DWM

DUNPHY WEALTH MANAGEMENT

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DWM INVESTMENT STRATEGY

Diversification

To reduce risk, we diversify your investments across a

wide range of companies, industries and mutual fund families.

Mutual funds provide instant diversification by combining the assets of many investors to purchase a broad portfolio of securities.  This leads to cost savings due to economies of scale, gains access to professional management and ensures liquidity (ready conversion of funds to cash).

Asset Allocation

To reduce market-level risk and improve performance, we allocate your investments among stocks (equities), bonds (fixed income), cash (money market) and real estate (REITS).  We further allocate based on growth vs. value management styles to generate additional returns due to market cycles and to create negative correlation (when one style is in favor, the other is typically not performing as well).  Further, we use international funds to take advantage of currency exchange rate fluctuations and gain access to a larger universe of global investment opportunities.

We also allocate among capitalization sizes: large, mid, small and micro cap.  This refers to the average size of the companies in which each fund specializes.  Since small caps outperform over the long-term, we generally over-weight portfolios towards the mid, small and micro-cap funds.

 Finally, we re-allocate (re-balance or re-align) your investments periodically to maximize your investment returns during up and down periods of market cycles.  This process has significantly improved investment returns for our clients.

 Time Horizon

We work with the understanding that market cycles (expansion/contraction) average approximately four years and that  most investors will eventually withdraw their funds over a long period of time.

We assist our clients in clarifying the difference between investments and savings so that they are able to withstand short-term ups and downs in order to earn superior long-term returns.

 Risk Tolerance

Risk tolerance refers to an investor’s ability to withstand principal volatility (ups and downs).  Before investing, we meet with you to determine your personal risk tolerance and create an Investment Policy Agreement.  This agreement guides our overall management decisions and assists us in meeting your performance expectations.

 Fund Selection

Asset size, management tenure, three and five-year performance, expense ratio, tax efficiency (if applicable), no loads (no commissions) and no transaction fees are all factors and qualities that we consider prior to selecting funds for your portfolio.

We use a computerized filter (screening) process to quickly identify an exclusive universe of superior funds.  Fund selections are then constantly monitored to ensure that they remain the best available.

Custodian: Charles Schwab & Co., Inc. (Schwab)

With over $700 billion in assets, Schwab is a national discount brokerage company that provides asset custody services and access to a FDIC bank – Schwab Bank.  Schwab also maintains a mutual fund marketplace of no-load, no-transaction-fee mutual funds known as One-Source funds.

Research Service: Morningstar Principia Software

Morningstar is an unbiased, independent research company with a vast database of mutual funds, stocks and annuities.  Their 5-star rating system is widely used and respected among independent financial advisors and they are recognized world-wide as a top quality source of objective investment information.  

Credentials, Associations and Professional Organizations

In addition to the American Institute of Certified Public Accountants and the Certified Financial Board of Standards, Inc., we are proud members of The Anderson Area Chamber of Commerce www.AndersonAreaChamber.org and The Greater Anderson Network Professionals www.ganp.net

FORM ADV PART 2  (In accordance with the Ohio Division of Securities requirements)

Advisory Services and Fees

Dunphy Wealth Management, Inc. (DWM) primarily provides fee-only investment management with fees based on a percentage of assets under management.  DWM also furnishes investment, personal financial planning and tax advice through consultations for an hourly fee or an agreed-upon fixed fee.  Standard hourly rates range from $75 to $150.

DWM works with clients to identify risk tolerance levels based on time horizons and ability to tolerate volatility.  We then craft suitable diversified investment portfolios using no-load, no-transaction-fee mutual funds.  In situations of high-net worth and for tax efficiency, DWM may create a portfolio using separately managed accounts (SMAs).  The portfolios are monitored and periodically re-balanced in an effort to improve long-term performance.

Investment management fees are based on a percentage of assets under management per the following table and may be discounted at our discretion.  Fees are charged quarterly, pro-rated in advance, and are negotiable.  These fees are separate and distinct from the fees charged by mutual funds directly to their shareholders by way of fund transaction expenses ratios.

For accounts in excess of $250,000 the fee is blended, i.e. as the portfolio value reaches various breakpoints, the assets above each breakpoint will be charged successively lower percentages.  DWM may also provide, at its discretion, discounted financial planning, tax or other services as portfolios reach certain breakpoints.

Compensation is not payable before services are provided.  The Investment Advisory Contract (Investment Management Agreement) may be terminated at any time by written notice.

Types of Clients

Clients include individuals, businesses, trusts, and not-for-profit organizations.

Types of Investments

DWM typically constructs diversified portfolios that may include cash, certificates of deposit, bonds and no-load, no-transaction-fee mutual funds.  Mutual funds may include cash, bonds, real estate investment trusts (REITS) or equities. In certain situations, DWM may create a portfolio using separately managed accounts (SMAs).

Methods of Analysis, Sources of Information and Investment Strategies

Primary sources of information and research include media (televised business information, internet sites, newspapers and periodicals), investment newsletters, industry research papers, annual reports, prospectuses and filings with the Securities and Exchange Commission, Morningstar Principia software/research and Charles Schwab & Co.

The investment strategies used to implement investment advice include both long and short-term purchases based on client time horizons and risk tolerance.  Mutual funds are selected using a proprietary filtering process and industry software.  Filtering criteria include investment performance, manager tenure, tax efficiency (when applicable), fund asset size and expense ratio comparisons.

Education and Business Standards

A high level of education and business experience is required for portfolio managers in determining or giving investment advice to clients.  Portfolio Managers must have an undergraduate or graduate degree in business and certification as a Chartered Financial Analyst (CFA) or Certified Financial Planner professional (CFP).  They must also have a minimum of ten (10) years comprehensive business and financial consulting experience.

Code of Ethics

DWM adheres to the comprehensive Certified Financial Planner Board of Standards, Inc. Code of Ethics and Professional Responsibility, in addition to specific standards that apply to state-registered advisers.  A copy will be provided to any client or prospective client upon request.  

Education and Business Background

See Schedule D section regarding James M. Dunphy.

Other Business Activities

DWM is actively engaged in businesses other than giving investment and financial planning advice.  These include small-business consulting services (10percent) and tax planning and preparation (20 percent).

Other Financial Industry Activities or Affiliations 

DWM has an agreement with Charles Schwab & Company to allow Schwab to provide trading, custody and administrative support services to DWM.  Schwab is compensated by the mutual funds and by a quarterly flat service fee paid by DWM.   

Schwab Institutional:  DWM may require that clients establish brokerage accounts with the Schwab Institutional division of Charles Schwab & Co., Inc. (Schwab), a registered broker-dealer, Member SIPC, to maintain custody of clients assets and to effect trades for their accounts.  Schwab Institutional is not affiliated with DWM and provides DWM with access to its institutional trading and operations services, which are typically not available to Schwab retail investors.  These services generally are available to independent investment advisors at no charge to them so long as a total of at least $10 million of the advisors clients assets are maintained in accounts at Schwab Institutional.  Schwab Institutional services include research, brokerage, custody, and access to mutual funds and other investments that are otherwise generally available only to institutional investors or would require a significantly higher minimum initial investment.  Schwab Institutional also makes available to DWM other products and services that benefit DWM but may not benefit its clients’ accounts.  Some of these other products and services assist DWM in managing and administering clients accounts.  These include software and other technology that provide access to client account data (such as trade confirmations and account statements), facilitate trade execution (and allocation of aggregated trade orders for multiple client accounts), provide research, pricing information and other market data, facilitate payment of DWMs fees from its clients accounts, and assist with back-office support, record-keeping and client reporting.  Many of these services generally may be used to service all or a substantial number of DWMs accounts, including accounts not maintained at Schwab Institutional.  Schwab Institutional may also provide DWM with other services intended to help DWM manage and further develop its business enterprise.  These services may include consulting, publications, conferences and presentations on practice management, information technology, business succession, regulatory compliance, and marketing.  In addition, Schwab may make available, arrange and or pay for these types of services to DWM by independent third parties.  Schwab Institutional may discount or waive fees it would otherwise charge for some of these services or pay all or a part of the fees of a third-party providing these services to DWM.  Except for the $10 million client asset custody requirement described above, the availability to Advisor of the foregoing products and services is not contingent upon Advisor committing to Schwab Institutional any specific amount of business assets in custody or trading.

Neither DWM nor any person related to the firm is a general partner in any partnership in which clients would be solicited to invest.

Participation or Interest in Client Transactions

DWM recommends to clients that they buy or sell mutual funds in which DWM or a related person may have a financial interest.  At DWM we eat our own cooking and typically invest our own money in the same mutual funds that we recommend to our clients.

No restrictions, internal procedures or disclosures are deemed necessary due to the very small (immaterial) size of these investments compared to the multi-million or multi-billion dollar asset size of the mutual funds involved.  Related parties of DWM receive no financial benefit from clients buying or selling the recommended mutual funds.

Conditions for Managing Accounts

DWM generally requires a minimum account size of $100,000 or a relationship account in order to provide active account management.  This account size may be waived at our discretion.  Relationship accounts encompass providing accounting, tax or other consulting services in addition to investment management.  Hourly consulting services are sometimes provided to clients with account sizes of less than $100,000.

Review of Accounts

Client accounts are reviewed monthly on a basic level, quarterly on an intermediate level and annually on an advanced level.  The president of DWM, James M. Dunphy, CFP, CPA, currently reviews all client accounts. Account transactions are reviewed on a daily basis.

Clients receive detailed monthly account statements from Charles Schwab & Co.  A more comprehensive performance report is prepared and delivered periodically to select clients by DWM. 

Investment or Brokerage Discretion

DWM generally has discretion, unless otherwise agreed, to determine, without obtaining specific client consent, the securities (mutual funds) and amount of securities to be bought or sold.  The asset allocation, broker or dealer to be used, and commission rates paid (none) are determined by agreement prior to investing client assets.  DWM does not suggest brokers to clients.

 Securities are generally limited by advisory agreement to no-load, no-transaction-fee mutual funds, money-market and other cash accounts.  Diversification is required, by agreement, among investment objectives, management styles and median market capitalization.  Bond funds are diversified by maturity and credit-quality groups.  In certain situations, DWM may utilize separately managed accounts (SMAs).

 Additional Compensation

DWM or a related person does not have any arrangements, oral or in writing, where it is paid cash by or receives economic benefit (including commissions, equipment or non-research services) from a non-client in connection with giving advice to clients.  DWM may enter into an arrangement with an accounting firm whereby the accounting firm will receive a percentage of the management fees charged to our clients.  Any such arrangement will be fully disclosed in the Client Investment Management Agreement.  Other than these limited and fully disclosed arrangements, DWM or a related person does not have any other arrangements, oral or in writing, where it directly or indirectly compensates any person for client referrals.

Balance Sheet

A balance sheet is not required since DWM does not have custody of client assets and does not require prepayment of more than $500 in fees per client six or more months in advance.

Control Person for Corporation

The corporation is wholly owned by James M. Dunphy, CFP, CPA.  Mr. Dunphy is President of the corporation, which began operations in January, 1997.

Form ADV, Schedule D

This information is submitted for an individual who 1) is an owner of at least 10% of a class of DWMs equity securities, 2) is an officer, director, partner or individual with similar status of DWM, 3) since DWM has no investment committee, is an individual who determines general client advice and 4) is an individual giving investment advice on behalf of DWM in Ohio.

            Investment advisor:            Dunphy Wealth Management, Inc.

            IRS EIN:                            31-1485918

            Full name of individual:       James Michael Dunphy

            Residence of individual:      7842 Stoneleigh Lane Cincinnati, OH 45255

            Date of birth:                    12/14/1955 Cincinnati, Ohio, USA

James M. Dunphy Resume:

Education:                              St. Xavier High School Cincinnati, OH, 1974

            College preparatory

                                                    College of the Holy Cross Worcester, MA, 1978

                                                    B.A. Dual concentration: accounting & economics

                                                    Xavier University Cincinnati, OH, 1981

                                                    MBA, accounting and tax concentration

                                                       College for Financial Planning, CO, 1992

      CFP, Comprehensive Personal Financial Planning coursework:                        Investments, Insurance, Tax, Estate, and Retirement Planning.

       Business background:                Dunphy Wealth Management, Inc. Cincinnati, Ohio

                                                    (Dunphy Financial Services, Inc. through 2004)

                                                     Investment management, personal financial planning and taxes

                                                     President

                                                     January, 1997 to present

                                                     James M. Dunphy, CFP, CPA, MBA

                                                     dba Dunphy Financial Services Cincinnati, Ohio

                                                     Accounting, investment management and taxes

                                                     Part-time sole proprietor

                                                     July, 1990 to December, 1996

                                                     Episcopal Retirement Homes, Inc. Cincinnati, Ohio

                                                     Not-for-profit long-term care organization

             Controller, cash management, fund development

             July, 1990 to July, 1996

                                                                        Donald J. Burkhardt & Co., CPA Cincinnati, Ohio

            CPA firm specializing in long-term care

            CPA, accounting manager, taxes & consulting

            November, 1988 to June, 1990

            Examinations/professional   Certified Public Accountant (CPA)

            designations:                     Accountancy Board of Ohio 8/09/85

                                                    Certified Financial Planner professional (CFP)

                                                    IBCFP, 9/14/92

CFP, CERTIFIED FINANCIAL PLANNER and  are certification marks owned by Certified Financial Planner Board of Standards, Inc.  These marks are awarded to individuals who successfully complete CFP Boards initial and ongoing certification requirements.

Revised 01/09//07

Sendmail to sandy@dunphywm.com
Last modified: 10/26/07