Financial Planning

FINANCIAL PLANNING PROCESS

A General Overview

The firm of MICHAEL PHILLIPS BLACK subscribes to a six-step comprehensive process, which sets the standard in financial planning methodology and defines the actions that are necessary to fully satisfy the needs of any client. This process includes:

1. Collection and assessment of all relevant data,

2. Identification of financial goals and objectives,

3. Identification of financial problems,

4. Production of a written financial plan,

5. Coordination and implementation of recommendations, and

6. Periodic review and update of plans.

The purpose of establishing a personal financial plan is simply to protect what assets and/or earnings ability you have and to accumulate and/or distribute what you need. Everyone, from the self-employed business owner and the career employee, to the retiree has the same basic need of a financial plan. However, each person has his or her own specific complexities due to unique personal circumstances.

The protection aspect of a financial plan is termed the DEFENSE. The defense is broken into two areas: risk management and cash flow planning. Risk management is a fancy term for insurance and can be split into two areas: asset protection and income replacement. An example of asset protection is liability coverage on your auto. In the event of an auto accident, the insurance company pays any claims, thereby leaving your savings and investments untouched. An example of income replacement is disability insurance. With adequate disability insurance coverage, your standard of living can be maintained and your assets protected from premature liquidation in the case of an accident or injury that prevents you from earning a living.

The next step in defensive planning is cash flow planning. Cash flow planning compares in-flow to out-flow. In-flow is incoming cash and out-flow is a combination of standard of living (fixed expenses), style of living (discretionary expenses) and taxes. If your in-flow exceeds your out-flow, you can build savings and invest to accomplish future financial goals. If your out-flow exceeds your in-flow, you will be forced to enter into debt or consume more assets than you may want. Managing and reducing debt is part of defensive planning.

Once the defensive planning is established, OFFENSIVE planning can be addressed. Offensive planning simply involves measuring your future needs. For example, offensive planning focuses on questions such as: How much money will you need for a particular goal? When will you need it? Will your existing assets provide for your current and future income needs? Because of inflation your future needs must be financially calculated. We then work backwards to determine how much must be saved today and/or how much investment risk should be exercised to meet those future goals.

Now, through comprehensive financial planning we can compare how much you need to save (offensive planning) to how much you can save (defensive cash flow planning). Or, if you are in retirement, we can compare your current assets and income capabilities to your current and anticipated life style. You may have to adjust your spending to meet that need. At that point, we will discuss the type of investment vehicles that will fit within your plan. To develop your proper investment portfolio, we must consider taxation, liquidity, time and risk.

In summary, by establishing a sound defense, you can assure your needs are met, regardless of what may happen to you, and by creating a responsible offense you should be able to meet your future financial goals.

In an increasingly complex economic and tax environment, it becomes more and more difficult to ensure a comprehensive and coordinated approach to both personal and business financial planning. By adopting an independent financial approach and implementing an integrated, balanced financial plan, the firm of MICHAEL PHILLIPS BLACK is able to offer both individuals and businesses a comprehensive and coordinated range of financial services.

FINANCIAL PLANNING SERVICES

PERSONAL

MICHAEL PHILLIPS BLACK's Comprehensive PERSONAL Financial Planning includes:

1. CASH FLOW PLANNING - Structuring the individual's income and expenses to maximize investment accumulation;

2. CONTINGENCY PLANNING - Reviewing coverage of automobile, homeowner's, life, health, disability and liability insurance for adequacy and economy; includes reviewing employer group benefit programs;

3. TAX PLANNING - Taking advantage of various tax planning strategies to help reduce taxable income;

4. INVESTMENT PLANNING - Developing an investment portfolio based on MODERN PORTFOLIO THEORY and then constantly reviewing, monitoring and updating that portfolio. This may include implementation of an investment portfolio as a Registered Representative, or Stockbroker, on a commission basis or as an associated member of a Registered Investment Advisor where the charge is a fee based on assets under management;

5. RETIREMENT PLANNING - Analyzing retirement needs and reviewing income sources at retirement; analyzing and developing company pension and retirement plans; building a capital base for retirement income;

6. ESTATE PLANNING - Positioning the individual's estate to minimize estate taxes; and ensuring a smooth transition from one generation to another through the use of wills, trusts and charitable gifts.

BUSINESS

MICHAEL PHILLIPS BLACK'S Comprehensive BUSINESS Planning includes:

1. PENSION, PROFIT SHARING AND EMPLOYEE STOCK OWNERSHIP PLANS - Analyze existing plans; design and administer new programs;

2. NON-QUALIFIED PENSION PLANS - Design and development of non-qualified pension plans for key executives and business owners;

3. EMPLOYEE GROUP BENEFIT PLANS - Design and implementation of medical, disability and life insurance plans; analyze cost/benefit of existing group benefits; develop Section 125, Cafeteria Plans; communicate benefits to employees;

4. EMPLOYEE FINANCIAL EDUCATION PROGRAMS - Provide comprehensive financial education designed to benefit both employees, by increasing financial decision-making skills, and employers, by reducing costs related to employees personal financial problems;

5. EXECUTIVE FRINGE BENEFITS - Design plans, including supplemental compensation programs and deferred compensation plans;

6. EMPLOYEE FRINGE BENEFITS - Provide complete employee communication programs on employee fringe benefits; handle all installation requirements with the IRS;

7. EMPLOYEE INCENTIVE PROGRAMS - Design programs geared to reward and motivate employees;

8. CONTINUITY PLANNING - Design continuity plans to ensure that the closely held corporation is passed on to the desired next generation of ownership and management;

9. ESTATE ANALYSIS - Plan company-sponsored estate planning programs, including coordination of wills, trust work, asset management, and financial planning;

10. TAX PLANNING AND ASSET ACCUMULATION - Provide coordination of tax planning and asset accumulation with company-sponsored and individually designed plans for executive and middle management personnel;

11. BUSINESS PLANNING AND PROJECTIONS - Provide coordination of short and long range projections on earnings and tax planning; serve as a consultant on corporate growth and the management of that growth; and

12. ACQUISITIONS OR BEING ACQUIRED - Provide counseling to enable a business to be acquired or make acquisitions.

The integration of both the personal and business financial planning is what creates the achievement of financial security and independence.

FINANCIAL PLANNING FEE STRUCTURE

FEE OFFSET

Michael Phillips Black is a FEE OFFSET Financial Planning Firm. This means that the firm charges a fee to develop a comprehensive financial plan to meet your overall planning goals. This fee, generally quoted in advance, ensures you that your financial plan is designed around your needs, not around the commission income needs of your financial planner.

Once you feel that the plan meets your stated needs, the implementation process begins. If you use MPB to implement the plan, and commissions or fees are generated from the implementation, all commissions and/or fees will offset the planning fee. If the plan dictates that financial product implementation is not required, or you choose to implement the plan on your own, then the fee is MPB's compensation for the plan development.

With this fee structure, you can be assured that your plan is designed with your best interest in mind.

Generally, a retainer deposit of $500, paid in advance, is required once you have chosen to hire the firm. MPB's planning fee accrues at the rate of $200 per hour. The balance of the fee is paid upon completion of the plan. Michael P. Black, CFP®, CDFA uses an individually customized ProEquities FINANCIAL ADVISORY AGREEMENT that estimates our fee relationship before the planning begins.

If you choose to hire MPB to design a plan to meet a particular financial goal (i.e. estate plan or pension distribution, etc.), we will quote a fee for that service alone and the ADVISORY AGREEMENT will identify the fee for that service. If your specific need involves a financial product and no planning is involved, then the commissions or fees generated from the implementation of that financial product or service would compensate MPB.

*There is no charge for the initial planning meeting to discuss your needs and the scope of our potential relationship.

FEE BASED

The financial planning firm of MICHAEL PHILLIPS BLACK WEALTH MAMAGEMENT offers a fee based approach to investment management, in addition to the traditional commission based process. With the fee-based approach, investors have access to a variety of stocks, bonds, ETFs (Exchange Traded Funds) and mutual funds on a NO LOAD basis. This means that there are no commissions on the purchase or exchange of investments held within the account (See Fee section below). We offer several investment management solutions. First, our clients can elect to use MPBWM to actively manage your funds. We utilize a tactical approach to Modern Portfolio Theory, discussed in “A Brief Guide to Modern Portfolio Theory”. We also utilize outside managers for specific markets and asset classes depending on the risks posture and objective of each client.

Our “outside” managers are part of a program titled, Private Access (PA). PA is sponsored through our Broker/Dealer, Requites, which is a Registered Investment Advisor and a Registered Broker/Dealer with the Securities and Exchange Commission, and is a member of the FINRA and SIPC. PA carefully selects managers that manage funds on our platform, meaning, the funds stay with our firm and the manager comes to us to co-manage your funds through our firm. This is opposed to the use of outside managers with most firms where the advisor sends your funds to an outside manager and the adviser receives quarterly reports just like you do. The adviser and you learn AFTER THE FACT how your funds have performed and what the manager actually did. With PA, our firm is in control of your funds, directs the manager, monitors the manager and there is no way the manager can do anything with your funds but make security selections. Our firm controls your money, not the manager.

All your investment activity is consolidated in a comprehensive, easy to read monthly brokerage statement. In addition, investors will receive a QUARTERLY PORTFOLIO EVALUATION REPORT. Historical performance data is provided by asset class and for the overall portfolio. Your investment performance will be compared to the relevant index for each asset class, informing you on how your portfolio is performing relative to the market, allowing you to determine if your investments are meeting your financial planning goals.

The cost basis is reported for each position held in the portfolio, and realized and unrealized gain/loss information is provided for the statement period and year-to-date. This information will provide your tax preparer the information you will need at year-end! This reporting process will allow your advisor to meet with you prior to year-end to assist you in your tax planning for the year. If you need investment losses or gains for the taxable year, you will now be able to recognize gains or losses in your account for tax purposes, if appropriate.

Blended Fee Schedule – the percentage shown for each range of Managed Asset value will apply only to assets in that range. For example: If Managed Assets in the Account are $500,000, charging 2.00% on assets of $25,000.00 -- $249,999.99 and 1.75% on assets of $250,000.00 -- $499,999.99 will result in an Investment Advisory Fee (payable as described below) of 2.00% of $249,999.99 plus 1.75% of $250,000.01.

Fees are paid QUARTERLY IN ADVANCE (prorated if assets initially contributed or Agreement terminated during the period).

The annual COST to manage your portfolio is based on assets under management. The following annual fees are deducted from your account on a quarterly basis, paid in advance, prorated if assets initially contributed or Agreement terminated during the period. For example, assuming your account is valued at $100,000, the annual fee would be $1,500. Therefore, $375 ($1,500 divided by 4) would be deducted from your account each quarter, assuming no portfolio growth.

FEE SCHDULE FOR FUNDS MANAGED BY

MICHAEL PHILLIPS BLACK WEALTH MANAGEMENT (Including the costs of outside managers through the Private Access Platform)

Equity Manager (Stocks OR Stocks and Bonds)

Breakpoints	MPBWM Fee	Equity Manager Fee
$25,000 to $249,999	1.00%	1.00%
$249,000 to $499,999	.95%	.95%
$500,000 to $999,999	.90%	.90%
$1,000,000 to $2,499,999	.85%	.85%
$2,500,000 and over	.80%	.80%

Fixed Income Manger (Bonds)

Breakpoints	MPBWM Fee	Fixed Manager Fee
$25,000 to $499,999	.30%	.650%
$500,000 to $999,999	.255%	.625%
$1,000,000 to $2,999,999	.205%	.575%
$3,000,000 to $4,999,999	.155%	.525%
$5,000,000 and over	.10%	.450%

Individual circumstances may affect the above fees. For instance, if you are converting an existing commission based portfolio to the fee-based portfolio, a credit for commissions paid during the last 3 years will be applied against the above fee schedule.

Fees:

The above fees are “Wrap” fees, meaning MPBWM covers all transaction costs, such as ticket- charges for trades placed in your account. The management fee is all inclusive.

For more information, please contact us at:

MICHAEL PHILLIPS BLACKWEALTH MANAGEMENT

7520 East Second Street, Suite 7

Scottsdale, Arizona 85251

(480) 425-0154, FAX (480) 874-1558

E-mail: MPBWM@MPBlack.COM

MICHAEL PHILLIPS BLACK WEALTH MANAGEMENT

Financial Planning

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