offer the use of Third Party Managers, Outside Managers, or Sub-Advisors (TAMPs) for portfolio management services. We assist clients in selecting an appropriate allocation model, completing the Outside Manager’s investor profile questionnaire, interacting with the Outside Manager and reviewing the Outside Manager. Our review process and analysis of outside managers is further discussed in Item 8 of this Form ADV Part 2A. Additionally, we will meet with the client on a periodic basis to discuss changes in their personal or financial situation, suitability, and any new or revised restrictions to be applied to the account. Fees pertaining to this service are outlined in Item 5 of this brochure.
XY Investment Solutions (“XYIS”) as a Sub-Adviser (CRD# 285967)
XY Investment Solutions (“XYIS”) builds investment models through a technology solution and supports financial planners with investment strategies based on research, experience, and sound rationale. XYIS primarily allocates client assets among various mutual funds and exchange-traded funds (“ETFs”). XYIS may also allocate client assets in individual debt and equity securities, options, and independent investment managers. XYIS’s services are based on long-term investment strategies incorporating the principles of Modern Portfolio Theory. XYIS manages client investments in model portfolios on a discretionary basis.
Description of Financial Planning Services
Business Planning: We provide consulting services for clients who currently operate their own business, are considering starting a business, or are planning for an exit from their current business. Under this type of engagement, we work with you to assess your current situation, identify your objectives, and develop a plan aimed at achieving your goals.
Cash Flow and Debt Management: We will conduct a review of your income and expenses to determine your current surplus or deficit along with advice on prioritizing how any surplus should be used or how to reduce expenses if they exceed your income. Advice may also be provided on which debts to pay off first based on factors such as the interest rate of the debt and any income tax ramifications. We may also recommend what we believe to be an appropriate cash reserve that should be considered for emergencies and other financial goals, along with a review of accounts (such as money market funds) for such reserves, plus strategies to save desired amounts.
College Savings: Includes projecting the amount that will be needed to achieve college or other post‑secondary education funding goals, along with advice on ways for you to save the desired amount. Recommendations as to savings strategies are included, and, if needed, we will review your financial picture as it relates to eligibility for financial aid or the best way to contribute to grandchildren (if appropriate).
Employee Benefits Optimization: We will provide review and analysis as to whether you, as an employee, are taking the maximum advantage possible of your employee benefits. If you are a business owner, we will consider and/or recommend the various benefit programs that can be structured to meet both business and personal retirement goals.
Estate Planning: This usually includes an analysis of your exposure to estate taxes and your current estate plan, which may include whether you have a will, powers of attorney, trusts and other related documents. Our advice also typically includes ways for you to minimize or avoid future estate taxes by implementing appropriate estate planning strategies such as the use of applicable trusts. We always recommend that you consult with a qualified attorney when you initiate, update, or complete estate planning activities. We may provide you with contact information for attorneys who specialize in estate planning when you wish to hire an attorney for such purposes. From time‑to‑time, we will participate in meetings or phone calls between you and your attorney with your approval or request.
Financial Goals: We will help clients identify financial goals and develop a plan to reach them. We will identify what you plan to accomplish, what resources you will need to make it happen, how much time you will need to reach the goal, and how much you should budget for your goal.
Insurance: Review of existing policies to ensure proper coverage for life, health, disability, long‑term care, liability, home and automobile.
Investment Analysis: This may involve developing an asset allocation strategy to meet clients’ financial goals and risk tolerance, providing information on investment vehicles and strategies, reviewing employee stock options, as well as assisting you in establishing your own investment account at a selected broker/dealer or custodian. The strategies and types of investments we may recommend are further discussed in Item 8 of this brochure.
Retirement Planning: Our retirement planning services typically include projections of your likelihood of achieving your financial goals, typically focusing on financial independence as the primary objective. For situations where projections show less than the desired results, we may make recommendations, including those that may impact the original projections by adjusting certain variables (e.g., working longer, saving more, spending less, taking more risk with investments). If you are near retirement or already retired, advice may be given on appropriate distribution strategies to minimize the likelihood of running out of money or having to adversely alter spending during your retirement years.
Risk Management: A risk management review includes an analysis of your exposure to major risks that could have a significant adverse impact on your financial picture, such as premature death, disability, property and casualty losses, or the need for long‑term care planning. Advice may be provided on ways to minimize such risks and about weighing the costs of purchasing insurance versus the benefits of doing so and, likewise, the potential cost of not purchasing insurance (“self‑insuring”).
Social Security and Medicare: We will review your social security claiming strategies and projected medicare costs to ensure your resources are adequate to support your lifestyle and health care needs in retirement.
Tax Planning Strategies: Advice may include ways to minimize current and future income taxes as a part of your overall financial planning picture. For example, we may make recommendations on which type of account(s) or specific investments should be owned based in part on their “tax efficiency,” with consideration that there is always a possibility of future changes to federal, state or local tax laws and rates that may impact your situation.
WatchDog Planning utilizes eMoney, a collaborative, internet-based financial planning software that offers a unique client-centered approach.
Clients electing to use eMoney can take advantage of a variety of tools, including:
- Streamlined Data Entry
- Social Security Analysis
- Estate Planning
- Cash Flow Analysis
- Debt Management
- Asset Allocation
- Insurance Analysis
- Risk Management
- Recommended Scenario Options
If you elect to use eMoney, you are required to provide us the information and documentation to be downloaded and/or input into the system. You will be provided with a unique username and password and will be able to view balances and store/view important papers and documents.
Limits Advice to Certain Types of Investments
WatchDog Planning provides investment advice on the following types of investments:
- Mutual Funds
- Exchange Traded Funds (ETFs)
- Exchange-listed Securities
- Securities Traded Over-the-Counter
- Foreign Issues
- Corporate Debt Securities
- Commercial Paper
- Certificates of Deposit
- Municipal Securities
- Fixed Annuities
- Variable Annuities
- Variable Life Insurance
- US Government Securities
- Hedge Funds
Although we generally provide advice only on the products previously listed, we reserve the right to offer advice on any investment product that may be suitable for each client’s specific circumstances, needs, goals and objectives.
It is not our typical investment strategy to attempt to time the market, but we may increase cash holdings modestly as deemed appropriate based on your risk tolerance and our expectations of market behavior. We may modify our investment strategy to accommodate special situations such as low basis stock, stock options, legacy holdings, inheritances, closely held businesses, collectibles, or special tax situations.
(Please refer to Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss for more information.)
Tailor Advisory Services to Individual Needs of Clients
WatchDog Planning’s advisory services are always provided based on your individual needs. When providing financial planning services, we work with you on a one-on-one basis through interviews and questionnaires to determine your investment objectives and suitability information.
We will not enter into an investment adviser relationship with a prospective client whose investment objectives may be considered incompatible with our investment philosophy or strategies or where the prospective client seeks to impose unduly restrictive investment guidelines.
Client Assets Managed by WatchDog Planning
As of December, 2019 WatchDog Planning has $0 discretionary or non-discretionary Assets Under Management.
Item 5 – Fees and Compensation
In addition to the information provided in Item 4 – Advisory Business, this section provides additional details regarding our firm’s services along with descriptions of each service’s fees and compensation arrangements. It should be noted that lower fees for comparable service may be available from other sources. The exact fees and other terms will be outlined in the agreement between you and WatchDog Planning.
WatchDog Planning is a fee‑only firm and is compensated solely by professional fees received directly from its clients. Neither WatchDog Planning, nor any related person associated with WatchDog Planning, receives compensation that is contingent on the purchase or sale of a financial product. Neither WatchDog Planning, nor any related person of WatchDog Planning, accepts any sales commissions referral fees, service fees, or other forms of compensation from any third party, nor does WatchDog Planning or any related person compensate anyone else directly or indirectly for client referrals.
WatchDog Planning’s fee and the specific manner in which fees are charged is established in each client agreement with the client. In no event will WatchDog Planning collect more than $500.00 more than six months in advance from any client. Please note, unless a client has received the firm’s disclosure brochure at least 48 hours prior to signing the investment advisory contract, the investment advisory contract may be terminated by the client within five (5) business days of signing the contract without penalty and without incurring any advisory fees. How we are paid depends on the type of advisory service we are performing. Please review the fee and compensation information below.
Initial Comprehensive Financial Plan
WatchDog Planning’s initial comprehensive financial plan starts at $4,000. We require a $1,000 set-up fee at the time you execute an agreement with WatchDog Planning. The remaining balance due will be billed to the client in equal installments over five (5) months. Upon completion and delivery of the financial plan, the fixed fee is considered earned by WatchDog Planning and any unpaid amount is immediately due.
Ongoing Comprehensive Financial Planning
Upon completion of the initial financial plan, WatchDog Planning provides ongoing comprehensive financial services for a monthly subscription fee. The fee is $333 per month, or $4,000 per year. Clients with more complex financial situations, such as business owners with retirement plans, executives with stock options and large estates, for example, may be quoted a higher fee.
Ongoing Comprehensive Financial Planning AND Investment Management
WatchDog Planning provides ongoing comprehensive financial services combined with investment management using an asset-based fee schedule. We use a Sub-Advisor, aka TAMP, to manage, monitor and report on your investment accounts. The ongoing comprehensive financial planning fee of $333 per month will apply in addition to the fee schedule below. However, if we are managing $2 million or more of a client’s assets, the subscription fee will be waived and ongoing comprehensive planning will be included along with investment management services.
Investment Advisory Services through the use of Third Party Managers, Outside Managers, or Sub-Advisors (TAMPs)
The standard advisory fee is based on the market value of the account(s) and is calculated as follows:
|Account Value||Annual Advisory Fee|
|All Assets Under Management||0.85%|
The annual fees are negotiable and are pro-rated and paid in advance on a quarterly basis.
Accounts initiated or terminated during a calendar quarter will be charged a pro-rated fee based on the amount of time remaining in the billing period. An account may be terminated with written notice at least 15 calendar days in advance. Upon termination of the account, any unearned fee will be refunded to the client.
The Outside Manager (Sub-Adviser) will debit the client’s account for both the Outside Manager’s fee, and WatchDog Planning’s advisory fee, and will remit WatchDog Planning’s fee to WatchDog Planning. Please note, the above fee schedule does include the Outside Manager’s fee. No increase in the annual fee shall be effective without agreement from the client by signing a new agreement or amendment to their current advisory agreement.
Termination of Services
The financial planning services terminate upon either party providing thirty (30) days written notice of termination to the other party.
You may terminate the financial planning services within five (5) business days of entering into an agreement with WatchDog Planning without penalty or fees due. If you terminate the financial planning services after five (5) business days of entering into an agreement, you will be responsible for immediate payment of any financial planning services performed by WatchDog Planning prior to the receipt by WatchDog Planning of your notice. For financial planning services performed by WatchDog Planning under a fixed fee arrangement, you will pay an early termination fee for the hours worked by WatchDog Planning multiplied by the hourly rate of $275. In the event there is a remaining balance of any fees paid in advance after the deduction of fees from the final invoice, those remaining proceeds will be refunded by WatchDog Planning to you.
If you are not satisfied with the financial plan prepared by WatchDog Planning, we may reduce or waive our fee; however, in such a situation, WatchDog Planning retains intellectual property rights over any written financial plan prepared by WatchDog Planning, and the written financial plan must be returned to WatchDog Planning.
Other Fee Terms for Financial Planning Services
You may pay the investment advisory fees owed for the financial planning services by submitting payment directly to WatchDog Planning by electronic funds transfer. The Adviser uses an independent third party payment processing system in which the Client is granted access through a secure link to process electronic fund transfer payments.
You should notify WatchDog Planning within ten (10) days of receipt of an invoice if you have questions about or dispute any billing entry.
All fees paid to WatchDog Planning for financial planning services are separate and distinct from the commission charged by a broker-dealer or asset management fees charged by an investment adviser to implement such recommendations.
It should be noted that lower fees for comparable services may be available from other sources.
There are no additional fees charged for using eMoney. Clients utilizing our subscription fee service and investment management service will have access to the financial planning software.
Item 6 – Performance-Based Fees and Side-By-Side Management
Performance-based fees are defined as fees based on a share of capital gains on or capital appreciation of the assets held in a client’s account. Item 6 is not applicable to this Disclosure Brochure because we do not charge or accept performance-based fees.
Item 7 – Types of Clients
WatchDog Planning generally provides investment advice to the following types of clients:
- High net worth individuals
- Corporations or business entities other than those listed above
You are required to execute a written agreement with WatchDog Planning specifying the particular advisory services in order to establish a client arrangement with WatchDog Planning.
Minimum Investment Amounts Required
There are no minimum investment amounts or conditions required for establishing an account managed by WatchDog Planning. However, all clients are required to execute an agreement for services in order to establish a client arrangement with WatchDog Planning and/or the third-party money manager or the sponsor of third-party money manager platforms.
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis
Use of Outside Managers: We may refer Clients to third-party investment advisers (“outside managers”). Our analysis of outside managers involves the examination of the experience, expertise, investment philosophies, and past performance of the outside managers in an attempt to determine if that manager has demonstrated an ability to invest over a period of time and in different economic conditions. We monitor the manager’s underlying holdings, strategies, concentrations, and leverage as part of our overall periodic risk assessment. Additionally, as part of our due diligence process, we survey the manager’s compliance and business enterprise risks. A risk of investing with an outside manager who has been successful in the past is that he or she may not be able to replicate that success in the future. In addition, we do not control the underlying investments in an outside manager’s portfolio. There is also a risk that a manager may deviate from the stated investment mandate or strategy of the portfolio, making it a less suitable investment for our Clients. Moreover, as we do not control the manager’s daily business and compliance operations, we may be unaware of the lack of internal controls necessary to prevent business, regulatory or reputational deficiencies.
WatchDog Planning uses the following investment strategies when providing investment advice:
Long term purchases. Investments held at least a year.
Short term purchases. Investments sold within a year.
We primarily follow a value-investing strategy that attempts to acquire at reasonable valuations publicly traded businesses that can deliver sustainable excess returns. We focus on a long-only strategy. Long term strategies are designed to identify and select investments to be held for multiple years. We will also invest in value oriented special situations with shorter expected holding periods.
Value Investing can be described as a strategy of selecting stocks that trade for less than their intrinsic values. Value investors typically seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company’s long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated. Often, value investors select stocks with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields. The risks associated with value-investing include incorrectly analyzing and overestimating the intrinsic value of a business, concentration risk, under performance relative to major benchmarks, macro-economic risks, investing in value traps i.e. businesses that remain perpetually undervalued, and lost purchasing power on cash holdings in the case of inflation.
Tactical asset allocation. Allows for a range of percentages in each asset class (such as Stocks = 40-50%). The ranges establish minimum and maximum acceptable percentages that permit the investor to take advantage of market conditions within these parameters. Thus, a minor form of market timing is possible, since the investor can move to the higher end of the range when stocks are expected to do better and to the lower end when the economic outlook is bleak.
Strategic asset allocation. Calls for setting target allocations and then periodically rebalancing the portfolio back to those targets as investment returns skew the original asset allocation percentages. The concept is akin to a “buy and hold” strategy, rather than an active trading approach. Of course, the strategic asset allocation targets may change over time as the client’s goals and needs change and as the time horizon for major events such as retirement and college funding grow shorter.
Primarily Recommend One Type of Security
We do not primarily recommend one type of security to clients. Instead, we recommend a product that may be suitable for each client relative to that client’s specific circumstances and needs.
Risk of Loss
Past performance is not indicative of future results. Therefore, you should never assume that future performance of any specific investment or investment strategy will be profitable. Investing in securities (including stocks, mutual funds, and bonds, etc.) involves risk of loss. Further, depending on the different types of investments there may be varying degrees of risk. You should be prepared to bear investment loss including loss of original principal.
Because of the inherent risk of loss associated with investing, our firm is unable to represent, guarantee, or even imply that our services and methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate you from losses due to market corrections or declines. There are certain additional risks associated with investing in securities through our investment management program, as described below:
- Market Risk – Either the stock market as a whole, or the value of an individual company, goes down resulting in a decrease in the value of client investments. This is also referred to as systemic risk.
- Equity (stock) market risk – Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. If you held common stock, or common stock equivalents, of any given issuer, you would generally be exposed to greater risk than if you held preferred stocks and debt obligations of the issuer.
- Company Risk. When investing in stock positions, there is always a certain level of company or industry specific risk that is inherent in each investment. This is also referred to as unsystematic risk and can be reduced through appropriate diversification. There is the risk that the company will perform poorly or have its value reduced based on factors specific to the company or its industry. For example, if a company’s employees go on strike or the company receives unfavorable media attention for its actions, the value of the company may be reduced.
- Fixed Income Risk. When investing in bonds, there is the risk that the issuer will default on the bond and be unable to make payments. Further, individuals who depend on set amounts of periodically paid income face the risk that inflation will erode their spending power. Fixed-income investors receive set, regular payments that face the same inflation risk.
- Options Risk. Options on securities may be subject to greater fluctuations in value than an investment in the underlying securities. Purchasing and writing put and call options are highly specialized activities and entail greater than ordinary investment risks.
- ETF and Mutual Fund Risk – When investing in an ETF or mutual fund, you will bear additional expenses based on your pro rata share of the ETF’s or mutual fund’s operating expenses, including the potential duplication of management fees. The risk of owning an ETF or mutual fund generally reflects the risks of owning the underlying securities the ETF or mutual fund holds. You will also incur brokerage costs when purchasing ETFs.
- Management Risk – Your investment with our firm varies with the success and failure of our investment strategies, research, analysis and determination of portfolio securities. If our investment strategies do not produce the expected returns, the value of the investment will decrease.
Item 9 – Disciplinary Information
Item 9 is not applicable to this Disclosure Brochure because there are no legal or disciplinary events that are material to a client’s or prospective client’s evaluation of our business or integrity.
Item 10 – Other Financial Industry Activities and Affiliations
WatchDog Planning is not and does not have a related person that is a broker/dealer, municipal securities dealer, government securities dealer or broker, an investment company or other pooled investment vehicle (including a mutual fund, closed-end investment company, unit investment trust, private investment company or “hedge fund,” and offshore fund), another investment adviser or financial planner, a futures commission merchant, commodity pool operator, or commodity trading advisor, a banking or thrift institution, an accountant or accounting firm, a lawyer or law firm, an insurance company or agency, a pension consultant, a real estate broker or dealer, and a sponsor or syndicator of limited partnerships.
We are an independent registered investment adviser and only provide investment advisory services. We are not engaged in any other business activities and offer no other services except those described in this Disclosure Brochure. However, while we do not sell products or services other than investment advice, our representatives may sell other products or provide services outside of their role as investment adviser representatives with us.
Recommendations or Selections of Other Investment Advisers
As referenced in Item 4 of this brochure, WatchDog Planning recommends clients to Outside Managers to manage their accounts. In the event that we recommend an Outside Manager, please note that we do not share in their advisory fee. Our fee is separate and in addition to their compensation (as noted in Item 5) and will be described to you prior to engagement. You are not obligated, contractually or otherwise, to use the services of any Outside Manager we recommend. Additionally, WatchDog Planning will only recommend an Outside Manager who is properly licensed or registered as an investment adviser.
Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading
Code of Ethics Summary
An investment adviser is considered a fiduciary and has a fiduciary duty to all clients. WatchDog Planning has established a Code of Ethics to comply with the requirements of the securities laws and regulations that reflects its fiduciary obligations and those of its supervised persons. The Code of Ethics also requires compliance with federal securities laws. WatchDog Planning’s Code of Ethics covers all individuals that are classified as “supervised persons”. All employees, officers, directors and investment adviser representatives are classified as supervised persons. WatchDog Planning requires its supervised persons to consistently act in your best interest in all advisory activities. WatchDog Planning imposes certain requirements on its affiliates and supervised persons to ensure that they meet the firm’s fiduciary responsibilities to you. The standard of conduct required is higher than ordinarily required and encountered in commercial business.
This section is intended to provide a summary description of the Code of Ethics of WatchDog Planning. If you wish to review the Code of Ethics in its entirety, you should send us a written request and upon receipt of your request, we will promptly provide a copy of the Code of Ethics to you.
Affiliate and Employee Personal Securities Transactions Disclosure
WatchDog Planning or associated persons of the firm may not buy or sell for their personal accounts, investment products identical to those recommended to clients. It is the express policy of WatchDog Planning that all persons associated in any manner with our firm must place clients’ interests ahead of their own when implementing personal investments.WatchDog Planning and its associated persons will not buy or sell securities for their personal account(s) where their decision is derived, in whole or in part, by information obtained as a result of employment or association with our firm unless the information is also available to the investing public upon reasonable inquiry.
We are now and will continue to be in compliance with applicable state and federal rules and regulations. To prevent conflicts of interest, we have developed written supervisory procedures that include personal investment and trading policies for our representatives, employees and their immediate family members (collectively, associated persons):
- Associated persons cannot prefer their own interests to that of the client.
- Associated persons cannot purchase or sell any security for their personal accounts prior to implementing transactions for client accounts.
- Associated persons cannot buy or sell securities for their personal accounts when those decisions are based on information obtained as a result of their employment, unless that information is also available to the investing public upon reasonable inquiry.
- Associated persons are prohibited from purchasing or selling securities of companies in which any client is deemed an “insider”.
- Associated persons are discouraged from conducting frequent personal trading.
- Associated persons are generally prohibited from serving as board members of publicly traded companies unless an exception has been granted to the Chief Compliance Officer of WatchDog Planning.
Any associated person not observing our policies is subject to sanctions up to and including termination.
Item 12 – Brokerage Practices
The Custodian and Brokers We Use (TD Ameritrade)
Advisor participates in the TD Ameritrade Institutional program. TD Ameritrade Institutional is a division of TD Ameritrade, Inc. (“TD Ameritrade”), member FINRA/SIPC. TD Ameritrade is an independent [and unaffiliated] SEC-registered broker-dealer. TD Ameritrade offers to independent investment Advisors services which include custody of securities, trade execution, clearance, and settlement of transactions. Advisor receives some benefits from TD Ameritrade through its participation in the program. (Please see the disclosure under Item 14 below.)
The Custodian and Brokers We Use (Betterment)
We currently receive soft dollar benefits by nature of our relationship with MTG, LLC dba Betterment Securities (“Betterment Securities”).
Watchdog Planning does not maintain custody of your assets that we manage, although we may be deemed to have custody of your assets if you give us the authority to withdraw advisory fees from your account (see Item 15—Custody, below). Your assets must be maintained in an account at a “qualified custodian,” generally a broker-dealer or bank. We may recommend that our Clients use MTG, LLC dba Betterment Securities (“Betterment Securities”), a registered broker-dealer, member SIPC, as the qualified custodian. We are independently owned and operated and are not affiliated with Betterment Securities. Betterment Securities will hold your assets in a brokerage account and buy and sell securities when we and/or you instruct them to. While we may recommend that you use Betterment Securities as custodian/broker, you will decide whether to do so and will open your account with Betterment Securities by entering into an account agreement directly with them. We do not open the account for you, although we may assist you in doing so. If you do not wish to place your assets with Betterment Securities, then we cannot manage your account on Betterment For Advisors (defined below).
Your Brokerage and Custody Costs
For our Clients’ accounts that Betterment Securities maintains, Betterment Securities generally does not charge you separately for custody services but is compensated as part of the Betterment For Advisors (defined below) platform fee, which is a percentage of the dollar amount of assets in the account in lieu of commissions. We have determined that having Betterment Securities execute trades is consistent with our duty to seek “best execution” of your trades. Best execution means the most favorable terms for a transaction based on all relevant factors, including those listed above (see “Factors Used to Select Custodians and/or Broker-Dealers”).
Services Available to Us via Betterment For Advisors
Betterment Securities serves as broker-dealer to Betterment For Advisors, an investment and advice platform serving independent investment advisory firms like us (“Betterment For Advisors”). Betterment For Advisors also makes available various support services which may not be available to Betterment’s retail customers. Some of those services help us manage or administer our Clients’ accounts, while others help us manage and grow our business. Betterment For Advisors’ support services are generally available on an unsolicited basis (we don’t have to request them) and at no charge to us. Following is a more detailed description of Betterment For Advisors’ support services:
- SERVICES THAT BENEFIT YOU. Betterment For Advisors includes access to a range of investment products, execution of securities transactions, and custody of Client assets through Betterment Securities. Betterment Securities’ services described in this paragraph generally benefit you and your account.
- SERVICES THAT MAY NOT DIRECTLY BENEFIT YOU. Betterment For Advisors also makes available to us other products and services that benefit us, but may not directly benefit you or your account. These products and services assist us in managing and administering our Clients’ accounts, such as software and technology that may:
- Assist with back-office functions, recordkeeping, and Client reporting of our Clients’ accounts.
- Provide access to Client account data (such as duplicate trade confirmations and account statements).
- Provide pricing and other market data.
- Assist with back-office functions, recordkeeping, and Client reporting.
- SERVICES THAT GENERALLY BENEFIT ONLY US. By using Betterment For Advisors, we will be offered other services intended to help us manage and further develop our business enterprise. These services include:
- Educational conferences and events.
- Consulting on technology, compliance, legal, and business needs.
- Publications and conferences on practice management and business succession.
Our Interest in Betterment Securities’ Services
The availability of these services from Betterment For Advisors benefits us because we do not have to produce or purchase them. In addition, we don’t have to pay for Betterment Securities’ services. These services may be contingent upon us committing a certain amount of business to Betterment Securities in assets in custody. We may have an incentive to recommend that you maintain your account with Betterment Securities, based on our interest in receiving Betterment For Advisors and Betterment Securities’ services that benefit our business rather than based on your interest in receiving the best value in custody services and the most favorable execution of your transactions. This is a potential conflict of interest. We believe, however, that our selection of Betterment Securities as custodian and broker is in the best interests of our Clients. Our selection is primarily supported by the scope, quality, and price of Betterment Securities’ services and not Betterment For Advisors and Betterment Securities’ services that benefit only us.
Item 13 – Review of Accounts
Account Reviews and Reviewers
Client accounts with the Investment Management Service will be reviewed regularly on a quarterly basis by Nancy Nawn, CCO of WatchDog Planning. The account is reviewed with regards to the client’s investment policies and risk tolerance levels. Events that may trigger a special review would be unusual performance, addition or deletions of client imposed restrictions, excessive draw-down, volatility in performance, or buy and sell decisions from the firm or per client’s needs.
Clients will receive trade confirmations from the custodian(s) for each transaction in their accounts as well as monthly or quarterly statements and annual tax reporting statements from their custodian showing all activity in the accounts, such as receipt of dividends and interest.
Our comprehensive financial planning services do not include monitoring the investments of your accounts held away from WatchDog Planning, and therefore, there is no ongoing review of your account(s) under such services.
Statements and Reports
One-time financial planning clients do not receive any report other than the written plan originally contracted for and provided by WatchDog Planning. When you have questions about your account statement, you should contact the qualified custodian preparing the statement.
Ongoing financial planning clients will receive an entire set of updated financial statements and reports at least annually.
Item 14 – Client Referrals and Other Compensation
WatchDog Planning does not directly or indirectly compensate any person for client referrals.
The only compensation received from advisory services is the fees charged for providing investment advisory services as described in Item 5 of this Disclosure Brochure. WatchDog Planning receives no other forms of compensation in connection with providing investment advice. Please see Item 5, Fees and Compensation, Item 10, Other Financial Industry Activities and Affiliations and Item 12, Brokerage Practices, for additional discussion concerning other compensation.
As disclosed under Item 12, above, WatchDog Planning participates in TD Ameritrade’s institutional customer program and WatchDog Planning may recommend TD Ameritrade to Clients for custody and brokerage services. There is no direct link between WatchDog Planning’s participation in the program and the investment advice it gives to its Clients, although WatchDog Planning receives economic benefits through its participation in the program that are typically not available to TD Ameritrade retail investors. These benefits include the following products and services (provided without cost or at a discount): receipt of duplicate Client statements and confirmations; research related products and tools; consulting services; access to a trading desk serving WatchDog Planning participants; access to block trading (which provides the ability to aggregate securities transactions for execution and then allocate the appropriate shares to Client accounts); the ability to have advisory fees deducted directly from Client accounts; access to an electronic communications network for Client order entry and account information; access to mutual funds with no transaction fees and to certain institutional money managers; and discounts on compliance, marketing, research, technology, and practice management products or services provided to WatchDog Planning by third party vendors. TD Ameritrade may also have paid for business consulting and professional services received by WatchDog Planning’s related persons. Some of the products and services made available by TD Ameritrade through the program may benefit WatchDog Planning but may not benefit its Client accounts. These products or services may assist WatchDog Planning in managing and administering Client accounts, including accounts not maintained at TD Ameritrade. Other services made available by TD Ameritrade are intended to help WatchDog Planning manage and further develop its business enterprise. The benefits received by WatchDog Planning or its personnel through participation in the program does not depend on the number of brokerage transactions directed to TD Ameritrade. As part of its fiduciary duties to Clients, WatchDog Planning endeavors at all times to put the interests of its Clients first. Clients should be aware, however, that the receipt of economic benefits by WatchDog Planning or its related persons in and of itself creates a potential conflict of interest and may indirectly influence WatchDog Planning’s choice of TD Ameritrade for custody and brokerage services.
Item 15 – Custody
Custody, as it applies to investment advisors, has been defined by regulators as having access or control over client funds and/or securities. In other words, custody is not limited to physically holding client funds and securities. If an investment adviser has the ability to access or control client funds or securities, the investment adviser is deemed to have custody and must ensure proper procedures are implemented. According to this definition, WatchDog Planning does not have custody of client funds or securities.
For client accounts in which WatchDog Planning directly debits their advisory fee:
- WatchDog Planning will send a copy of its invoice to the custodian at the same time that it sends the client a copy.
- The custodian will send at least quarterly statements to the client showing all disbursements for the account, including the amount of the advisory fee.
- The client will provide written authorization to WatchDog Planning, permitting them to be paid directly for their accounts held by the custodian.
Clients should receive at least quarterly statements from the broker-dealer, bank or other qualified custodian that holds and maintains client’s investment assets. We urge you to carefully review such statements and compare such official custodial records to the account statements or reports that we may provide to you. Our statements or reports may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities.
Item 16 – Investment Discretion
For those client accounts where we provide Investment Advisory Services, we maintain discretion over client accounts with respect to securities to be bought and sold and the amount of securities to be bought and sold. Investment discretion is explained to clients in detail when an advisory relationship has commenced. At the start of the advisory relationship, the client will execute a Limited Power of Attorney, which will grant our firm discretion over the account. Additionally, the discretionary relationship will be outlined in the advisory contract and signed by the client.
Item 17 – Voting Client Securities
WatchDog Planning does not vote proxies on behalf of Clients. We have determined that taking on the responsibilities for voting client securities does not add enough value to the services provided to you to justify the additional compliance and regulatory costs associated with voting client securities. Therefore, it is your responsibility to vote all proxies for securities held in an Account.
You will receive proxies directly from the qualified custodian or transfer agent; we will not provide you with the proxies. You are encouraged to read through the information provided with the proxy-voting documents and make a determination based on the information provided. Although we do not vote client proxies, if you have a question about a particular proxy feel free to contact us. However, you will have the ultimate responsibility for making all proxy-voting decisions.
Item 18 – Financial Information
This Item 18 is not applicable to this brochure. WatchDog Planning does not require or solicit prepayment of more than $500 in fees per client, six months or more in advance. Therefore, we are not required to include a balance sheet for the most recent fiscal year. We are not subject to a financial condition that is reasonably likely to impair our ability to meet contractual commitments to clients. Finally, WatchDog Planning has not been the subject of a bankruptcy petition at any time.
Item 19 – Requirements for State-Registered Advisers
Executive Officer and Management Personnel
Nancy A. Nawn
Rowan University, Bachelor’s degree in Business and Finance: 1996
St. Joseph’s University, Master’s degree in Finance: 2000
WatchDog Planning LLC, Chief Compliance Officer and Investment Adviser Representative, 10/2017 to Present;
WatchDog Planning LLC, Managing Member, 03/2017 to Present;
Unemployed/Disability, 12/2016 to 02/2017;
Mercer Global Advisors, Client Advisor, Regional Operations Manager, 04/2013 to 11/2016;
Unemployed/Disability, 12/2009 to 04/2013;
Mercer Global Advisors, Financial Advisor, 08/2006 to 12/2009.
Other Business Activities
See Item 10 – Other Financial Industry Activities and Affiliations.
No Performance Based Fees
As previously disclosed in Item 6, WatchDog Planning does not charge or accept performance-based fees.
WatchDog Planning or any of its associated persons have not been the subject of any client arbitrations or similar legal disputes.
No Arrangement with Issuer of Securities
WatchDog Planning and its management do not have any relationship or arrangement with any issuer of securities.
Business Continuity Plan
WatchDog Planning has a business continuity and contingency plan in place designed to respond to significant business disruptions. These disruptions can be both internal and external. Internal disruptions will impact our ability to communicate and do business, such as a fire in the office building. External disruptions will prevent the operation of the securities markets or the operations of a number of firms, such as earthquakes, wildfires, hurricanes, terrorist attack or other wide-scale, regional disruptions.
Our continuity and contingency plan has been developed to safeguard employees’ lives and firm property, to allow a method of making financial and operational assessments, to quickly recover and resume business operations, to protect books and records, and to allow clients to continue transacting business.
The plan includes the following:
- Alternate locations to conduct business;
- Hard and electronic back-ups of records;
- Alternative means of communications with employees, clients, critical business constituents and regulators; and
- Details on the firms’ employee succession plan
Our business continuity and contingency plan is reviewed and updated on a regular basis to ensure that the policies in place are sufficient and operational.
Commitment to Your Private Information: WatchDog Planning has a long-standing policy of protecting the confidentiality and security of information we collect about our clients. We do not, and will not, share nonpublic personal information about you (“Information”) with outside third parties without your consent, except for the specific purposes described below. This notice has been provided to you to describe the Information we may gather and the situations under which we may need to share it.
Why We Collect and How We Use Information. We limit the collection and use of Information within our firm to only those individuals associated or employed with us that must have Information to provide financial services to you. Such services include maintaining your accounts, processing transaction requests, providing financial planning, financial consultation, and other services described in our Form ADV.
How We Gather Information. We get most Information directly from you when you provide us with information from any of the following sources:
- Applications or forms (for example: name, address, social security number, birth date, assets, income, financial history)
- Transactional activity in your account (for example: trading history and account balances)
- Information services and consumer reporting sources (for example: to verify your identity or to assess your credit history)
- Other sources with your consent (for example: your insurance professional, attorney, or accountant)
Sharing Information with Other Companies Permitted Under Law. We do not disclose Information obtained in the course of our practice except as required or permitted under law. Permitted disclosures include, for instance, providing information to unrelated third parties who need to know such Information in order to assist us with providing services to you. Unrelated third parties may include broker/dealers, mutual fund companies, insurance companies, and the custodian with which your assets are held. In such situations, we stress the confidential nature of information being shared.