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EDELMAN FINANCIAL SERVICES LLC
Edelman Financial Services LLC
Investment Advisory Services
This brochure provides information about the qualifications and business practices of Edelman
Financial Services LLC. If you have any questions about the contents of this brochure, please
contact us at 888-PLAN-RIC (888-752-6742) or you may email us at info@RicEdelman.com or
write us at the address below. The information in this brochure has not been approved or
verified by the United States Securities and Exchange Commission (“SEC”) or any state securities
authority, nor does registration with the SEC imply a certain level of skill or training.
Additional information about Edelman Financial Services LLC is also available on the SEC’s
website at www.adviserinfo.sec.gov.
4000 Legato Road, 9th Floor
Fairfax, VA 22033
EdelmanFinancial.com
RicEdelman.com
888-PLAN-RIC (888-752-6742)
866-742-7222 (fax)
info@RicEdelman.com
Form ADV Part 2A 1 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 2: Material Changes
This brochure follows the SEC’s new rules published in “Amendments for Form ADV” on July 28,
2010. It follows a new structure and contains much of the information that the old brochure did
and some that it didn’t. This information is accurate as of June 20, 2012.
We’re required to tell you about any material changes in this updated brochure. Future
brochures will contain similar summaries. The following are the material changes made to this
brochure:
1. Joe Bottazzi, a former Hewlett- Packard senior executive, joined the Edelman Financial
Services Executive Team as Chief Communications Officer.
2. Edelman Financial Services offers discretionary advice to ERISA Plan sponsors.
3. Fredric (Ric) M. Edelman has become Chief Executive Officer of The Edelman Financial
Group, Inc. (“TEFG”). He was previously Co-CEO with George Ball. Mr. Ball will continue
to serve in his position as Chairman of TEFG.
We used to have to offer you information about our qualifications and business practices
annually. Under new SEC rules, we’ll give you a new brochure within 120 days of the end of our
fiscal year. You may also receive updates at other times if information changes. You may request
a new brochure at any time and at no charge.
You can request a free brochure by calling us at 888-PLAN-RIC. You can also find out more about
us and receive our current brochure from the SEC’s website: www.adviserinfo.sec.gov. The site
can also give you information about people who are registered, or about to be registered, as
Investment Adviser Representatives of our firm.
Form ADV Part 2A 2 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 3: Table of Contents
Edelman Financial Services LLC Investment Advisory Services....................................................... 1
Item 2: Material Changes ................................................................................................................. 2
Item 3: Table of Contents ................................................................................................................ 3
Item 4: Advisory Business ................................................................................................................ 6
Background of Edelman Financial Services LLC ........................................................................... 6
Principal Executive Officers.......................................................................................................... 6
Advisory Services Offered ............................................................................................................ 8
Wrap Fee Asset Allocation Program ............................................................................................ 8
Asset Allocation Program for ERISA Plans ................................................................................... 9
Financial Planning ...................................................................................................................... 11
The Financial Education Group .................................................................................................. 12
Institutional Advisory Services ................................................................................................... 12
Assets Under Management ....................................................................................................... 13
Item 5: Fees and Compensation .................................................................................................... 13
Institutional ................................................................................................................................ 15
Edelman Retirement Program ................................................................................................... 16
Other Fees Earned by EFS .......................................................................................................... 17
Financial Plans ........................................................................................................................ 17
Annual Financial Planning Fee ............................................................................................... 17
Seminars................................................................................................................................. 17
Speaking Engagements .......................................................................................................... 17
Educational Products ............................................................................................................. 18
Edelman Gear......................................................................................................................... 18
RIC-E Trust® ............................................................................................................................ 18
Item 6: Performance-Based Fees and Side-by-Side Management ................................................ 18
Form ADV Part 2A 3 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 7: Types of Clients.................................................................................................................. 19
Minimum Account Size .............................................................................................................. 19
EMAP ...................................................................................................................................... 19
ERP ......................................................................................................................................... 19
Item 8: Methods of Analysis, Investment Strategies and Risk of Loss........................................... 19
Investment Strategy................................................................................................................... 19
Methods of Analysis and Investment Selection......................................................................... 20
Risk of Loss ................................................................................................................................. 21
Item 9: Disciplinary Information .................................................................................................... 22
Administrative Proceeding......................................................................................................... 22
Item 10: Other Financial Industry Activities and Affiliations ......................................................... 23
Related Persons ......................................................................................................................... 23
Broker-Dealer ......................................................................................................................... 23
Investment Advisors .............................................................................................................. 23
Insurance Agency ................................................................................................................... 24
Other ...................................................................................................................................... 24
Item 11: Code of Ethics, Participation of Interest in Client Transactions and Personal Trading ... 25
Code of Ethics ............................................................................................................................ 25
Related Person May Invest in the Same Securities.................................................................... 26
Agency Cross Procedures ........................................................................................................... 26
Item 12: Brokerage Practices ......................................................................................................... 26
Brokerage Selection ................................................................................................................... 26
ERP ............................................................................................................................................. 27
Soft Dollars ................................................................................................................................. 27
Brokerage for Client Referrals ................................................................................................... 28
Trade Aggregation Policy ........................................................................................................... 29
Item 13: Review of Accounts ......................................................................................................... 29
Item 14: Client Referrals and Other Compensation ...................................................................... 30
Form ADV Part 2A 4 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Other Advisers Offering EMAP................................................................................................... 30
Client Referrals........................................................................................................................... 30
Selection of Other Advisors — Edelman Financial Network™ (“EFN”) ...................................... 31
TD Ameritrade Institutional Program ........................................................................................ 31
TD Ameritrade Operations Panel ............................................................................................... 32
Compensation for Other Products and Services ........................................................................ 33
Indirect Compensation Regarding Television Broadcasts.......................................................... 33
Item 15: Custody ............................................................................................................................ 34
Item 16: Investment Discretion ..................................................................................................... 35
EMAP.......................................................................................................................................... 35
Risks ....................................................................................................................................... 35
Trading Authorization ............................................................................................................ 35
Reallocations .......................................................................................................................... 36
Rebalancing ............................................................................................................................ 36
Liquidations ............................................................................................................................ 36
Contributions ......................................................................................................................... 37
ERP ............................................................................................................................................. 37
Reallocations .......................................................................................................................... 37
Rebalancing ............................................................................................................................ 37
Item 17: Proxy Voting Client Securities.......................................................................................... 38
Item 18: Financial Information ...................................................................................................... 38
Form ADV Part 2A 5 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 4: Advisory Business
Background of Edelman Financial Services LLC
Edelman Financial Services LLC (“EFS” or “We”) is an investment advisory firm registered with
the United States Securities and Exchange Commission under the Investment Advisers Act of
1940. We are primarily owned by The Edelman Financial Group (Ticker Symbol “EF” referred to
as “TEFG”), a publicly traded financial services firm with principal offices in Houston, Texas and
Fairfax, Virginia. EFS shares executive officers with TEFG and its subsidiaries. Ric Edelman is
Chairman, CEO and a minority owner of EFS. He also serves as President, CEO and Director of
TEFG. George Ball is a Director of EFS and serves as Chairman of TEFG. He also serves as
Chairman and CEO of Sanders Morris Harris Inc. (“SMH”), a wholly owned broker-dealer and
registered investment adviser subsidiary of TEFG.
EFS provides investment advisory services and financial education to consumers, institutions
and other entities throughout the country. Our firm was founded nearly 25 years ago by Ric and
Jean Edelman. Today we are headquartered in Northern Virginia and have branch offices located
throughout the country.
Principal Executive Officers
Fredric (Ric) M. Edelman (Born: 1958). Chairman, Chief Executive Officer and minority owner of
Edelman Financial Center, LLC (which is the single member owner of Edelman Financial Services
LLC). President, Chief Executive Officer (CEO) and Director of The Edelman Financial Group.
Previously, he was sole owner and Chairman of EFS from its founding in 1987 to 2005. For eight
years in a row, Barron’s has named Ric Edelman one of the nation’s top-ranked financial
advisors and twice named him the #1 Independent Financial Advisor in the country (2009-2010)
based on assets under management, revenues the advisors generate for their firm and the
quality of their practices. For three years in a row (2010-2012), Barron’s ranked Ric as the #1
advisor in Virginia in their list of top 1,000 advisors by state. Ric was inducted into the Financial
Advisor Hall of Fame in 2004 by Research magazine. He received an honorary doctorate from
Rowan University (then known as Glassboro State College) in New Jersey in 1999, where he
graduated with honors with a B.A. in Communications in 1980. Ric is a registered representative
and principal with Sanders Morris Harris Inc. He is a Certified Fund Specialist, a Chartered
Mutual Fund Counselor, a Registered Financial Consultant, a Qualified Financial Planner, a
Certified Retirement Counselor® and Board Certified in Mutual Funds. He is also licensed to sell
securities, life and health insurance and variable annuities.
Form ADV Part 2A 6 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
George L. Ball (Born: 1938). Chairman of TEFG and Chairman and CEO of Sanders Morris Harris
Inc. Director of the Edelman Financial Center, LLC, SMH Capital Advisors Inc., Global Financial
Services, LLC and Leonetti & Associates, LLC — all registered investment advisors. Mr. Ball was a
Director of TEFG’s predecessor, Sanders Morris Mundy Inc., and was the nonexecutive Chairman
from May 1992 to July 1997. He is a former governor of the American Stock Exchange and the
Chicago Board Options Exchange and served on the Executive Committee of the Securities
Industry Association. Mr. Ball is a dually registered representative and principal with Sanders
Morris Harris Inc. and Global Financial Securities, LLC. He received a B.A. from Brown University
in 1960.
Bruce R. McMaken (Born: 1959). Executive Vice President of TEFG and Director of the Edelman
Financial Center, LLC since 2011. Mr. McMaken has been affiliated with SMH since 1992, first as
Senior Vice President. He also serves as a Manager for the SMH Private Equity Group Funds I and
II and for the M.D. Anderson Proton Therapy Center. Mr. McMaken is a dually registered
representative and principal with Sanders Morris Harris Inc. and Global Financial Securities, LLC.
He received a B.A. from Cornell University in 1981.
Edward (Ed) P. Moore (Born: 1960). Executive Vice President of TEFG and EFS President and
Director and minority owner of the Edelman Financial Center, LLC since 2005. Mr. Moore has
been affiliated with EFS since 1990. He is a CERTIFIED FINANCIAL PLANNER™ and is licensed to
sell securities, life and health insurance and variable annuities. Mr. Moore is a registered
representative and principal with Sanders Morris Harris Inc. He received a B.S. in Industrial
Engineering from Virginia Tech in 1983.
Lesley V. Roberts (Born: 1966). EFS Chief of Staff (COS) and Director of the Edelman Financial
Center, LLC since 2010. Ms. Roberts has been affiliated with EFS since 1998, first as the Director
of Human Resources. Prior to joining our firm, she was employed as a Human Resources
Manager in the airline industry. Her areas of responsibility cover human resources, information
technology and facilities.
Eraine J. Parker (Born: 1960). EFS and TEFG Chief Compliance Officer (CCO). Ms. Parker has been
affiliated with EFS since 2007. She has over 25 years of compliance and accounting experience
within the financial services industry, including five years with FINRA. Prior to joining us, Ms.
Parker was employed by a bank-affiliated broker-dealer and registered investment advisor for
23 years, where she served as CCO during her tenure. Ms. Parker is a registered representative
and principal with Sanders Morris Harris Inc. She received a B.A. in Business Administration from
Georgia State University in 1988.
Domenico (Dom) Conti (Born: 1966). EFS Chief Financial Officer (CFO) and Director of the
Edelman Financial Center, LLC since 2011. Mr. Conti has been affiliated with EFS since 2006. Mr.
Conti is a CPA with active status in Maryland. He has worked in finance and accounting for over
20 years. Prior to joining us, Mr. Conti was employed by America Online as a Finance Officer. He
received a B.S. in accounting from the University of Maryland in 1989.
Form ADV Part 2A 7 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
William (Bill) Coquelin (Born: 1960). EFS and TEFG Chief Information Officer (CIO). Mr. Coquelin
joined EFS and SMH in 2011. He has held both CIO and technical leadership roles with several
financial industry firms in the Washington, DC and Baltimore, Maryland areas, as well as for a
multinational firm in the financial industry. Prior to joining EFS and TEFG, Mr. Coquelin was one
of the principals in a technology consulting company that provided IT management and
oversight to firms in the pharmaceutical and defense contracting markets. He received a B.S. in
Management from George Mason University in 1982.
Joseph (Joe) Bottazzi (Born 1958). EFS and TEFG Chief Communications Officer. Mr. Bottazzi
joined EFS and TEFG in 2011. He was an executive with Hewlett-Packard for 31 years and served
as Senior Vice President of HP’s Americas Technology Services business unit, responsible for
approximately one-third of the unit’s $12billion annual revenue and 10,000 employees. Mr.
Bottazzi received a B.S. in Marketing from Rowan University in 1980 and an MBA from Fordham
University in 1990.
Advisory Services Offered
EFS provides financial planning, investment management and education, and insurance services
to individuals, trusts, estates, charitable organizations, foundations, pension, retirement and
profit-sharing plans, institutions, and small businesses. Our wrap fee program is available to
clients and other affiliated and unaffiliated registered investment advisers and their clients. Our
investment advice is generally limited to mutual funds, Exchange Traded Funds (“ETFs”),
annuities, insurance products and 529 College Plans. Advisory personnel are also registered
representatives of SMH, a registered broker-dealer and registered investment adviser subsidiary
of TEFG. This allows EFS investment advisory personnel to provide brokerage services to clients.
Wrap Fee Asset Allocation Program
The Edelman Managed Asset Program® (“EMAP”) is a wrap fee asset allocation program
sponsored by EFS. Through EMAP, we create well-diversified asset allocation models for clients.
The investments in these models include:
• mutual fund shares of no-load, open-end registered investment companies,
• exchange-traded funds (“ETFs”), and
• variable annuities.
We don’t sponsor, nor are we affiliated with, these investments. Investment Adviser
Representatives (“Advisors”) meet with clients to discuss their needs. The main factors that help
us recommend an asset allocation model to clients are their investment objectives and risk
tolerance. We also consider the client’s personal situation, including age, health, family
circumstances, income, expenses, assets, debts, liquidity needs, goals, personal objectives,
Form ADV Part 2A 8 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
suitability, time horizon and other relevant factors. If a client’s investment objectives or financial
situation changes, the client should tell his or her Advisor.
Clients are allowed to place or change reasonable restrictions on the management of their
accounts. This includes deciding to sell or not to buy particular securities or types of securities.
However, a client can’t require us to buy particular securities or types of securities. We reserve
the right, at our sole discretion, to close an account if unreasonable or overly restrictive
conditions are requested.
Either a client or the firm can end the relationship with written notice. We receive a wrap fee for
our services and we bill clients quarterly, after a quarter closes. If the relationship ends before
the quarter does, the client will not be billed for the remainder of the quarter.
Asset Allocation Program for ERISA Plans
EFS makes the Edelman Retirement Program (“ERP”) available to plan sponsors of 401(k), profit-
sharing and retirement plans (“Plans”) subject to the Employee Retirement Income Security Act
of 1974 (“ERISA”), as amended. Many such Plans give participants the ability to individually
direct the investment of their Plan account balances. Under ERISA, a plan sponsor is generally
relieved of liability for participant self-directed investment loss if certain investment options are
offered under the Plan and required informational disclosures are made to participants pursuant
to the applicable regulations. As part of ERP, EFS may also provide discretionary investment
services to Plan sponsors. Through ERP, EFS creates and recommends a range of asset allocation
models, each consisting of a diversified mix of asset classes for Plan sponsors. In addition, we
recommend the underlying asset classes for the models and recommend at least one
investment security for each underlying asset class. Usually these asset classes consist of funds
including, but not limited to, shares of open-end registered investment companies, such as
mutual funds and ETFs (collectively, the “Underlying Funds”). We don’t sponsor, nor are we
affiliated with, any of the Underlying Funds.
EFS may use its discretion to invest the Underlying Funds of each investment option from the
Plan’s investment menu in a mix of investments corresponding to asset allocation models
selected in accordance with the investment policy statement (“IPS”) approved by the Plan
sponsor or fiduciary. Using discretionary authority granted by the Plan sponsor, EFS rebalances
the mix of investments in the underlying funds for each investment option offered by the Plan
periodically, in order to maintain the desired mix of investments for each investment option. In
addition, EFS will occasionally modify the strategic allocations and reallocate the mix of
investments in the underlying funds for each investment option offered by the Plan based on
revisions to the asset allocation model(s) in accordance with the Plan’s IPS. EFS does not have
any discretion over any participant self-directed option within any Plan.
Generally, our Advisor holds an initial meeting with the Plan sponsor to explain EFS services and
fees and to collect detailed financial data about the Plan. Emphasis is placed on identifying the
Form ADV Part 2A 9 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Plan sponsor’s investment objectives and determining the financial situation of the Plan. With
respect to the asset allocation models and Underlying Funds recommended to each Plan
sponsor client, we consider the Plan’s investment objectives, financial situation, suitability and
other relevant factors.
After the Plan sponsor reviews and approves our recommendations, the asset allocation models
are offered to Plan participants as investment options (the “Investment Options”). Participants
will select an Investment Option for their Plan accounts. The Underlying Funds may also be
available to Plan participants who do not select an Investment Option, if the Plan sponsor
permits it. With the Plan sponsor’s permission, we make general educational information
regarding saving for retirement and asset allocation models and the Investment Options
available to the Plan’s participants. We are not responsible for reviewing or changing any
participant’s decision to invest in a particular Investment Option.
On an ongoing basis, we work with the Plan sponsor’s Third Party Administrator (“TPA”) to
ensure that the selected investment options are properly implemented. With the Plan sponsor’s
permission, we give instructions to the TPA to do the following:
• Invest the underlying assets of each Investment Option in a mix of investments in the
Underlying Fund
• Periodically rebalance the mix of investments in the Underlying Funds for each
Investment Option
• Strategically modify the allocations for the Investment Option so as to reallocate the mix
of investments
Plan sponsors are permitted to impose reasonable restrictions on the underlying assets of
Investment Options managed on behalf of the Plan. With respect to such restrictions, a Plan
sponsor may request that particular securities or types of securities not be purchased, or that
such securities be sold. Plan sponsors should know that we are generally unable to influence or
change the mix of securities held by any Underlying Fund in which the Plan may be invested. We
reserve the right, at our sole discretion, to reject any Plan sponsor account where unreasonable
or overly restrictive conditions are requested. Plan sponsors are reminded to inform their
Advisor if their investment objectives or financial situation changes. The professional
relationship between the Plan sponsor client and EFS may be terminated at will by either party
upon written notice.
Plan sponsors may be introduced to ERP through SMH, an affiliated registered investment
adviser or through other unaffiliated registered investment advisers. In that case, SMH or the
unaffiliated registered investment adviser initiates and maintains the relationship with the Plan
sponsor on behalf of EFS. Specifically, the Advisor:
• Collects detailed financial data about the Plan
Form ADV Part 2A 10 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
• Provides educational guidance to Plan Participants regarding saving for retirement and
asset allocation models
• Meets with the Plan sponsor on our behalf on a periodic basis to discuss suitability and
any reasonable restrictions
The Advisor assists the client with the completion of the new account documentation, including
the ERP Investment Management Agreement. After the ERP models and Underlying Funds have
been approved by the Plan sponsor, the Advisor promptly communicates the information to us.
The Advisor remains responsible for assessing initial and ongoing suitability of ERP and
introducing the appropriate models and Underlying Funds to the Plan sponsor. The Advisor may
offer ERP or any other financial planning product(s) that meets the needs and goals of a
prospective Plan sponsor.
Advisors will share in the advisory fee generated from any client assets that are invested in ERP.
We receive no compensation or economic benefit from products or services offered by the
Advisor to Plan clients, other than ERP. The Plan client does not pay any additional fees as a
result of this arrangement. None of the Underlying Funds recommended to the Plan sponsor will
be sponsored by or affiliated with either entity. In addition, neither will receive any additional
compensation related to the Underlying Funds other than a share of the advisory fee, which is
generated through ERP.
EFS is the sub-advisor to the TDATC Edelman Collective Investment Trusts created and
administered by TD Ameritrade Trust Company. The TDATC Edelman Collective Investment
Trusts are a series of risk- based collective investment funds comprised of assets from various
qualified retirement plans of unrelated companies. The Collective Investment Trusts are
designed to provide retirement plan participants extensive diversification, access to no-load
institutional funds, exchange traded funds and provide qualified plan participants the same
investment strategies offered to EFS wealth management clients. EFS is not affiliated with TD
Ameritrade Trust Company. We also provide educational guidance to assist the Plan sponsor in
its review of these models.
Financial Planning
EFS Advisors may provide financial planning services to clients. The Advisor prepares a
comprehensive financial plan for clients based on their financial and personal circumstances. We
do not provide legal or tax advice. Clients are charged a one-time fee that can be waived at the
Advisor’s discretion. Each financial planning client has a choice of selecting us to invest on
his/her behalf on a limited discretionary basis (meaning we can carry out some financial
transactions without first consulting the client) by establishing an Edelman Managed Asset
Program® (“EMAP”) account, or the client can implement an EFS financial plan on their own.
Legacy financial planning clients who are ineligible for or who elect not to participate in EMAP
may choose annual financial planning services. This gives them the benefits of ongoing
Form ADV Part 2A 11 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
investment advice and recommendations from our Advisor. There is an annual planning fee for
this service, which may be waived at the sole discretion of the Advisor. The Advisor may also, at
his/her sole discretion, decline to assist clients with the implementation of investment strategies
or choices that have not been recommended or that the Advisor deems not to be in the client’s
best interest.
Clients who are not eligible for EMAP may implement the recommendations set forth in their
financial plans through our firm. They open SMH or fund-direct accounts and receive
nondiscretionary recommendations (meaning we have to receive instructions from the client
before a financial transaction can be carried out) from their Advisor. Advisors are compensated
for such advice through annual planning fees and transaction-related compensation, such as
commissions or trail fees from the purchase or sale of securities. In such cases, our Advisors,
who are also registered representatives of SMH, receive brokerage commissions when
implementing investments for their financial planning clients. Clients are under no obligation to
implement their financial plans through our firm. Clients who choose to implement their
financial plans elsewhere will not receive ongoing investment advice from us.
EFS does not serve as an ERISA fiduciary to any account subject to the Employee Retirement
Income Security Act of 1974, as amended, which seeks only financial planning services.
The Financial Education Group
EFS is a strong advocate of consumer education and financial literacy. The Edelman Financial
Education Group is a team of financial educators who provide seminars to corporations,
associations, non-profit organizations, community and religious groups on a variety of personal
finance topics, often as a community service. Presentations are created by and based on the
teachings of Ric Edelman. They are designed to explain complex financial concepts in plain
English in a way that is educational, informational and entertaining. Groups may qualify to
receive presentations free of charge, as part of our community services program.
Ric Edelman is a public speaker and financial educator and offers seminars on a variety of
financial topics. See Item 5 for a discussion of fees.
Institutional Advisory Services
EFS provides a broad range of institutional investment management services to a variety of
small and midsize organizations, endowments and associations. The services offered include:
• Investment Policy Statement Assistance — EFS assists in creating, rewriting and/or
reviewing an effective Investment Policy Statement that reflects the investment needs
of the entity.
Form ADV Part 2A 12 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
• Asset Allocation Model — EFS assists in developing a diversified asset allocation strategy
in accordance with the investment objectives, goals, need for liquidity and risk tolerance
of the entity.
• Financial Profile — EFS performs a detailed review of the entity’s investment objectives
and financial situation in order to provide an accurate assessment of the appropriate
level of acceptable risk in accordance with the stated time horizon and goals.
• Investment Management — EFS provides ongoing, continuous management of assets,
including strategic rebalancing and daily account review.
• Record keeping — EFS provides statements and online functions designed to ease the
administrative needs and burdens associated with record keeping and reporting.
Assets Under Management
EFS has the following assets under management as of February 28, 2012:
Accounts Assets
Discretionary 37,535 $7,106,100,000
Non-discretionary 0 0
Total 37,535 $ 7,106,100,000
Item 5: Fees and Compensation
EMAP Client Fee Schedule
Portion of the Account That Is
at Least But Less Than Fee at This Tier
-- $ 150,000 2.00%
$ 150,000 $ 400,000 1.65%
$ 400,000 $ 750,000 1.25%
$ 750,000 $ 1,000,000 1.00%
$ 1,000,000 $ 3,000,000 0.75%
$ 3,000,000 $ 10,000,000 0.60%
$ 10,000,000 $ 25,000,000 0.50%
$ 25,000,000 and greater negotiable
Form ADV Part 2A 13 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
The EMAP fee includes periodic access to an Advisor and discretionary management, including
periodic review of all investments in the EMAP asset allocation model. The fee also includes all
model transaction costs, custody of assets and a subscription to Ric Edelman’s Inside Personal
Finance newsletter.
Clients pay a wrap fee, which includes all brokerage execution costs, without regard to the
number of transactions executed during the billing period. EFS has negotiated fees with
clearing/custodying firms, and the costs do not affect the wrap fee paid by the client.
Transaction costs imposed by the brokerage firms are covered by the wrap fee. The wrap fee
does not include certain account and securities-related costs, including the fees embedded in
the mutual funds, ETFs or annuities in which wrap fee accounts invest. In addition, the fee does
not include debit balances, related margin interest, IRA and retirement plan fees, transfer fees,
SEC fees, 12b-1 fees for certain money market funds, wire transfer fees, overnight check fees,
account closing fees, expenses charged by the mutual funds (including management fees,
transaction charges incurred for fund-level asset allocation model trades, custody of fund assets
and other fund expenses), expenses charged by the variable annuities and exchange-traded
funds, or other fees or taxes that are required by law.
Transactions executed on behalf of EMAP clients are executed for a single wrap fee, which
reduces the potential conflict of interest associated with executing a large number of orders for
client accounts and earning transaction-based compensation following each order. In addition,
EMAP invests client assets in no-load shares of unaffiliated open-end registered investment
companies (such as mutual funds), ETFs and no-commission variable annuities. Thus, neither our
firm nor the Advisors earn any additional revenue from EMAP accounts beyond the wrap fee.
However, EFS and its Advisors may have a financial incentive to recommend EMAP over other
products.
When calculating advisory fees, we aggregate household accounts to determine the lowest
percentage if all accounts were managed as one relationship. Fees are not negotiable, other
than as disclosed in the fee schedule above. Accounts with less than $50,000 may effectively pay
a fee that is greater than 2.00% due to our minimum annual fee. Full fee details are discussed in
Item 7 and also in the Client Services Agreement that is signed by the client. Clients should be
aware that lower fees for comparable services may be available from other sources.
Clients authorize the custodian firm, on behalf of EFS, to deduct the EMAP fee from their
accounts. The fee is based on the average daily balance of the client assets including money
market funds, interest and reinvested dividends. The first payment is calculated based on the
number of days assets are placed in the account during a calendar quarter. Subsequent fees are
determined based on the average daily balance for the quarter ending on the last day of each
calendar quarter. Generally, fees are deducted from the client’s account no later than the
fifteenth (15th) day after the end of each quarter, in arrears. For margined accounts, the fee
may be added to the margin balance unless the client elects to deposit cash or liquidate
Form ADV Part 2A 14 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
securities. If an account is terminated prior to the end of a calendar quarter, the terminating
client will pay fees due up to the termination date.
EFS and the Advisors who are authorized to recommend EMAP receive compensation based on
the amount of money the client invests in the program. The amount of such compensation may
be more or less than what our Advisors might earn from non-discretionary annual financial
planning advice. Therefore, our firm and Advisors may have a financial incentive to recommend
EMAP over other programs or services. However, the compensation paid from the EMAP fee
does not vary depending upon the number of trades made in EMAP client accounts. We do not
earn more of the fee if fewer trades are placed. This arrangement gives us no economic
incentive to place more or fewer trades through clearing broker-dealers for EMAP accounts.
Clients will pay the same fee, regardless of whether the client selects an EMAP asset allocation
model through an EFS Advisor or another affiliated or unaffiliated registered investment
advisory firm that is authorized to offer EMAP. Our firm will pay a negotiated percentage, up to
60% of the annual account fee, to registered investment advisory firms on accounts initiated
and serviced by their Advisors. Also, at no additional cost to the client, EFS may occasionally pay
additional basis points to the registered investment advisory firm.
Institutional
EMAP Institutional Fee Schedule Fee
Up to $999,999 1.40%
$1 million to $1,999,999 1.00%
$2 million to $4,999,999 0.75%
$5 million to $9,999,999 0.60%
$10 million to $24,999,999 0.50%
$25 million +……………….. negotiable
The fee includes periodic access to an Advisor and the services described above in Item 4.
The fee does not include debit balances, related margin interest, transfer fees, SEC fees, 12b-1
fees for certain money market funds, expenses charged by the mutual funds (including
management fees, transaction charges incurred for fund-level asset allocation model trades,
custody of fund assets and other fund expenses) andETFs, or other fees or taxes that are
required by law.
Institutional clients authorize the custodian firm, on behalf of EFS, to deduct the EMAP fee from
their accounts. The fee is based on the average daily balance of the client asset allocation
model. The first payment is calculated based on the number of days assets are placed in the
account during a calendar quarter. Subsequent fees are determined based on the average daily
balance for the quarter ending on the last day of each calendar quarter. Fees are deducted from
Form ADV Part 2A 15 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
the account no later than the fifteenth (15th) day after the end of each quarter, in arrears. If an
account is terminated prior to the end of a calendar quarter, the terminating client will pay fees
due up to the termination date.
EFS and the Advisors who are authorized to recommend EMAP receive compensation based on
the amount of money invested in the program. The compensation paid from the EMAP fee does
not vary depending upon the number of trades made in EMAP client accounts. EFS does not
earn more of the fee if it places fewer trades. As a result of the wrap nature of the fee, EFS has
no economic incentive to place more or fewer trades through clearing broker-dealers for EMAP
accounts.
Edelman Retirement Program
ERP Plan Assets Fee
$0 to $2 million 1.00%
$2 million to $5 million 0.85%
$5 million to $10 million 0.70%
$10 million to $15 million 0.60%
$15 million to $20 million 0.50%
$20 million +……………….. negotiable
The fee includes periodic access to an Advisor and the services provided on behalf of the Plan
sponsor client as described above. The ERP fee is payable quarterly in arrears, no later than the
thirtieth (30th) day after the end of the quarter. Except as may be otherwise agreed to by the
Plan sponsor and EFS, the Plan sponsor agrees for the Plan’s recordkeeper, custodian or other
service provider to deduct the ERP fee from Plan accounts and to remit such amounts to
EFSprior to the due date as provided under the ERP Investment Management Agreement, which
is the standard ERP client contract. The fee is based on the balance of the total assets of the Plan
accounts invested in the Investment Options as of the end of each calendar quarter. The first
payment is prorated for assets that are placed in Plan accounts during a calendar quarter.
Subsequent fees will be determined based on the last day of each quarter. The fee schedule
above shows the annual percentages.
The ERP fee does not cover any fees or expenses charged by any of the Underlying Funds,
including but not limited to any brokerage commissions, other transaction costs, redemption
fees or any other charges or expenses imposed by the Underlying Funds. The Plan’s
recordkeeper, custodian or other service provider may charge a separate fee to cover the
administrative and other record keeping costs associated with Plan accounts invested in the
Investment Options.
Form ADV Part 2A 16 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Other Fees Earned by EFS
Financial Plans
EFS may charge a one-time initial fee of $800 for financial plan development and presentation.
Clients who pay for a plan are under no obligation to implement the plan with our firm. The
financial planning fee is waived for employees of the firm and for pro bono cases at the
discretion of the Advisor.
Annual Financial Planning Fee
EFS charges an annual financial planning fee of $400 beginning in the second year after the
creation of a plan for non-EMAP accounts. This fee is not charged for EMAP accounts. The fee
includes periodic review of recommended investments by EFS Advisors. Included in the annual
financial planning fee is a subscription to Ric Edelman’s Inside Personal Finance newsletter.
Fees are billed annually at the quarter-end following the client’s anniversary date and are
charged at the discretion of the Advisor. The fee is waived for an ERISA-only client. If
termination occurs prior to the end of the client’s anniversary date, the client will receive a pro
rata refund of any unearned fee. Clients may contact us utilizing the information on the cover
page if they have questions regarding their refund.
EFS Advisors are also SMH registered representatives and receive commissions and other
transaction-related fees on products sold outside of EMAP as part of an implemented financial
plan. Lower fees for financial planning and securities transactions may be available from other
sources. EFS Advisors may have a financial incentive to recommend products that may result in
commission revenue. However, financial planning clients are under no obligation to implement
their financial plans through us and are informed of this at the time plans are presented.
Seminars
Seminars are offered to the public on a variety of financial topics. Fees range from $10 to $495,
with satisfaction guaranteed or 100% of the registration fee is refunded. The fee is due prior to
the event.
Speaking Engagements
Ric Edelman is a public speaker, radio show host, and host of a television show about investing
and financial education. Fees for his speaking engagements range from free to $30,000 plus
first-class travel expenses, depending on sponsor, date, location and program requested. For all
speeches, 50% of the fee is required prior to the event, with the balance due at the conclusion
of the event. Speaker fees are nonrefundable.
Form ADV Part 2A 17 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Educational Products
EFS publishes and sells the newsletter, Ric Edelman’s Inside Personal Finance , on a subscription
basis for $39.95 annually. Subscribers may cancel at any time and receive a full refund. The
complete first season of The Truth About Money with Ric Edelman, a weekly Public Television
series, is available on DVD for $9.99. Ric Edelman’s books include: The Truth About Money (4th
ed.); The New Rules of Money; Ordinary People, Extraordinary Wealth; Discover the Wealth
Within You; What You Need to Do Now; The Lies About Money; and Rescue Your Money. Books
are available for sale through booksellers, with prices ranging from $9.95 to $28. EFS may
provide books at a discount or for no cost to organizations, individual clients or prospective
clients.
Edelman Gear
Edelman-branded apparel and merchandise is available through our online store,
EdelmanGear.com. Clients can save 10% by using the promo code ‘clientsuccess’ at check out.
Branded merchandise includes shirts, jackets, hats, backpacks, pad folios, water bottles,
umbrellas, golf balls, Frisbees, piggy banks, etc. Items may be periodically added or removed.
100% of proceeds from branded-merchandise benefit the Boys & Girls Clubs of America.
For all products except the newsletter, there is a fee for shipping and handling.
RIC-E Trust®
Edelman Business Services LLC (“EBS”),a wholly owned subsidiary of Edelman Financial Center
LLC, markets the Retirement InCome for Everyone Trust® (RIC-E Trust®), which is an individual
grantor trust enabling the Grantor to set aside assets for a child’s retirement. Because the assets
of each trust are invested in a variable annuity, assets grow tax-deferred. The trustee is named
by the Grantor. First SunAmerica Life Insurance Company, the issuer of the tax-deferred
investment, is a subsidiary of AIG. EBS receives an administrative fee of $400 for each RIC-E
Trust® established. This fee is not associated with investment advisory services offered by EFS.
Commissions from the underlying variable annuity are received by the EFS Advisor.
Item 6: Performance-Based Fees and Side-by-Side
Management
EFS does not charge any performance-based fees (fees based on a share of capital gains on or
capital appreciation of the assets of a client). We do not engage in side-by-side management.
See Item 5: Fees and Compensation for further details on advisory services offered.
Form ADV Part 2A 18 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 7: Types of Clients
EFS provides financial planning, investment management, advice and insurance services to
individuals, trusts, estates, charitable organizations, foundations, pensions, retirement and
profit-sharing plans, institutions, and small businesses.
Minimum Account Size
EMAP
• Client household minimum account size is $50,000. We may waive the minimum
account size at our sole discretion.
• Minimum annual fee is $1,000. We may waive the minimum annual fee at our sole
discretion.
• Employee and Advisor minimum account size is $3,000.
• Institutional minimum account size is $500,000. We may waive the minimum account
size at our sole discretion.
ERP
We may require a minimum dollar value of Plan assets of $500,000, at our sole discretion, as a
condition of providing our services to Plan sponsors. Minimum account size depends on the
number of total assets in the Plan’s trust, the current number of participants, the expected
number of participants in future periods and other factors EFS deems relevant, including the
Plan sponsor’s financial requirements, economic circumstances and investment objectives.
Item 8: Methods of Analysis, Investment Strategies and
Risk of Loss
Investment Strategy
EMAP relies on an investment philosophy that is based on the latest academic research, such as
the Modern Portfolio Theory and the Fama-French Three-Factor Model, and the latest
discoveries in behavioral finance. The Modern Portfolio Theory says that it is not enough to look
at the expected risk and return of one particular asset class. By investing in more than one asset
class, an investor can reap the benefits of diversification, chief among them being a reduction in
the risk level of the portfolio. The Modern Portfolio Theory quantifies the benefits of
diversification, also known as “not putting all your eggs in one basket.” The Fama-French Three-
Form ADV Part 2A 19 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Factor Model, through research, found that over long periods of time, value stocks outperform
growth stocks and, similarly, small cap stocks tend to outperform large cap stocks. Therefore, by
analyzing these factors it becomes easier to evaluate the potential portfolio performance. EMAP
is founded on the premise that solid science, backed by decades of academic research, offers
one of the smartest approaches to investing.
The EFS investment philosophy is based on the following basic principles:
• Develop highly diversified portfolios that feature a broad range of asset classes and
market sectors.
• Use market-based investments, not manager-based investments.
• Hold the investments for long periods of time.
• Periodically reallocate investments as conditions warrant.
• Strategically rebalance as needed.
EMAP is highly diversified, invests in mutual funds and ETFs, and features as many as nineteen
(19) asset classes and market sectors. This approach is very effective, but of course cannot
ensure investment success or prevent loss in a declining market. Past performance is no
guarantee of future results.
Methods of Analysis and Investment Selection
Based on the written EMAP agreement that clients execute, EFS is granted limited discretionary
authority to implement client-approved investment strategies. Investments are selected based
on past performance (as applicable), manager tenure, portfolio turnover, fees and a variety of
academic statistics including beta, standard deviation, R-Squared and Sharpe Ratio. These
statistics are provided by third-party vendors and the investment sponsors and are evaluated by
the asset allocation model manager as well as the EFS Investment Committee, on both an
absolute and relative basis, relying on standards set by the firm.
We may obtain and utilize information and data from a wide variety of public and private
sources. Neither EFS nor our Advisors will independently verify or guarantee such information
and data. In categorizing the asset classes of investments, we will rely on prospectuses and
information obtained from the issuer or its agents, or through publicly available sources. Neither
EFS nor our Advisors shall be liable for any misstatement or omission contained in the
information from these sources, or any loss, liability, claim, damage or expense incurred, arising
out of, or attributable to such misstatement or omission.
Transactions for different account(s) or for other clients’ accounts may not be made at the same
time, may be made on different days, and may be made over multiple days. In handling
Form ADV Part 2A 20 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
purchases and liquidations, we will execute transactions without regard to pending dividend or
capital gains distributions, stock splits, mergers, or other corporate or financial events.
The client may impose reasonable restrictions on the management of the account. When
imposing restrictions, the client may request that particular securities or types of securities not
be purchased, or that such securities be sold if held in the account. However, the client cannot
request that particular securities be purchased for the account. Moreover, the client should
note that it is impossible for us to influence or change the mix of securities held by any mutual
fund or ETF included in the client’s account. We reserve the right, at our sole discretion, to
reject any account should the client request unreasonable or overly restrictive conditions.
Risk of Loss
EMAP consists of a combination of no-load mutual funds, exchange-traded funds (ETFs) and,
rarely, variable annuities, all of which are subject to some or all of the following risk factors:
• Market Risk — Even a long-term investment approach cannot guarantee a profit.
Economic, political and issuer-specific events will cause the value of securities to rise or
fall. Because the value of investment portfolios will fluctuate, there is the risk that you
will lose money and your investment may be worth more or less upon liquidation.
• Foreign Securities and Currency Risk — Investments in international and emerging-
market securities include exposure to risks including currency fluctuations, foreign taxes
and regulations, and the potential for illiquid markets and political instability.
• Capitalization Risk — Small cap and mid cap companies may be hindered as a result of
limited resources or less diverse products or services and have historically been more
volatile than the stocks of larger, more established companies.
• Interest Rate Risk — In a rising rate environment, the value of fixed-income securities
generally declines.
• Credit Risk — Credit risk is the risk that the issuer of a security may be unable to make
interest payments and/or repay principal when due. A downgrade to an issuer’s credit
rating or a perceived change in an issuer’s financial strength may affect a security’s
value and, thus, impact the fund’s performance.
• Securities Lending Risk — Securities lending involves the risk that the fund loses money
because the borrower fails to return the securities in a timely manner or at all. The fund
could also lose money if the value of the collateral provided for loaned securities, or the
value of the investments made with the cash collateral, falls. These events could also
trigger adverse tax consequences for the fund.
• Derivatives — Derivatives are securities, such as futures contracts, whose value is
derived from that of other securities or indices. Derivatives can be used for hedging
Form ADV Part 2A 21 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
(attempting to reduce risk by offsetting one investment position with another) or non-
hedging purposes. Hedging with derivatives may increase expenses, and there is no
guarantee that a hedging strategy will work. Changes in the value of the derivative may
not correlate perfectly with the underlying asset, rate or index, and the fund could lose
more than the principal amount.
• While hedging can reduce or eliminate losses, it can also reduce or eliminate gains.
Derivative securities are subject to a number of risks, including:
o Liquidity
o Interest rate risk
o Market risk
o Credit and management risks
o Risk of improper valuation
• Exchange-Traded Funds –ETFs face market-trading risks, including the potential lack of
an active market for shares, losses from trading in the secondary markets and disruption
in the creation/redemption process of the ETF. Any of these factors may lead to the
fund’s shares trading at a premium or discount to its “net asset value.”
• Performance of Underlying Managers-We select mutual funds and ETFs. We depend on
the manager of such funds to select individual investments in accordance with their
stated investment strategy.
Item 9: Disciplinary Information
Registered investment advisers are required to disclose all legal or disciplinary events that are
material in a client’s evaluation of EFS or the integrity of EFS’ management. The following is the
only disciplinary item we have to report since inception:
Administrative Proceeding
On July 17, 2006, EFS entered into an administrative proceeding with the State of Illinois for a
registration matter. EFS paid a $4,200 fine to the State of Illinois for exceeding its de minimis
registration standard. Basically, EFS had six clients who resided in Illinois and the limit where no
registration was required was five. EFS also agreed to pay the state $1,500 for the cost of its
investigation.
Form ADV Part 2A 22 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 10: Other Financial Industry Activities
and Affiliations
Related Persons
Broker/Dealer
TEFG, which is the majority owner of EFS, also owns Sanders Morris Harris Inc. (“SMH”), a firm
that is dually registered as a broker-dealer and an investment adviser. As such, we are affiliated
with a registered broker-dealer and investment adviser. Certain EFS employees are also
registered representatives of SMH. Our advisory personnel, solely in their capacity as registered
representatives of SMH and not as Advisors of EFS, accept orders for SMH accounts from
brokerage clients who may or may not be financial planning clients. When acting as registered
representatives for clients, our advisory personnel execute transactions for clients through SMH
and receive brokerage commissions from SMH on any products sold in this capacity. Thus, a
potential conflict of interest exists between the interests of our advisory personnel and
brokerage clients. Clients are advised that they are under no obligation to effect securities
transactions with SMH or through their EFS registered representative and that similar services
may be less expensive elsewhere.
As previously mentioned, Ric Edelman serves as President, CEO and Director of TEFG, as well as
Chairman and CEO of EFS. In addition, he is a registered representative and principal with SMH.
As such, there is a potential inherent conflict of interest arising out of his obligations to the
shareholders of TEFG and his fiduciary duties to the clients of EFS.
SMH Advisors may offer EMAP and ERP to their clients. In those situations, SMH and EFS would
share in the program fees. A potential conflict of interest may exist due to the affiliation
between the two companies. However, clients who purchase EMAP or ERP through SMH pay no
more than other clients of EFS making similar purchases.
Finally, we provide various administrative, back-office and trading services to SMH to assist with
its advisory product offerings. Generally, EFS and SMH will share in the advisory fees generated
from the assets in the wrap fee program to compensate EFS for its services.
Investment Advisors
EFS is affiliated with the following wholly owned subsidiaries of TEFG, which are also registered
investment advisors:
• Sanders Morris Harris Inc. (“SMH”) — See discussion above
• SMH Capital Advisors Inc. (“SMHCA”) — No material relationship with EFS
Form ADV Part 2A 23 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
The following registered investment advisors and/or broker-dealers are wholly or partially
owned subsidiaries of TEFG but have no material relationship with EFS:
• SOF Management, LLC
• Rikoon Group LLC
• Leonetti & Associates LLC
• Investor Financial Solutions, LLC
• Silverbay Capital Management, LLC
• Miller-Green Financial Services Inc.
• GFS Advisors LLC
• Global Financial Services, L.L.C. (broker-dealer)
Insurance Agency
HWG Insurance Agency, Inc., is a wholly owned subsidiary of TEFG. EFS Advisors may also be
insurance agents of HWG. They are licensed to sell variable and fixed insurance products and
receive insurance commissions from client transactions through this agency.
EFS is also a licensed insurance agency and is licensed in most states. Our advisory personnel
generally refer clients who wish to buy insurance products such as life, long-term disability and
long-term care insurance to AccuQuote, an unaffiliated insurance agency that specializes in
insurance brokerage and providing affordable insurance to clients. EFS and its insurance agents
are compensated a percentage of the revenues generated on the sale of such insurance
products. As such, our firm and our insurance agents have a conflict of interest because of the
economic incentive to sell policies that result in commissions or other sales revenue. Clients are
advised that they are under no obligation to purchase any insurance products through us or our
personnel and those products may be less expensive elsewhere.
Other
Edelman Business Services LLC (“EBS”), a wholly owned subsidiary of EFC, markets the
Retirement InCome for Everyone Trust® (RIC-E Trust®), which is an individual grantor trust
enabling the Grantor to set aside assets for a child’s retirement. Because the assets of each such
trust are invested in a variable annuity, assets grow tax-deferred. The trustee is named by the
Grantor. First SunAmerica Life Insurance Company, the issuer of the tax-deferred investment, is
a subsidiary of AIG. EBS receives an administrative fee of $400 for each RIC-E Trust® established.
This fee is not associated with investment advisory services offered by EFS, although
commissions are generated from the underlying annuity through SMH.
Form ADV Part 2A 24 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 11: Code of Ethics, Participation of Interest in
Client Transactions and Personal Trading
Code of Ethics
EFS has adopted a Code of Ethics (“The Code”) that is designed to ensure that all employees
adhere to the highest standards of ethical conduct. The Code states that all of our employees
must act in the best interest of the client at all times. It also states that employees should avoid
any practice that creates or appears to create a material conflict of interest that could
potentially harm a client.
In addition, the EFS Code of Ethics requires, among other things, that employees:
• Submit their personal and related trading accounts to the Compliance Department for
review
• Refrain from purchasing Initial Public Offerings (“IPOs”)
• Refrain from trading on insider information
• Get approval prior to purchasing a private placement
• Comply with ethical restraints including restrictions on giving and receiving gifts
• Report any conduct that could potentially harm a client
EFS has also adopted supervisory procedures that are designed to detect the following abusive
behavior:
• Front-running, trading ahead or opposite clients
• Trading in securities on the SMH Restricted or Watch List
• Trading that appears to be based on insider information
• Short-term or day trading
• Trading during designated SMH blackout periods
Any officer or employee of the firm who fails to observe the EFS Code of Ethics risks serious
sanctions, including personal liability and/or termination of employment.
A copy of the EFS Code of Ethics is available upon request by contacting us using the information
on the cover page of this brochure.
Form ADV Part 2A 25 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Related Person May Invest in the Same Securities
EFS investment advisory personnel may invest their personal funds and establish an EMAP
account for themselves. Our advisory personnel may also participate in the EFS Employee 401(k)
Plan that may use abbreviated EMAP asset allocation models. In that regard, employees may
buy and sell for themselves the same underlying securities as clients and will have interests in
securities owned by or recommended to our clients, including mutual funds, ETFs or insurance
products. Although all employees get the benefit of a fee reduction on EMAP accounts, those
accounts are not given preferential trading treatment. Employee accounts are monitored and
rebalanced on the same basis as all other unrestricted client accounts invested in accordance
with the same EMAP asset allocation model strategy. We have adopted procedures relating to
personal securities transactions, insider trading and internal trading that are designed to
prevent client harm resulting from this conflict of interest.
Agency Cross Procedures
In order to comply with the agency cross provisions of the Investment Advisers Act, EFS relies on
SMH policies and procedures. SMH has policies and procedures in place to ensure that
transactions introduced on behalf of EMAP clients are not crossed with transactions introduced
to the clearing firm on behalf of SMH brokerage customers. As a general matter, the nature of
the securities acquired for EMAP and financial planning clients are not likely to cross
transactions since shares of mutual funds and variable annuities are purchased from their
issuers and are not exchange-traded. Although ETFs are exchange-traded, EFS would not, acting
as investment adviser, generally recommend that such shares be crossed from one advisory
client account to another and would never act as a broker with respect to any such potential
cross transaction.
Item 12: Brokerage Practices
Brokerage Selection
Clients who establish a wrap fee account with EFS must consent to a clearing/custodying broker-
dealer that we have a clearing arrangement with. We have selected the following unaffiliated
registered broker-dealers, which are members of FINRA and SIPC, to execute and clear
transactions and provide custody services for EMAP wrap fee clients:
• TD Ameritrade Institutional (as cleared through TD Ameritrade Clearing, Inc.), a division
of TD Ameritrade, Inc. (“TD Ameritrade”)
• Fidelity Institutional Wealth Services (“Fidelity”) (as cleared through National Financial
Services LLC)
Form ADV Part 2A 26 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
• Pershing Advisor Solutions (“PAS”) (as cleared through Pershing LLC)
EFS places all transactions associated with wrap fee accounts for execution through these
executing broker-dealers. Most client accounts are established with TD Ameritrade although
each clearing broker-dealer offers services that include custody of securities, trade execution,
clearance and settlement of transactions. Each also provides services that are typically made
available to institutional investment managers and generally are not offered to retail customers.
These services include duplicate client statements and confirmations, 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 and access to mutual funds with no transaction fees. All clearing firms
receive a fixed percentage as compensation for their services. That percentage is based on all
EMAP account assets that are maintained in the custody of their firm.
In selecting clearing firms, we evaluate all the services offered, the quality of those services and
the cost indirectly borne by clients to determine if the clearing firm provides overall quality of
services for the price. While we have attempted to negotiate favorable commission rates for
transactions and believe that each clearing firm offers competitive commission rates, we do not
otherwise seek to obtain the best combination of price and execution with respect to wrap fee
account asset allocation model transactions. We will periodically compare clearing firm services
and prices against other broker-dealers qualified to provide comparable services. While another
broker-dealer may offer these services at a lower overall cost, EFS is not required to move all
accounts to that broker-dealer.
Non-EMAP clients may establish accounts to place brokerage transactions. Client brokerage
transactions are introduced through SMH, an affiliated broker-dealer, and cleared through
Pershing LLC. SMH is an introducing broker and clears and settles transactions made in SMH
brokerage accounts through Pershing, which performs the clearance, settlement, execution of
transactions and custody functions.
ERP
Plan sponsors select the clearing and custodian broker-dealer of their choice. Neither EFS nor
any of our affiliates provide brokerage services in connection with the investment advisory
services provided by us to Plan sponsor clients through ERP.
Soft Dollars
EFS has no formal soft dollar arrangements and does not use soft dollars to acquire any research
services. Custodian firms offer services to EFS including custody of client securities; trade
execution; clearance and settlement of transactions; access to platform systems; duplicate client
statements; research-related products and tools; access to a trading desk; 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
Form ADV Part 2A 27 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
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. See further discussion in Item 14.
Brokerage for Client Referrals
EFS participates in the TD Ameritrade Institutional program known as AdvisorDirect. TD
Ameritrade Institutional is a division of TD Ameritrade, Inc. (“TD Ameritrade”), member
FINRA/SIPC/NFA. TD Ameritrade is an independent and unaffiliated SEC-registered broker-
dealer. There is no employee or agency relationship between TD Ameritrade and EFS. The
AdvisorDirect program allows TD Ameritrade to refer its brokerage customers and other
investors seeking fee-based personal investment management or financial planning services to
other advisers such as EFS. TD Ameritrade has established the referral program as a means of
retaining brokerage customers. TD Ameritrade does not supervise EFS and has no responsibility
for our management of client asset allocation models or other advice or services. EFS was
chosen by TD Ameritrade to participate in this program based on the number of client accounts
maintained with TD Ameritrade, amount of the assets, profitability and the volume of trades
placed, along with other relevant factors.
We receive client referrals from TD Ameritrade through participation in the AdvisorDirect
program that may result in economic benefit to EFS. We pay TD Ameritrade an ongoing referral
fee for each successful client referral. This fee is usually a percentage (not to exceed 25%) of the
annual advisory fee that the client pays us. We will also pay TD Ameritrade the referral fee on
any advisory fees we received from any of a referred client’s family members, including a
spouse, child or any other family member who resides with the referred client and also becomes
an EFS client. Clients who are referred through this program do not pay higher fees or costs than
other EFS clients. For more information, please refer to the TD Ameritrade AdvisorDirect
Disclosure and Acknowledgment Form.
EFS participation in the AdvisorDirect program poses potential conflicts of interest. TD
Ameritrade will most likely refer clients through AdvisorDirect to EFS to encourage clients to
custody their assets at TD Ameritrade and maintain client accounts that are profitable to TD
Ameritrade. Consequently, in order to obtain client referrals from TD Ameritrade, we may have
an incentive to recommend to clients that assets under management be held in custody with TD
Ameritrade and to place transactions for client accounts with TD Ameritrade. We have agreed
not to solicit clients referred through AdvisorDirect to transfer their accounts from TD
Ameritrade or to establish brokerage or custody accounts at other custodians, except when its
fiduciary duties require doing so. EFS participation in AdvisorDirect does not diminish our duty
to seek best execution of trades for client accounts.
Form ADV Part 2A 28 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Trade Aggregation Policy
Whenever appropriate and when the price or execution of a security can be impacted favorably
by aggregating orders among accounts, EFS aggregates transactions on behalf of all EMAP
accounts, including accounts of Advisors and employees. It is our policy that such transactions
will be allocated to all participating client accounts in a fair and equitable manner. There is no
preferential treatment given to any account. Transactions may be traded together to ensure
best execution and to avoid price differential. There is seldom, if ever, a problem finding
sufficient mutual fund shares to purchase for EMAP accounts. These shares are purchased from
the issuer and sold at the net asset value next determined after an order is received. Shares of
mutual funds are sold back to the issuer and since we buy open-end funds, each issuing mutual
fund must stand ready to buy the shares back at the shares’ net asset value, as determined after
the redemption order is received. Similarly, we buy and sell highly liquid ETF interests or shares
and there is seldom any difficulty finding a sufficient supply of ETFs in the market. Variable
annuities and 529 College Saving Plans are purchased directly from the issuer, and no
aggregation of these transactions occurs.
Item 13: Review of Accounts
EFS client accounts are reviewed by advisory personnel of EFS. EMAP accounts are monitored on
an ongoing basis. Accounts are rebalanced or assets reallocated based on market or other
conditions as warranted. Securities we buy or sell for accounts are subject to our limited
discretionary authority. Changes in the asset allocation models, which include adding, removing
or replacing securities at the recommendation of the EFS Investment Committee, are made
infrequently, based on significant changes in the economic, financial or political climate;
changes in the tax code; and the management of the securities used by the asset allocation
model. Changes may also be made based on the client’s personal circumstances, including
health, employment and family status, or restrictions that the client may place on the
investments in the account.
EFS Advisors generally meet weekly to review economic, tax, financial, political, social and other
relevant issues and to determine if any changes in strategy are warranted and, if so, to
implement such changes. Based on these meetings, each Advisor independently reviews clients’
situations on a periodic basis and makes recommendations as needed.
On at least an annual basis, the Advisor contacts EMAP clients to update their personal and
financial information, including health, employment, marital and family status, time horizon,
goals and objectives, and risk tolerance. The Advisor uses the information to determine if there
are any changes that could impact the ongoing suitability of the account. Clients may request a
review at any time as well.
Form ADV Part 2A 29 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Non-EMAP accounts and financial planning client brokerage accounts at SMH are monitored
periodically where consistent with the EFS financial plan and client instructions.
ERP Plan assets are monitored on an ongoing basis. Plan assets are rebalanced or reallocated
based on market or other conditions as warranted. Changes in the asset allocation models,
which include adding, removing or replacing securities at the recommendation of the EFS
Investment Committee, are made infrequently based on significant changes in the economic,
financial or political climate; changes in the tax code; and the management of the securities
used by the Investment Option. Changes may be made based on the Plan sponsor’s
circumstances or restrictions that they may place on the investments in the account.
Item 14: Client Referrals and Other Compensation
Other Advisers Offering EMAP
EFS sponsors EMAP as discussed above and makes the asset allocation models available to
clients of other unaffiliated registered investment advisers (“RIAs”), including Sanders Morris
Harris Inc., which is an affiliated firm. We provide systems, services and back-office support to
those RIAs. The RIA is responsible for the supervision of its Advisors and the selection of the
EMAP asset allocation model recommendations made to clients. The RIA initiates the
relationship with the client and is the ongoing client relationship manager. The RIA, through its
Advisors, compiles personal and financial information about the client, maintains the
appropriate books and records, makes an asset allocation model recommendation that will
meet the client’s goals and objectives, maintains the ongoing client relationship, and meets with
the client on a periodic basis to discuss suitability and any reasonable restrictions the client
would like to impose on their account. EFS reviews and approves the recommendation. The
EMAP fee is shared between the two entities on a negotiated basis. The client does not pay an
increased fee as a result of this arrangement.
Client Referrals
From time to time, EFS may enter into agreements to pay other investment advisers for client
referrals in accordance with the requirements of Rule 206(4)-3 of the Investment Advisers Act,
the respective federal and state laws governing the same, and ERISA, if applicable. In such cases,
wrap fees will be shared between the two entities. EMAP or ERP fees are based on a percentage
of client assets invested in the wrap fee program. Any such referral fee shall be paid solely from
the investment advisory fee. The client does not pay an increased fee as a result of these
arrangements.
Compensation to other investment advisory firms who refer clients to EFS (“Solicitor”) is on a
negotiated basis. The Solicitor provides the client with a copy of the EFS ADV and a copy of the
Form ADV Part 2A 30 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
EFS written disclosure document, which describes the arrangement between EFS and the
solicitor including the terms, conditions and compensation.
Selection of Other Advisors — Edelman Financial Network™ (“EFN”)
EFN is a network of Advisors created by EFS to refer prospective clients who are interested in
working with a local advisor in cities where we do not have a branch office. We may refer
prospective clients to these Advisors of other affiliated or unaffiliated registered investment
advisory firms for advisory service in accordance with the requirements of Rule 206(4)-3 of the
Investment Advisers Act and the respective federal and state laws governing the same. With the
exception of Sanders Morris Harris Inc., an affiliated advisory firm, Advisors are not affiliated
with EFS in any manner and they are not our employees.
In selecting Advisors, EFS takes into consideration the Advisor’s investment philosophy,
regulatory status and overall credibility. The Advisor’s philosophies must be aligned to a large
extent with those of Ric Edelman and EFS. We complete due diligence on each investment
advisory firm and Advisor prior to referring a prospective client. Advisors do not pay any fee to
join EFN other than a nominal reimbursement to cover the costs of all necessary background
checks. We may also provide marketing support and practice management training to the
Advisor.
The selected Advisor may offer EMAP or any other financial planning product(s) that meets the
prospective client’s needs and goals. We receive no compensation or economic benefit from
products or services offered by the EFN Advisor other than EMAP. Advisors and EFS share in the
EMAP fee. There are no additional costs to the client and, accordingly, the client does not pay a
higher fee as a result of this arrangement.
Participation in the Edelman Financial Network™ raises potential conflicts of interest as the
Advisor may have an economic incentive to offer EMAP. A potential conflict of interest may arise
from the Advisor’s inclination to offer EMAP to clients over other investment products due to
the economic benefits of the referral from EFS.
TD Ameritrade Institutional Program
EFS participates in the TD Ameritrade Institutional Program. TD Ameritrade is an unaffiliated
registered broker-dealer and a member of FINRA, SIPC and NFA. TD Ameritrade Institutional is a
division of TD Ameritrade, Inc. We receive services that include custody of client securities,
trade execution, clearance and settlement of transactions. The Institutional Program provides
additional significant economic benefits to EFS that are not typically available to TD Ameritrade
retail investors. EFS may make these additional services available to its affiliates without cost.
There is no direct link between EFS’s participation in the program and the investment advice it
gives to its clients.
Form ADV Part 2A 31 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
The economic benefits include the following products and services, which are 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 EFS
• 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
• Discounts on compliance, marketing, research and technology
• Practice management products or services provided to EFS by third-party vendors
• TD Ameritrade may also pay for business consulting and professional services received
by EFS related persons
Some of the products and services made available by TD Ameritrade through the Institutional
Program may benefit us but may not benefit client accounts. These products or services may
assist us in managing and administering client accounts, including accounts not maintained at
TD Ameritrade. Other services made available by TD Ameritrade are intended to help us manage
and further develop our business enterprise. Receiving these economic benefits creates a
potential conflict of interest and may indirectly influence EFS to recommend TD Ameritrade to
clients for custody and brokerage services.
TD Ameritrade Operations Panel
EFS employees may serve on a TD Ameritrade Institutional Operations Panel from time to time.
The panel is sponsored by TD Ameritrade and consists of approximately 24 independent
advisors who advise TD Ameritrade on issues relevant to its service, technology and products
provided. In-person meetings are held three to four times a year. Panel members are not
compensated for their participation; however, TD Ameritrade pays or reimburses EFS for the
travel, lodging and meal expenses incurred when attending panel meetings.
Form ADV Part 2A 32 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Panel members are selected by TD Ameritrade and appointed to serve for a three-year term.
Longer service is permitted at the discretion of TD Ameritrade Institutional sales, service and
senior management. At times, panel members are provided with confidential information about
TD Ameritrade initiatives. Therefore, panel members are required to sign a confidentiality
agreement. The benefits received by EFS do not depend on the number of brokerage
transactions directed to TD Ameritrade. However, receiving economic benefit creates a
potential conflict of interest and may indirectly influence us to recommend TD Ameritrade to
clients for custody and brokerage services.
Compensation for Other Products and Services
EFS Advisors receive commissions on insurance and/or securities products purchased by
financial planning clients who choose to implement their financial plan through us. Advisory
personnel may also receive 12b-1 fees as a result of placing clients with retail mutual funds.
EMAP clients do not incur sales charges, commissions or 12b-1 fees when purchasing or owning
variable annuities or mutual funds.
As a financial planning firm, EFS makes the following statements:
(1) Our Advisors are also licensed to sell insurance policies from several insurance
companies and may receive sales or referral compensation from any such transactions.
(2) Clients are under no obligation to have us or our advisory personnel implement any
suggestions made in the financial plan.
(3) If asked to implement the suggestions of the financial plan, we intend to implement
such financial planning, in whole or in part, through products selected by us and to clear
securities transactions through Pershing, TD Ameritrade or Fidelity, as described in Item
12.
(4) To the extent EFS or our Advisors implement recommendations through SMH,
a. we are acting as agents for SMH;
b. we will use only products offered by SMH; and
c. we will earn commissions.
(5) Clients have total freedom to execute securities and/or insurance transactions with any
company of their choice other than with respect to participation in EMAP or the receipt
of ongoing, annual financial planning recommendations.
Indirect Compensation Regarding Television Broadcasts
Ric Edelman is the host of a syndicated television program, “The Truth About Money with Ric
Edelman, airing on public television stations. The program covers all aspects of financial
Form ADV Part 2A 33 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
education. He does not give specific securities advice and does not reveal any of the EMAP asset
allocation model holdings or recommendations. A portion of the television show is filmed before
a studio audience where participants can ask questions. An audience participant may discuss a
specific mutual fund, ETF or insurance product that may be held in the accounts of certain EMAP
clients or under consideration at the time of the question. Mr. Edelman does not give specific
legal, tax or investment advice, and he may give advice that is the same as or different from the
advice EFS has taken or may take for its clients.
From time to time, TD Ameritrade provides a significant economic benefit to EFS by directly
sponsoring the foregoing television show. This economic benefit may or may not be offered to
other independent investment advisors participating in the TD Ameritrade Institutional
Program. TD Ameritrade provides this economic benefit to us indirectly at its sole discretion and
its own expense. The benefit we receive does not depend on the number of brokerage
transactions directed to TD Ameritrade. As part of our fiduciary duties to clients, we endeavor at
all times to put the interests of our clients first. Receiving this significant economic benefit
creates a potential conflict of interest and may directly or indirectly influence our choice of TD
Ameritrade for client account custody and brokerage services.
From time to time, iShares, the exchange-traded fund business of BlackRock and one of the
industry’s leading exchange-traded funds platforms, provides a significant economic benefit to
EFS by directly sponsoring the foregoing television show. This economic benefit may or may not
be offered to other independent investment advisors doing business with iShares. iShares
provides this economic benefit to us indirectly at its sole discretion and its own expense. The
benefits we receive do not depend on any reciprocal services or trades directed to BlackRock or
iShares. As part of our fiduciary duties to clients, we endeavor at all times to put the interests of
our clients first. Receiving this significant economic benefit creates a potential conflict of
interest and may directly or indirectly influence our use of BlackRock or iShares to provide more
exchange traded funds in EMAP portfolios.
Item 15: Custody
EFS does not maintain custody of client funds or securities. We establish relationships with
various nonaffiliated third-party clearing/custodying broker-dealers who are responsible for
taking custody of and maintaining all client funds and securities, as discussed in Item 12. The
custodian sends confirmations and account statements directly to clients. Account statements
are sent directly to the client by the custodian on at least a quarterly basis. These confirmations
and account statements should be reviewed carefully by the client.
Form ADV Part 2A 34 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 16: Investment Discretion
EMAP
Based on a written, signed agreement, EMAP clients give EFS limited discretionary authority to
execute client-approved investment strategies in their accounts. We are granted limited
discretionary authority that allows us to place orders through one of several custodying firms
mentioned in Item 12. Clients give us the ability to make the following determinations in
accordance with the client’s specified investment objectives without client consultation or
consent before a transaction is effected:
• Invest client assets into a diversified mix of asset classes and investment securities
primarily in the form of shares of open-end registered investment companies, exchange-
traded funds and variable annuities.
• Modify or change the mix of asset classes and investment securities within the account.
• Rebalance the account periodically.
Clients are permitted to impose reasonable restrictions on the management of their accounts.
When imposing restrictions, clients may request that particular securities or types of securities
not be purchased, or that such securities be sold if held in the account. Clients, however, cannot
request that particular securities be purchased for their accounts. Additionally, EFS has no
influence or control over the mix of securities held by any mutual fund, variable annuity or ETF
in which client accounts may be invested. We reserve the right, at our sole discretion, to reject
any account for which unreasonable or overly restrictive conditions are requested.
Risks
EFS does not assume market risk on behalf of the client. EFS does not guarantee the
performance of the client’s account or any specific level of performance. Market values of the
securities within the account will fluctuate with market conditions. When the account is
liquidated, it may be worth more or less than the original amount invested.
Trading Authorization
Once an asset allocation model has been selected, we have limited discretionary authority to
invest the assets in the account. EMAP clients must establish brokerage accounts with one of
the custodians mentioned in Item 12 so that we can place securities transactions and maintain
assets with a qualified custodian. Transaction costs imposed by any of the clearing/custodying
firms are covered by the EMAP fee, except as noted in Item 4 and in the client agreement. We
have negotiated fixed fees with the clearing/custodying firms that are based on a percentage of
the value of EMAP assets maintained in client accounts. The clearing/custodying firms perform
all the necessary brokerage services for accounts maintained with them and provide custody
Form ADV Part 2A 35 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
services of client assets. In choosing which brokerage firm to use for EMAP, we generally select
TD Ameritrade, who in turn provides certain economic benefits to EFS, as discussed in Items 12
and 14.
Reallocations
EFS has the limited discretionary authority to reallocate assets in client accounts. In a
reallocation, we change the target percentages of some or all of the asset classes or types of
assets relative to the total account. Accounts are monitored on an ongoing basis and assets
reallocated based on market or other conditions, as warranted. Changes in the asset allocation
model, which include adding, removing or replacing securities at the discretion of EFS, are made
based on significant changes in the economic, financial or political climate; changes in the tax
code; the management of the securities used by the asset allocation model; and/or the client’s
personal circumstances, including health, employment and family status. EFS may replace a
particular security (or securities), if it significantly diverges from its relevant index in terms of
risk or return, with a security that is more in line with the risk/return profile of the relevant
index or if there is a different security that, in our opinion, would be better suited. Reallocations
occur with less frequency than rebalancing. When EFS reallocates accounts, it generally does so
in anticipation of the impact that expected long-term market volatility could have on specific
asset classes or types. Clients are notified of reallocations after the transactions are executed.
Rebalancing
Each client’s account is invested in accordance with the client’s asset allocation strategy. At the
inception of an account, EMAP assets are invested in specific asset types, including mutual funds
(including funds that are used as funding vehicles for variable annuity contracts) or ETFs that
invest in a variety of equity securities, fixed income or cash instruments. Amounts invested in
each asset type are determined in accordance with set target percentages of total assets in the
account. Afterwards, as markets fluctuate and values change, amounts originally allocated to an
asset type will either exceed or fall below the original target allocations. We periodically adjust
account holdings back to the original asset targets, or “rebalance” the account. We do not
rebalance accounts constantly, and asset allocations may drift away from their original target
percentages before EFS, within our authority and judgment, brings those allocations back in line
to the original percentages. In a sense, when we rebalance an account, we sell holdings that are
appreciating in value to buy other holdings that may be declining in value. However, the
investment philosophy of an asset allocation strategy is to be positioned in various asset types
so that when the asset type becomes profitable, the account is positioned to take advantage of
the upturn.
Liquidations
EFS will accept and follow all liquidation instructions given by clients and seek to execute client
orders in a timely manner on a best efforts basis. Occasionally, due to market conditions and
time constraints imposed by custodying firms, trades may be executed the following business
Form ADV Part 2A 36 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
day. In handling liquidations and purchases, we will execute transactions without regard to
pending dividend or capital gains distributions, stock splits, mergers or other corporate or
financial events.
Contributions
Contributed cash or money market fund shares in client accounts may remain uninvested in
securities for a period of time. EFS invests liquid assets in an orderly manner and believes it is to
each client’s benefit to invest in an aggregated fashion rather than piecemeal. For this reason, a
period of time may elapse between the deposit of cash or liquid assets to the account and the
account reaching a fully invested position. Although clients may deposit freely tradable
securities in their accounts to meet the EMAP minimum account size, we will liquidate those
securities positions and invest the proceeds in securities matching the client’s selected
investment strategy. Tax consequences associated with this liquidation and reinvestment
process will likely occur, and clients should consult with their tax professionals before depositing
securities in their EMAP accounts.
EFS does not provide legal or tax advice to clients. Clients are advised to discuss the possible
legal or tax consequences of their investment decisions with their legal or tax advisors prior to
effecting any transaction.
ERP
Reallocations
Under the ERP Investment Management Agreement, EFS has the limited discretionary authority
to change the asset allocation model for each Investment Option and its Underlying
Investments. Investment Options are monitored on an ongoing basis and reallocations are made
based on market or other conditions, as warranted. Changes in the model are made based on
significant changes in the economic, financial or political climate; the management of the
securities used by the asset allocation model; and/or the Plan client’s circumstances. We will
recommend that the Plan sponsor replace an Underlying Fund from the Plan’s investment
menu, if it significantly diverges from its relevant index in terms of risk or return, with another
Underlying Fund that is more in line with the risk/return profile of the relevant index.
Reallocations occur with less frequency than rebalancing. When we make reallocations, we
generally do it in anticipation of the impact that expected long-term market volatility could have
on specific asset classes or types. Plan sponsors are notified of reallocations after the
transactions are made.
Rebalancing
Each Investment Option is invested in a mix of Underlying Funds in accordance with the
corresponding asset allocation model approved by the Plan sponsor and the target allocation
percentages determined by that model. As markets fluctuate and values change, the actual
Form ADV Part 2A 37 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
percentage allocations of some or all of the Underlying Funds for the Investment Option will
either exceed or fall below the original target percentage allocations. At our discretion, we may
periodically rebalance an Investment Option’s holdings in Underlying Funds to return the
Investment Option to its original target percentage allocations. However, we do not rebalance
Investment Options constantly. Actual percentage allocations may drift away from their original
target percentage allocations before EFS, within our authority and judgment based on market or
other conditions as warranted, brings those allocations back in line to the original target
percentage allocations. In a sense, when we rebalance an Investment Option, we sell interests in
Underlying Funds that are appreciating in value to buy interests in other Underlying Funds that
may be declining in value.
Item 17: Proxy Voting Client Securities
EFS does not accept proxy voting responsibility for client accounts. Therefore, we have no
obligation or authority to take action or render any advice with respect to the voting of proxies
solicited by or with respect to issuers of securities held by client accounts. We expect clients to
expressly retain the authority and responsibility for proxy voting. With respect to ERISA
accounts, we generally expect the fund sponsor to expressly retain the authority and
responsibility for proxy voting and to specify, in writing, who has voting authority. All clients will
receive proxies directly from the custodian firm. Clients may direct any questions to their
Advisor should the need arise.
Item 18: Financial Information
Registered investment advisers are required to provide clients with financial information or
disclosures about their financial condition under certain circumstances. EFS is financially sound
and does not have any financial condition that would impair the ability to meet contractual or
fiduciary commitments to clients. We have not been the subject of any bankruptcy proceeding.
Therefore, we are not required to provide any additional financial statements under this item.
Form ADV Part 2A 38 June 20, 2012
Edelman Managed Asset Program® (EMAP)
Wrap Fee Brochure
This wrap fee brochure provides information about the qualifications and business practices of
Edelman Financial Services LLC. If you have any questions about the contents of this brochure,
please contact us at 888-PLAN-RIC (888-752-6742), or you may email us at
info@RicEdelman.com or write to us at the address below. The information in this brochure has
not been approved or verified by the United States Securities and Exchange Commission or by
any state securities authority, nor does registration with the SEC imply a certain level of skill or
training.
Additional information about Edelman Financial Services LLC is also available on the SEC’s
website at www.adviserinfo.sec.gov.
4000 Legato Road, 9th Floor
Fairfax, VA 22033
EdelmanFinancial.com
RicEdelman.com
888-PLAN-RIC (888-752-6742)
866-742-7222 (fax)
info@RicEdelman.com
June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 2: Material Changes
This wrap fee brochure follows the SEC’s new rules published in “Amendments for Form ADV”
on July 28, 2010. It follows a new structure and contains much of the information that the old
brochure did and some that it didn’t. This information is accurate as of June 20, 2012.
We’re required to tell you about any significant changes in this updated wrap fee brochure.
Future wrap fee brochures will contain similar summaries. The following are the material
changes made to this brochure:
1. Fredric (Ric) M. Edelman has become Chief Executive Officer of The Edelman Financial
Group, Inc. (“TEFG”). He was previously Co-CEO with George Ball. Mr. Ball will continue
to serve in his position as Chairman of TEFG.
We used to have to offer you information about our qualifications and business practices
annually. Under new SEC rules, we’ll give you a new wrap fee brochure within 120 days of the
end of our fiscal year. You may also receive updates at other times if information changes. You
can also request a new wrap fee brochure at any time and at no charge.
You may request a free brochure by calling us at 888-PLAN-RIC (888-752-6742). You can also find
out more about us and receive our current brochure from the SEC’s website,
www.adviserinfo.sec.gov. The site can also give you information about people who are
registered or about to be registered as Advisors of our firm.
Wrap Fee Brochure 2 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 3: Table of Contents
Edelman Managed Asset Program® (EMAP) Wrap Fee Brochure .................................................. 1
Item 2: Material Changes ................................................................................................................. 2
Item 3: Table of Contents ................................................................................................................ 3
Item 4: Service, Fees and Compensation ......................................................................................... 5
Services ........................................................................................................................................ 5
Trading Authorization and Reallocation ...................................................................................... 5
Rebalancing .................................................................................................................................. 6
Institutional Service ..................................................................................................................... 6
Fees and Compensation............................................................................................................... 7
Advisory Fee ............................................................................................................................. 7
Payment Method ..................................................................................................................... 8
Changes to Fees ....................................................................................................................... 8
Other Fees and Expenses ......................................................................................................... 9
Item 5: Account Requirements and Types of Clients ....................................................................... 9
Account Requirements ................................................................................................................ 9
Types of Clients .......................................................................................................................... 10
Item 6: Portfolio Manager Selection and Evaluation ..................................................................... 10
Performance Calculation ........................................................................................................... 10
Investment Strategy................................................................................................................... 11
Rebalancing ............................................................................................................................ 12
Reallocations .......................................................................................................................... 12
Trade Aggregation.................................................................................................................. 12
Trade Allocation Policy........................................................................................................... 13
Methods of Analysis and Investment Selection......................................................................... 13
Risk of Loss ................................................................................................................................. 14
Performance-Based Fees and Side-by-Side Management ......................................................... 15
Voting Client Securities .............................................................................................................. 16
Item 7: Client Information Provided to Portfolio Manager ........................................................... 16
Wrap Fee Brochure 3 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 8: Client Contact with Portfolio Managers ............................................................................ 16
Item 9: Additional Information ...................................................................................................... 16
Disciplinary Information ............................................................................................................ 16
Administrative Proceeding......................................................................................................... 16
Other Financial Industry Activities and Affiliations.................................................................... 17
Related Persons ......................................................................................................................... 17
Broker-Dealer – Sanders Morris Harris Inc. CRD No. 20580 .................................................. 17
Investment Advisers and Other Broker-Dealer...................................................................... 18
Insurance Agency ................................................................................................................... 18
Other ...................................................................................................................................... 18
Code of Ethics ............................................................................................................................ 19
Related Person May Invest in the Same Securities.................................................................... 20
Agency Cross Procedures ........................................................................................................... 20
Review of Accounts .................................................................................................................... 20
Nature and Frequency of Client Reports ................................................................................... 21
Client Referrals and Other Compensation ................................................................................. 21
Other Advisers Offering EMAP............................................................................................... 21
Client Referrals....................................................................................................................... 21
Selection of Other Advisors – Edelman Financial Network™ (“EFN”).................................... 22
TD Ameritrade Institutional Program .................................................................................... 22
TD Ameritrade Operations Panel ........................................................................................... 23
TD Ameritrade AdvisorDirect Program .................................................................................. 24
Compensation for Other Products and Services .................................................................... 25
Indirect Compensation Regarding Television Broadcasts...................................................... 25
Financial Information ................................................................................................................. 26
Wrap Fee Brochure 4 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Item 4: Services, Fees and Compensation
Services
Edelman Managed Asset Program® (“EMAP”) is a wrap fee asset allocation program sponsored
by Edelman Financial Services LLC (“EFS” or “We”). The client retains EFS and an Investment
Adviser Representative (“Advisor”) for the purpose of opening an investment advisory account
(“Account”) and participating in EMAP. We will invest participating client assets in one or more
diversified asset allocation models consisting of open-end investment companies (commonly
referred to as mutual funds) and closed-end investment companies (commonly referred to as
exchange-traded funds or ETFs) and variable annuities, in exchange for an all-inclusive asset-
based advisory fee (“Advisory Fee”).
We offer EMAP asset allocation models which consist of no-load mutual funds and ETFs in a
broad range of asset classes and market sectors, including domestic stocks, international stocks,
global bonds, and alternative investments. Neither EFS nor any of its affiliates serve as
investment adviser to any of the investment company products included in portfolio assets.
EMAP portfolios range from conservative to aggressive. The client’s Advisor assists the client in
selecting the asset allocation model that best meets the client’s needs. The Advisor considers
the client’s financial situation, goals and investment objectives, risk tolerance, time horizon,
liquidity needs, and other relevant factors, as described by the client, in selecting the client’s
asset allocation model. EFS does not provide tax or legal advice. The client is instructed to seek
advice from a tax or legal adviser before making an investment decision. The client should
inform his or her Advisor if changes occur in investment objectives or financial situation.
Trading Authorization and Reallocation
Once an asset allocation model portfolio has been selected, the client grants EFS limited
discretionary authority to:
• Invest the assets in the EMAP account(“Account”) in a diversified asset mix;
• Reallocate assets in the Account; and
• Rebalance the assets when needed.
When reallocating, EFS changes the target percentages of some or all of the asset classes or
types relative to the total Account. The Account is monitored on an ongoing basis and assets are
reallocated based on market or other conditions, as warranted. Changes in the asset allocation
model, which include adding, removing or replacing securities at the discretion of EFS and the
Investment Committee, are made based on significant changes in the economic, financial or
political climate; changes in the tax code, the management of the securities used by the asset
Wrap Fee Brochure 5 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
allocation model; and/or the client’s personal circumstances. We may replace a particular
security, if it significantly diverges from its relevant index in terms of risk or return, with a
security that is more in line with the risk/return profile of the relevant index. Reallocations occur
with less frequency than rebalancing, and when we reallocate Accounts, it generally is in
anticipation of the impact that expected long-term market volatility could have on specific asset
classes or types. Clients are notified of reallocations after the transactions are effected.
Rebalancing
Each client’s Account is invested in accordance with the client’s investment objectives, risk
tolerance and goals. At the inception of an Account, EMAP assets are invested in specific asset
types including mutual funds and/or ETFs and annuities. Amounts invested in each asset type
are determined in accordance with set target percentages of total assets in the Account.
Thereafter, as markets fluctuate and values change, amounts originally allocated to an asset
type will either exceed or fall below the original target allocations. We periodically adjust
Account holdings back to the original asset targets, or “rebalance” the Account. However, we do
not rebalance Accounts constantly, and asset allocations may drift away from their original
target percentages before EFS, within its authority and judgment, brings those allocations back
in line to the original percentages. In a sense, when we rebalance an Account, we sell holdings
that are appreciating in value to buy other holdings that may be declining in value. However, the
investment philosophy of an asset allocation strategy is to be positioned in various asset types
so that when the asset type becomes profitable, the Account is positioned to take advantage of
the upturn.
The client may impose reasonable restrictions on the Account(s) that are not fundamentally
inconsistent with the client’s investment objective or the nature or operation of EMAP. We will
notify the client quarterly, as a reminder, to contact us regarding any changes in the client’s
financial situation or investment objectives. In addition, the Advisor will contact the client at
least annually to determine whether any such changes have occurred and to verify the ongoing
suitability of EMAP.
Institutional Services
EFS provides a broad range of institutional investment management services to a variety of
small and mid-size organizations, endowments and associations. The services offered include:
• Investment Policy Statement Assistance – EFS assists in creating, rewriting and/or
reviewing an effective Investment Policy Statement that reflects the investment needs
of the entity;
• Asset Allocation Model – EFS assists in developing a diversified asset allocation strategy
in accordance with the investment objectives, goals, need for liquidity, and risk
tolerance of the entity;
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• Financial Profile – EFS performs a detailed review of the entity’s investment objectives
and financial situation in order to provide an accurate assessment of the appropriate
level of acceptable risk in accordance with the stated time horizon and goals;
• Investment Management – As a fiduciary, EFS provides ongoing, continuous
management of assets including strategic rebalancing and daily Account review; and
• Recordkeeping – EFS provides statements and online functions designed to ease the
administrative needs and burden associated with recordkeeping and reporting.
Fees and Compensation
Advisory Fee
The Advisory Fee includes discretionary management and periodic review of all investments in
the EMAP Account. The fee also covers administrative services, transaction costs, and clearance
and custody of assets, and a subscription to Ric Edelman’s Inside Personal Finance newsletter. In
addition, the Advisory Fee covers consultation with an Advisor who receives compensation as a
result of the client’s participation in EMAP.
The Advisory Fee is based on the average daily balance of the assets including money market
funds, interest and reinvested dividends in the Account, calculated following the last day of each
calendar quarter. The Advisory Fee is payable quarterly, in arrears. The first payment is prorated
for assets that are placed in the Account during a calendar quarter. Fees are payable to EFS no
later than the fifteenth (15th) day after the end of each quarter, in arrears.
EMAP Client Fee Schedule
Portion of the Account That Is
At Least But Less Than Fee at This Tier
-- $ 150,000 2.00%
$ 150,000 $ 400,000 1.65%
$ 400,000 $ 750,000 1.25%
$ 750,000 $ 1,000,000 1.00%
$ 1,000,000 $ 3,000,000 0.75%
$ 3,000,000 $ 10,000,000 0.60%
$ 10,000,000 $ 25,000,000 0.50%
$ 25,000,000 and greater negotiable
When calculating advisory fees, we aggregate household accounts to determine the lowest
percentage if all accounts were managed as one relationship. Fees are not negotiable, other
than as disclosed in the fee schedule above. Accounts with less than $50,000 may effectively pay
a fee that is greater than 2.00% due to our minimum annual fee discussed in Item 5. Clients
should be aware that lower fees for comparable services may be available from other sources.
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EMAP Institutional Fee Schedule Fee
Up to $999,999 1.40%
$1 million to $1,999,999 1.00%
$2 million to $4,999,999 0.75%
$5 million to $9,999,999 0.60%
$10 million to $24,999,999 0.50%
$25 million + negotiable
The above Advisory Fee Schedules are based on the amount of money the client invests in the
program, and are not dependent on the amount of trading in the Account or the advice given in
any particular time period. The client should be aware that lower fees for comparable services
may be available from other sources.
Transactions executed on behalf of EMAP clients are executed for a single wrap fee, which
reduces the potential conflict of interest associated with executing a large number of orders for
client accounts and earning transaction-based compensation following each order. In addition,
EMAP invests client assets in no-load shares of unaffiliated open-end registered investment
companies (such as mutual funds), ETFs and no-commission variable annuities. Thus, neither our
firm nor the Advisors earn any additional revenue from EMAP accounts beyond the wrap fee.
A portion of the Advisory Fee is paid to the Advisor. The Advisory Fee earned may be more or
less than what EFS or its Advisors might earn from other programs available in the financial
services industry or if the services were purchased separately. Therefore, EFS and its Advisors
may have a financial incentive to recommend the EMAP program over other products or
services.
EFS has entered into an agreement with other affiliated and unaffiliated Investment Advisory
Firms to offer EMAP to its clients. EFS and the other Investment Advisory Firms will share in the
Advisory Fee. Therefore, affiliated and unaffiliated advisors may have a financial incentive to
recommend EMAP. The client will not pay additional fees as a result of this arrangement.
Payment Method
The client authorizes EFS to collect the Advisory Fee and authorizes the Custodian(s) to deduct
the Advisory Fee from the Account under the Client Services Agreement. All fees will be noted
on the client’s custodial Account statements. If the Account does not hold cash or money
market balances sufficient to cover the Advisory Fee, the client may deposit additional funds by
the due date. If no such deposit is made, we will liquidate securities in the Account in amounts
sufficient to cover such fees. Liquidation may cause the client to incur taxes and other costs.
Changes to Fees
EFS may change the fee schedule at any time by giving 30 days prior written notice to the client.
Following the 30-day notice period, the new fee schedule will become effective unless the client
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terminates the Client Services Agreement. The client’s continued acceptance of the services will
constitute consent to changes in the Advisory Fee, including an increase in the amount charged.
Other Fees and Expenses
Clients pay a wrap fee, which includes all brokerage execution costs without regard to the
number of transactions executed during the billing period. EFS has negotiated fixed fees with
clearing/custodying firms, and the costs do not affect the wrap fee paid by the client.
Transaction costs imposed by the brokerage firms are covered by the wrap fee. The wrap fee
does not include certain Account and securities-related costs, including the fees embedded in
the mutual funds, ETFs or annuities in which wrap fee accounts invest. In addition, the fee does
not include debit balances, related margin interest, IRA and retirement plan fees, transfer fees,
SEC fees, 12b-1 fees for certain money market funds, wire transfer fees, overnight check fees,
expenses charged by the mutual funds (including management fees, transaction charges
incurred for fund-level asset allocation model trades, custody of fund assets and other fund
expenses), expenses charged by the variable annuities and exchange-traded funds, account
closing fees charged by the custodian or other fees or taxes that are required by law.
Item 5: Account Requirements and Types of Clients
Account Requirements
The minimum Account size for non-institutional Accounts is $50,000 and the minimum annual
fee is $1,000. The minimum account size for institutional Accounts is $500,000. Employee and
Advisor minimum account size is $3,000. We may waive the minimum account size and annual
fee at our sole discretion.
The client may make additions to or withdrawals from the Account at any time. EMAP is
designed as a long-term investment vehicle and asset withdrawals may impair the ability to
achieve the client’s investment objectives. Withdrawals that cause material reductions in the
value of the Account could cause EFS to terminate the Account.
We have entered into an agreement with the following unaffiliated broker-dealers
(“Custodian(s)”) to provide clearing and custody services to EMAP clients. The client must agree
to the opening of an Account with one of the following Custodians as a condition to participate
in EMAP.
• TD Ameritrade Institutional (as cleared through TD Ameritrade Clearing, Inc.), a division
of TD Ameritrade, Inc. (“TD Ameritrade”)
• Fidelity Institutional Wealth Services (“Fidelity”) (as cleared through National Financial
Services LLC)
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• Pershing Advisor Solutions (“PAS”) (as cleared through Pershing LLC)
Each unaffiliated Custodian provides the following services to EMAP clients:
1. Maintain custody of Account assets;
2. Execute and perform clearance of all purchase and sale orders as directed by EFS;
3. Perform all custodial functions customarily performed with respect to the Account,
including but not limited to the crediting of interest and dividends on Account assets;
4. Forward to client and to EFS purchase and sale confirmations and Account statements;
5. Act as general administrator of the EMAP Account(s);
6. Charge and collect advisory fees on EFS’s behalf; and
7. Accept deposits to and withdrawals from the Account pursuant to our instructions.
Clients will pay no commissions for EMAP brokerage services and we will not enter into any
principal transactions in EMAP Accounts. Except for the TD Ameritrade AdvisorDirect Program
(discussed in Item 9)The Custodian does not assist the client in selecting EFS or any investment
or in determining the suitability of investments.
The Custodian will send a monthly statement to the client detailing all Account activity,
including deduction of the Advisory Fee. The client may elect to receive custodial Account
statements and confirmations electronically in lieu of paper confirmations and statements.
Types of Clients
EMAP asset allocation models are offered to individuals, trusts, estates, charitable
organizations, foundations, pension plans, retirement plans , profit sharing plans, institutions,
and small businesses.
Item 6: Portfolio Manager Selection and Evaluation
We do not select or utilize the services of any third-party portfolio manager in EMAP. The EFS
Investment Committee and the Advisors oversee the management of the assets for EMAP
Accounts.
Performance Calculation
EFS, as a matter of policy, prepares information relating to investment performance of the
EMAP asset allocation models. Firm-wide methods as well as policies and procedures used in
calculating and presenting EMAP performance figures are prepared in compliance with the
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Global Investment Performance Standards (GIPS®) and independently verified by Ashland
Partners & Company LLP, an independent third-party GIPS® verification company. Ashland
Partners also serves as an ongoing consultant to EFS in order to maintain compliance with GIPS®
standards, which includes, but is not limited to, reviewing methods of performance calculation,
composite construction, and the presentation of performance information.
Investment performance figures are determined by utilizing internal portfolio accounting
software, which calculates investment performance according to globally accepted industry
standards. Performance calculations are based on actual EMAP Accounts under management,
including those Accounts that have been closed. Investment performance is presented net of
actual management fees and expenses.
Investment Strategy
EMAP relies on an investment philosophy that is based on the latest academic research such as
Modern Portfolio Theory and the Fama-French Three-Factor Model, and the latest discoveries in
behavioral finance. Modern Portfolio Theory says that it is not enough to look at the expected
risk and return of one particular asset class. By investing in more than one asset class, an
investor can reap the benefits of diversification, chief among them a reduction in the risk level
of the portfolio. Modern Portfolio Theory quantifies the benefits of diversification, also known
as “not putting all of your eggs in one basket.” The Fama-French Three-Factor Model is based on
research showing that over long periods of time, value stocks outperform growth stocks, and
similarly, small cap stocks tend to outperform large cap stocks. Therefore, with analysis of these
factors, it becomes easier to evaluate the potential portfolio performance. EMAP is founded on
the premise that solid science, backed by decades of academic research, offers one of the
smartest approaches to investing.
The EFS investment philosophy is based on the following basic principles:
• Develop highly diversified portfolios that feature a broad range of asset classes and
market sectors;
• Use market-based investments, not manager-based investments;
• Hold the investments for long periods of time;
• Periodically reallocate investments as conditions warrant;
• Strategically rebalance as needed.
EMAP is highly diversified, invests in no-load mutual funds and ETFs, and features as many as
nineteen (19) asset classes and market sectors. This approach is very effective, but of course
cannot ensure investment success or prevent loss in a declining market. Past performance is no
guarantee of future results.
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Rebalancing
Each client’s Account is invested in accordance with the client’s asset allocation strategy. At the
inception of an Account, EMAP assets are invested in specific asset types including mutual funds
(including funds that are used as funding vehicles for variable annuity contracts) or ETFs that
invest in a variety of equity securities, fixed income or cash instruments. Amounts invested in
each asset type are determined in accordance with set target percentages of total assets in the
Account. Thereafter, as markets fluctuate and values change, amounts originally allocated to an
asset type will either exceed or fall below the original target allocations. We periodically adjust
Account holdings back to the original asset targets, or “rebalance” the Account. However, we do
not rebalance Accounts constantly and asset allocations may drift away from their original
target percentages before EFS, within its authority and judgment, brings those allocations back
in line to the original percentages. In a sense, when we rebalance an Account, we sell holdings
that are appreciating in value to buy other holdings that may be declining in value. However, the
investment philosophy of an asset allocation strategy is to be positioned in various asset types
so that when the asset type becomes profitable, the Account can take advantage of the upturn.
Reallocations
EFS has the limited discretionary authority to reallocate assets in client Accounts. In a
reallocation, we change the target percentages of some or all of the asset classes or types of
assets relative to the total Account. Accounts are monitored on an ongoing basis and assets are
reallocated based on market or other conditions, as warranted. Changes in the asset allocation
model, which include adding, removing or replacing securities at the discretion of EFS, are made
based on significant changes in the economic, financial or political climate; changes in the tax
code; the management of the securities used by the asset allocation model; and/or the client’s
personal circumstances, including health, employment and family status. We may replace a
particular security (or securities), if it significantly diverges from its relevant index in terms of
risk or return, with a security that is more in line with the risk/return profile of the relevant
index or if there is a different security that, in our opinion, would be better suited. Reallocations
occur with less frequency than rebalancing, and when we reallocate Accounts, we generally do
so in anticipation of the impact that expected long-term market volatility could have on specific
asset classes or types. Clients are notified of reallocations after the transactions are effected.
Trade Aggregation
Whenever appropriate and when the price or execution of a security can be impacted favorably
by aggregating orders among Accounts, EFS aggregates transactions on behalf of all EMAP
Accounts, including Accounts of Advisors and employees. It is the policy of EFS that such
transactions will be allocated to all participating client Accounts in a fair and equitable manner.
There is no preferential treatment given to any Account. Transactions may be traded together to
ensure best execution and to avoid price differential. There is seldom, if ever, a problem finding
sufficient mutual fund shares to purchase for EMAP Accounts. These shares are purchased from
the issuer and sold at the net asset value next determined after an order is received. Shares of
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mutual funds are sold back to the issuer, and since we buy open-end funds, each issuing mutual
fund must stand ready to buy the shares back at the share’s net asset value, as determined after
the redemption order is received. Similarly, we buy and sell highly liquid ETF interests or shares
and there is seldom any difficulty finding a sufficient supply of ETFs in the market. Variable
annuities and 529 College Saving Plans are purchased directly from the issuer and no
aggregation of these transactions occurs.
Trade Allocation Policy
In an effort to seek best execution for clients and treat all clients fairly and equitably over time,
EFS utilizes a rotation procedure for executing trades. All client, employee and Advisor Accounts
are included in the rotation. All EMAP equity trades are executed at their respective Custodian
on a block basis. The order of the Custodians’ trades will be rotated on a daily basis and in
sequential fashion. For example, if there are three Custodians and Custodian 1 goes first on a
particular day, Custodian 2 will go first the following day, and Custodian 3 will go first on the
third day.
One exception to this rotation procedure will be when a Custodian has a large block order of
30,000 shares or greater. To avoid having an order of this size unfavorably impact the market
and the orders that follow, such Custodian will be the last to trade on that particular day. The
normal rotational schedule will continue the following day.
In the limited circumstances when sufficient quantities of a particular security are not
obtainable, a pro rata allocation may be used when a batch order in the security cannot be fully
executed in a single day. The partial order fill is generally allocated among the participating
client Accounts based on the size of each Account’s original order, subject to rounding in order
to achieve “round lots.” Unexecuted orders will continue until the block order is completed or
until all component orders have been cancelled. New orders for the same security will be
aggregated with any remaining unexecuted orders and will continue in the same manner. As
previously mentioned, orders for all EMAP wrap fee clients, including employees and
Representatives, generally will be aggregated to ensure equal pricing for all clients.
Methods of Analysis and Investment Selection
Based on the written EMAP agreement that clients execute, EFS is granted limited discretionary
authority to implement client-approved investment strategies. Investments are selected based
on past performance (as applicable), manager tenure, portfolio turnover, fees, and a variety of
academic statistics including beta, standard deviation, R-Squared, and Sharpe Ratio. These
statistics are provided by third-party vendors and the investment sponsors, and are evaluated
by the asset allocation model manager as well as the EFS Investment Committee on both an
absolute and relative basis, relying on standards set by EFS.
We may obtain and utilize information and data from a wide variety of public and private
sources. Neither EFS nor our Advisors will independently verify or guarantee such information
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and data. In categorizing the asset classes of investments, we will rely on prospectuses and
information obtained from the issuer or its agents, or through publicly available sources. Neither
EFS nor our Advisors shall be liable for any misstatement or omission contained in the
information from these sources, or any loss, liability, claim, damage or expense incurred arising
out of, or attributable to, such misstatement or omission.
Transactions for different Account(s) or for other clients’ accounts may not be made at the same
time, may be made on different days, and may be made over multiple days. In handling
purchases and liquidations, we will execute transactions without regard to pending dividend or
capital gains distributions, stock splits, mergers or other corporate or financial events.
The client may impose reasonable restrictions on the management of the account. When
imposing restrictions, the client may request that particular securities or types of securities not
be purchased, or that such securities are to be sold if held in the account. The client, however,
cannot request that particular securities be purchased for the account. Moreover, the client
should note that it is impossible for us to influence or change the mix of securities held by any
mutual fund or ETF included in the client’s account. We reserve the right, at our sole discretion,
to reject or close any account should the client request unreasonable or overly restrictive
conditions.
Risk of Loss
EMAP consists of a combination of institutional or no-load mutual funds, ETF’s and variable
annuities that are subject to market risk. There is no guarantee that the underlying investment
will reach its objectives. Investments in EMAP will fluctuate with market conditions. Upon
liquidation, the investment may be worth more or less than the original investment and
subsequent contributions. Past performance is no guarantee of future results.
Mutual funds and ETFs may also be subject to the following risks:
• Market Risk – Even a long-term investment approach cannot guarantee a profit.
Economic, political and issuer-specific events will cause the value of securities to rise or
fall. Because the value of investment portfolios will fluctuate, there is the risk that you
will lose money and your investment may be worth more or less upon liquidation.
• Foreign Securities & Currency Risk – Investments in international and emerging market
securities include exposure to risks including currency fluctuations, foreign taxes and
regulations, and the potential for illiquid markets and political instability.
• Capitalization Risk – Small and mid-cap companies may be hindered as a result of
limited resources or less diverse products or services and have therefore historically
been more volatile than the stocks of larger, more established companies.
• Interest Rate Risk – In a rising rate environment, the value of fixed-income securities
generally declines.
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• Credit Risk – Credit risk is the risk that the issuer of a security may be unable to make
interest payments and or repay principal when due. A downgrade to an issuer’s credit
rating or a perceived change in an issuer’s financial strength may affect a security’s
value, and thus impact the Fund’s performance.
• Securities Lending Risk – Securities lending involves the risk that the fund loses money
because the borrower fails to return the securities in a timely manner or at all. The fund
could also lose money if the value of the collateral provided for loaned securities or the
value of the investments made with the cash collateral falls. These events could also
trigger adverse tax consequences for the fund.
• Derivatives – Derivatives are securities, such as futures contracts, whose value is
derived from that of other securities or indices. Derivatives can be used for hedging
(attempting to reduce risk by offsetting one investment position with another) or non-
hedging purposes. Hedging with derivatives may increase expense, and there is no
guarantee that a hedging strategy will work. While hedging can reduce or eliminate
losses, it can also reduce or eliminate gains. Derivative securities are subject to a
number of risks including:
o Liquidity;
o Interest rate risk;
o Market;
o Credit & management risks; and
o Risk of improper valuation.
Changes in the value of the derivative may not correlate perfectly with the underlying
asset, rate or index, and the Fund could lose more than the principal amount.
• Exchange-Traded Funds- ETF’s face market trading risks, including the potential lack of
an active market for fund shares, losses from trading in the secondary markets, and
disruption in the creation and redemption process of the ETF. Any of these factors may
lead to the fund’s shares trading at a premium or discount to its “net asset value.”
• Performance of Underlying Managers-We select mutual funds and ETF’s. We depend
on the manager of such funds to select individual investments in accordance with their
stated investment strategy.
Performance-Based Fees and Side-by-Side Management
EFS does not charge any performance-based fees (fees based on a share of capital gains on or
capital appreciation of the assets of a client). We do not engage in side-by-side management.
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Voting Client Securities
EFS has no obligation or authority to take action or render advice with respect to the voting of
proxies solicited by or with respect to issuers of securities held in EMAP Accounts. The client
expressly retains the authority and the responsibility for the voting of proxies.
Item 7: Client Information Provided to Portfolio
Manager
The Advisor obtains information, prior to opening an Account, regarding the client’s financial
situation, goals and investment objectives, risk tolerance, time horizon and other relevant
factors, as described by the client, and assists the client in selecting an asset allocation model.
The Advisor will also inquire as to the client’s interest in imposing any reasonable restrictions on
the management of the Account. The Advisor will contact the client at least annually to
determine if any changes have occurred that may affect the ongoing suitability of the portfolio
selected and to determine if any new restrictions should be imposed on the Account.
Item 8: Client Contact with Portfolio Managers
Clients are generally free to contact EFS and their Advisor at any time during normal business
hours via telephone, facsimile, mail or email. In-person meetings should be scheduled in
advance to ensure that the Advisor is available. Generally, clearing/custodying broker-dealers
and the issuers or sponsors of investments used by the program are not available to answer
questions or discuss specific investment issues. However, if a client has a specific need, we will
reasonably attempt to arrange the discussion.
Item 9: Additional Information
Disciplinary Information
Registered investment advisers are required to disclose all legal or disciplinary events that are
material in a client’s evaluation of EFS or the integrity of EFS management. The following is the
only disciplinary item we have to report since inception:
Administrative Proceeding
On July 17, 2006, EFS entered into an administrative proceeding with the State of Illinois for a
registration matter. EFS paid a $4,200 fine to the State of Illinois for exceeding its de minimis
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registration standard. Basically, EFS had six clients who resided in Illinois, and the limit for no
registration was five. EFS also agreed to pay the state $1,500 for the cost of its investigation.
Other Financial Industry Activities and Affiliations
EFS is a majority owned subsidiary of The Edelman Financial Group (“TEFG”), which is a publicly
traded financial services firm headquartered in Houston, Texas. TEFG owns several other
registered investment advisers and broker-dealers, and one insurance agency. As such, we are
affiliated with several other registered investment advisers, broker-dealers, and other entities.
EFS offers broker-dealer related services to its clients as well.
Related Persons
Broker-Dealer – Sanders Morris Harris Inc. CRD No. 20580
TEFG, which is the majority-owner of EFS, also owns Sanders Morris Harris Inc. (“SMH”), a firm
that is dually registered as a broker-dealer and an investment adviser. As such, we are affiliated
with a registered broker-dealer and investment adviser. Ric Edelman is a registered
representative and principal of SMH. Certain EFS employees are also registered representatives
of SMH. Our advisory personnel, solely in their capacity as registered representatives of SMH
and not as Advisors of EFS, accept orders for SMH brokerage accounts from brokerage clients
who may or may not be financial planning clients. When acting as registered representatives for
clients, our advisory personnel execute transactions for clients through SMH and receive
brokerage commissions from SMH on any products sold in this capacity. Thus, a potential
conflict of interest exists between the interests of our advisory personnel and brokerage clients.
Clients are advised that they are under no obligation to effect securities transactions with SMH
or through their EFS registered representative, and similar services may be less expensive
elsewhere.
Ric Edelman serves as President, Director and Chief Executive Officer of TEFG as well as
Chairman and CEO of EFS (see EFS ADV Item 2). In addition, he is a registered representative and
principal with SMH. As such, there is a potential inherent conflict of interest arising out of his
obligations to the shareholders of TEFG and his fiduciary duties to the clients of EFS.
SMH Representatives may offer EMAP to their clients. In those situations, SMH and EFS would
share in the program fees. A potential conflict of interest may exist due to the affiliation
between the two companies. However, clients who purchase EMAP through SMH pay no more
than do other clients of EFS making similar purchases.
Finally, we provide various administrative and trading services to SMH to assist with its advisory
product offerings.
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Investment Advisers and Other Broker-Dealers
EFS is affiliated with the following wholly owned subsidiaries of TEFG, which are also registered
investment advisers and a broker-dealer:
• Sanders Morris Harris Inc. (“SMH”) – See discussion above
• SMH Capital Advisors Inc. (“SMHCA”) – No material relationship with EFS
The following registered investment advisers and/or broker-dealers are wholly or partially
owned subsidiaries of TEFG but have no material relationship with EFS:
o SOF Management, LLC
o Rikoon Group LLC
o Leonetti & Associates LLC
o Investor Solutions Group, LLC
o Silverbay Capital Management, LLC
o Miller-Green Financial Services Inc.
o GFS Advisors LLC
o Global Financial Services, L.L.C. (Broker-Dealer)
Insurance Agency
HWG Insurance Agency, Inc., is a wholly owned subsidiary of TEFG. Our Investment Advisor
Representatives may also be insurance agents of HWG. They are licensed to sell variable and
fixed insurance products and receive insurance commissions from client transactions through
this agency.
EFS is also a licensed insurance agency in several states. Our advisory personnel generally refer
clients who wish to buy products such as life, long-term disability and long-term care insurance
to Accuquote, an unaffiliated insurance agency that specializes in insurance brokerage and
providing affordable insurance to clients. EFS and its insurance agents are compensated a
percentage of the revenues generated on the sale of such insurance products. Therefore, EFS
and its insurance agents have a conflict of interest because of the economic incentive to sell
policies that result in commissions or other sales revenue. Clients are advised that they are
under no obligation to purchase any insurance products through EFS or its personnel and those
products may be less expensive elsewhere.
Other
Edelman Business Services LLC (“EBS”), a wholly owned subsidiary of Edelman Financial Center
LLC (which is the single member owner of EFS), markets the Retirement InCome for Everyone
Trust® (“RIC-E Trust”®), which is an individual grantor trust enabling the Grantor to set aside
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assets for a child’s retirement. Because the assets of each such trust are invested in a variable
annuity, assets grow tax-deferred. The trustee is named by the Grantor. First SunAmerica Life
Insurance Company, the issuer of the tax-deferred investment, is a subsidiary of AIG. EBS
receives an administrative fee of $400 for each RIC-E Trust® established. This fee is not
associated with investment advisory services offered by EFS although commissions are
generated from the underlying annuity through SMH.
Code of Ethics
EFS has adopted a Code of Ethics (“The Code”) that is designed to ensure that all employees
adhere to the highest standards of ethical conduct. The Code states that all of our employees
must act in the best interest of the client at all times. It also states that employees should avoid
any practice that creates or appears to create a material conflict of interest that could
potentially harm a client.
In addition, the EFS Code of Ethics requires, among other things, that employees:
• Submit their personal and related trading Accounts to the Compliance Department for
Review;
• Refrain from purchasing Initial Public Offerings (“IPOs”);
• Refrain from trading on inside information;
• Get approval prior to purchasing a private placement;
• Comply with ethical restraints including restrictions on giving and receiving gifts; and
• Report any conduct that could potentially harm a client.
EFS has also adopted supervisory procedures that are designed to detect the following abusive
behavior:
• Front-running, trading ahead or opposite clients;
• Trading in securities on the SMH Restricted or Watch List;
• Trading that appears to be based on inside information;
• Short-term or day trading; and
• Trading during designated SMH blackout periods.
Any officer or employee of EFS who fails to observe the EFS Code of Ethics risks serious
sanctions, including personal liability and/or termination of employment.
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A copy of our Code of Ethics is available upon request by contacting us using the information on
the cover page.
Related Persons May Invest in the Same Securities
EFS investment advisory personnel may invest their personal funds and establish an EMAP
Account for themselves. Our advisory personnel may also participate in the EFS Employee 401(k)
Plan, which uses abbreviated EMAP asset allocation models that do not include exchange-traded
funds. In that regard, employees may buy and sell for themselves the same underlying securities
as clients, and will have interests in securities owned by or recommended to EFS clients,
including mutual funds, ETFs, and insurance products. Although all employees get the benefit of
a fee reduction on EMAP Accounts, those Accounts are not given preferential trading treatment.
Employee Accounts are monitored and rebalanced on the same basis as all other unrestricted
client Accounts invested, in accordance with the same EMAP asset allocation model strategy.
We have adopted procedures relating to personal securities transactions, insider trading, and
internal trading that are designed to prevent client harm as a result of this conflict of interest.
Agency Cross Procedures
In order to comply with the agency cross provisions of the Advisers Act, EFS relies on SMH
policies and procedures. SMH has policies and procedures in place to ensure that transactions
introduced on behalf of EMAP clients are not crossed with transactions introduced to the
clearing firm on behalf of SMH brokerage customers. As a general matter, the nature of the
securities acquired for EMAP and financial planning clients is not conducive to cross
transactions, since shares of mutual funds and variable annuities are purchased from their
issuers and are not exchange-traded. Although ETFs are exchange-traded, we would not, acting
as investment adviser, generally recommend that such shares be crossed from one advisory
client Account to another, and would never act as a broker with respect to any such potential
cross transaction.
Review of Accounts
EFS client Accounts are reviewed by our advisory personnel. EMAP Accounts are monitored on
an ongoing basis and are rebalanced or assets reallocated based on market or other conditions
as warranted. Securities for Accounts are bought or sold by EFS subject to its limited
discretionary authority. Changes in the asset allocation models, which include adding, removing
or replacing securities at the recommendation of the EFS Investment Committee, are made
infrequently. Those changes are based on significant changes in the economic, financial or
political climate; changes in the tax code; or the management of the securities used by the asset
allocation model. Changes may also be made based on the client’s personal circumstances,
including health, employment and family status or restrictions that the client may place on the
investments in the Account.
Wrap Fee Brochure 20 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Our Advisors generally meet weekly to review economic, tax, financial, political, social and other
relevant issues and to determine if any changes in strategy are warranted and, if so, to
implement such changes. Based on these meetings, each Advisor independently reviews his or
her client’s situation on a periodic basis and makes recommendations as needed.
On at least an annual basis, the Advisor contacts the client to update personal and financial
information including financial, health, employment, marital and family status; time horizon,
goals and objectives; and risk tolerance. The Advisor uses the information to determine if there
are any changes that could impact the ongoing suitability of the Account. The client may request
a review at any time as well.
Nature and Frequency of Client Reports
Clients participating in EMAP receive Account statements at least quarterly and confirmations
(unless otherwise requested to be suppressed by the client) from the clearing broker-dealer,
and generally have unlimited and continuous access to their Account information through
websites offered and maintained by the Account Custodian and EFS.
Client Referrals and Other Compensation
Other Advisers Offering EMAP
EFS sponsors EMAP as discussed above, and makes the asset allocation models available to
clients of other unaffiliated registered investment advisers (“RIAs”), including Sanders Morris
Harris Inc., which is an affiliated firm. We provide systems, services and back office support to
those RIAs. The RIA is responsible for the supervision of its Investment Advisor Representatives
and the selection of the EMAP asset allocation model recommendations made to clients. The
RIA initiates the relationship with the client and is the ongoing client relationship manager. The
RIA, through his or her Advisors, compiles personal and financial information about the client,
maintains the appropriate books and records, makes an asset allocation model recommendation
that will meet the client’s goals and objectives, maintains the ongoing client relationship, and
meets with the client on a periodic basis to discuss suitability and any reasonable restrictions
the client would like to impose on the Account. EFS reviews and approves the recommendation.
The EMAP fee is shared between the two entities on a negotiated basis. The client does not pay
an increased fee as a result of this arrangement.
Client Referrals
From time to time, EFS may enter into agreements to pay other investment advisers for client
referrals in accordance with the requirements of Rule 206(4)-3 of the Investment Advisers Act,
the respective federal and state laws governing the same, and ERISA, as may be applicable. In
such cases, wrap fees will be shared between the two entities. EMAP fees are based on a
percentage of client assets invested in the wrap fee program. Any such referral fee shall be paid
solely from the investment advisory fee. The client does not pay an increased fee as a result of
these arrangements.
Wrap Fee Brochure 21 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Compensation to other investment advisory firms (“Solicitor”) who refer clients to EFS is on a
negotiated basis. The Solicitor provides the client with a copy of the EFS ADV, and a copy of the
EFS written disclosure document, which describes the arrangement between EFS and the
solicitor, including the terms, conditions and compensation.
Selection of Other Advisors – Edelman Financial Network™ (“EFN”)
EFN is a network of Advisors created by EFS to refer prospective clients who are interested in
working with a local advisor in cities where we do not have a branch office. We may refer
prospective clients to these Representatives of other affiliated or unaffiliated registered
investment advisory firms for advisory services in accordance with the requirements of Rule
206(4)-3 of the Investment Advisers Act, and the respective federal and state laws governing the
same. With the exception of Sanders Morris Harris Inc., an affiliated advisory firm,
Representatives are not affiliated with EFS in any manner and they are not our employees.
In selecting Advisors, EFS takes into consideration the Advisor’s investment philosophy,
regulatory status, and overall credibility. The Advisor’s philosophies must be aligned to a large
extent with those of Ric Edelman and EFS. We complete due diligence on each investment
advisory firm and Advisor prior to referring a prospective client. Representatives do not pay any
fee to join EFN other than a nominal expense reimbursement to cover the costs of all necessary
background checks. We may also provide marketing support and practice management training
to the Representative.
The selected Advisor may offer EMAP or any other financial planning product(s) that meets the
prospective client’s needs and goals. We receive no compensation or economic benefit from
products or services offered by the EFN Advisor other than EMAP. Representatives and EFS
share in the EMAP fee. Therefore, there are no additional costs to the client; the client does not
pay a higher fee as a result of this arrangement.
Participation in the Edelman Financial Network raises potential conflicts of interest for Advisors
since they may have an economic incentive to offer EMAP. A potential conflict of interest may
arise from Advisors’ inclination to offer EMAP to clients over other investment products they
offer due to the economic benefits of the referral from EFS.
TD Ameritrade Institutional Program
EFS participates in the TD Ameritrade Institutional Program. TD Ameritrade is an unaffiliated
registered broker-dealer and a member of FINRA, SIPC, and NFA. TD Ameritrade Institutional is a
division of TD Ameritrade, Inc. We receive services that include custody of client securities,
trade execution, clearance and settlement of transactions. The Institutional Program provides
additional significant economic benefit to EFS that is not typically available to TD Ameritrade
retail investors. EFS may make these additional services available to its affiliates without cost.
There is no direct link between EFS participation in the programs and the investment advice it
gives to its clients.
Wrap Fee Brochure 22 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
The economic benefits include the following products and services, which are 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 EFS;
• 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;
• Discounts on compliance, marketing, research and technology; and
• Practice management products or services provided to EFS by third-party vendors.
• TD Ameritrade may also pay for business consulting and professional services received
by EFS related persons.
Some of the products and services made available by TD Ameritrade through the Institutional
Program may benefit us but may not benefit client Accounts. These products or services may
assist us in managing and administering client Accounts, including Accounts not maintained at
TD Ameritrade. Other services made available by TD Ameritrade are intended to help us manage
and further develop our business enterprise. Receiving these economic benefits creates a
potential conflict of interest and may indirectly influence us to recommend TD Ameritrade to
clients for custody and brokerage services.
TD Ameritrade Operations Panel
Our employee(s) may serve on a TD Ameritrade Institutional Operations Panel from time to
time. The panel is sponsored by TD Ameritrade and consists of approximately 24 independent
advisers that advise TD Ameritrade on issues relevant to its service, technology and products
provided. In-person meetings are held three to four times a year. Panel members are not
compensated for their participation. However, TD Ameritrade pays or reimburses EFS for the
travel, lodging and meal expenses incurred when attending panel meetings.
Wrap Fee Brochure 23 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Panel members are selected by TD Ameritrade and appointed to serve for a three-year term.
Longer service is permitted at the discretion of TD Ameritrade Institutional Sales, Service and
Senior Management. At times, panel members are provided with confidential information about
TD Ameritrade initiatives. Therefore, panel members are required to sign a confidentiality
agreement. The benefits received by EFS do not depend on the amount of brokerage
transactions directed to TD Ameritrade. However, the receipt of economic benefit by EFS
creates a potential conflict of interest and may indirectly influence our recommendation of TD
Ameritrade to clients for custody and brokerage services.
TD Ameritrade AdvisorDirect Program
EFS participates in the TD Ameritrade Institutional program known as AdvisorDirect. TD
Ameritrade Institutional is a division of TD Ameritrade, Inc. (“TD Ameritrade”), member
FINRA/SIPC/NFA. TD Ameritrade is an independent and unaffiliated SEC-registered broker-
dealer. There is no employee or agency relationship between TD Ameritrade and EFS. The
AdvisorDirect program allows TD Ameritrade to refer its brokerage customers and other
investors seeking fee-based personal investment management or financial planning services to
other advisers such as EFS. TD Ameritrade has established the referral program as a means of
retaining brokerage customers. TD Ameritrade does not supervise EFS and has no responsibility
for the management of our client asset allocation models or other advice or services. EFS was
chosen by TD Ameritrade to participate in this program based on the number of client Accounts
maintained with TD Ameritrade, amount of the assets, profitability, and the volume of trades
placed, along with other relevant factors.
We receive client referrals from TD Ameritrade through our participation in the AdvisorDirect
program that may result in economic benefit to EFS. We pay TD Ameritrade an ongoing referral
fee for each successful client referral. This fee is usually a percentage (not to exceed 25%) of the
annual advisory fee that the client pays to EFS. We will also pay TD Ameritrade the referral fee
on any advisory fees we receive from any of a referred client’s family members, including a
spouse, child, or any other family member who resides with the referred client and also
becomes an EFS client. Clients who are referred through this program do not pay any higher fees
or costs than do other EFS clients. More informationis available on the TD Ameritrade
AdvisorDirect Disclosure and Acknowledgement Form. Please contact us utilizing the
information on the cover page if you would like a copy.
Our participation in the AdvisorDirect program poses potential conflicts of interest. TD
Ameritrade will most likely refer clients through AdvisorDirect to us to encourage clients to
custody their assets at TD Ameritrade and maintain client Accounts that are profitable to TD
Ameritrade. Consequently, in order to obtain client referrals from TD Ameritrade, we may have
an incentive to recommend to clients that the assets under management by EFS be held in
custody with TD Ameritrade and that transactions for client Accounts be placed with TD
Ameritrade. In accordance, we have agreed not to solicit clients referred through AdvisorDirect
to transfer their Accounts from TD Ameritrade or to establish brokerage or custody Accounts at
Wrap Fee Brochure 24 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
other custodians, except when our fiduciary duties require doing so. Our participation in
AdvisorDirect does not diminish our duty to seek best execution of trades for client Accounts.
Compensation for Other Products and Services
Our Advisors receive commissions on insurance and/or securities products purchased by
financial planning clients who choose to implement their financial plan through us. Advisory
personnel may also receive 12b-1 fees as a result of placing clients with retail mutual funds.
EMAP clients do not incur sales charges, commissions, or 12b-1 fees when purchasing or owning
variable annuities or mutual funds and ETFs.
As a financial planning firm, we make the following statements:
(1) Our Advisors are also licensed to sell insurance policies from several insurance
companies and may receive sales or referral compensation from any such transactions;
(2) Clients are under no obligation to have EFS or our advisory personnel implement any
suggestions made in the financial plan;
(3) If asked to implement the suggestions of the financial plan, we intend to implement
such financial planning, in whole or in part, through products selected by us and to clear
securities transactions through Pershing, TD Ameritrade, or Fidelity as described in Item
12 of EFS Form ADV;
(4) To the extent EFS or our Advisors implement recommendations through SMH;
a. They are acting as agents for SMH.
b. They will use only products offered by SMH.
c. They will earn commissions.
(5) Clients have total freedom to execute securities and/or insurance transactions with any
company of their choice other than with respect to participation in EMAP or the receipt
of ongoing, annual financial planning recommendations.
Indirect Compensation Regarding Television Broadcasts
Ric Edelman is the host of a syndicated television program, “The Truth About Money with Ric
Edelman,” airing on public television stations. The program covers all aspects of financial
education. He does not give specific securities advice and does not reveal any of the EMAP asset
allocation model holdings or recommendations. A portion of the television show is filmed before
a studio audience where participants can ask questions; an audience participant may discuss a
specific mutual fund, ETF or insurance product that may be held in the accounts of certain EMAP
clients or under consideration at the time of the question. Mr. Edelman does not give specific
legal, tax or investment advice, and he may give advice that is the same as or different from the
advice EFS has taken or may take for its clients.
Wrap Fee Brochure 25 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
From time to time, TD Ameritrade provides a significant economic benefit to EFS by directly
sponsoring the foregoing television show. This economic benefit may or may not be offered to
other independent investment advisors participating in the TD Ameritrade Institutional
Program. TD Ameritrade provides this economic benefit to us indirectly at its sole discretion and
its own expense. The benefit we receive does not depend on the number of brokerage
transactions directed to TD Ameritrade. As part of our fiduciary duties to clients, we endeavor at
all times to put the interests of our clients first. Receiving this significant economic benefit
creates a potential conflict of interest and may directly or indirectly influence our choice of TD
Ameritrade for client account custody and brokerage services.
From time to time, iShares, the exchange-traded fund business of BlackRock and one of the
industry’s leading exchange-traded funds platforms, provides a significant economic benefit to
EFS by directly sponsoring the foregoing television show. This economic benefit may or may not
be offered to other independent investment advisors doing business with iShares. iShares
provides this economic benefit to us indirectly at its sole discretion and its own expense. The
benefits we receive do not depend on any reciprocal services or trades directed to BlackRock or
iShares. As part of our fiduciary duties to clients, we endeavor at all times to put the interests of
our clients first. Receiving this significant economic benefit creates a potential conflict of
interest and may directly or indirectly influence our use of BlackRock or iShares to provide more
exchange traded funds in EMAP portfolios.
Financial Information
Registered investment advisers are required to provide clients with financial information or
disclosures about its financial condition under certain circumstances. EFS is financially sound
and does not have any financial condition that would impair its ability to meet contractual or
fiduciary commitments to clients. We have not been the subject of any bankruptcy proceeding.
Therefore, we are not required to provide any additional financial statements under this item.
Wrap Fee Brochure 26 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
Edelman Financial Services LLC
Investment Committee
This brochure provides information about the members of the Edelman Financial Services LLC
Investment Committee and is a supplement to the Edelman Financial Services LLC brochure
which is attached. If you have any questions about the contents of either brochure, please
contact us at 888-PLAN-RIC (888-752-6742) or you may email us at info@RicEdelman.com or
write us at the address below. The information in this brochure has not been approved or
verified by the United States Securities and Exchange Commission or any state securities
authority, nor does registration with the SEC imply a certain level of skill or training.
4000 Legato Road, 9th Floor
Fairfax, VA 22033
EdelmanFinancial.com
RicEdelman.com
888-PLAN-RIC (888-752-6742)
866-742-7222 (fax)
info@RicEdelman.com
Form ADV Part 2B 1 June 20, 2012
EDELMAN FINANCIAL SERVICES LLC
EFS Investment Committee
Summary
EFS has an Investment Committee which consists of twelve (12) voting members, two (2) ex-
officio members, and five (5) non-voting members. The committee uses its fiduciary obligations
to research, evaluate, construct and monitor the best asset allocation and security selection for
each EMAP® model. Each Advisor then uses his or her fiduciary duty to determine which model
or combination of models (if any) is in the best interest of each client. The committee meets on
a regular basis to discuss and vote on changes to asset allocation models such as
recommendations to replace, reduce or add investments as deemed appropriate.
Andrew Massaro, Director, Financial Planning, serves as Chairman of the Investment
Committee. Robert Bowman, EMAP Portfolio Manager and Associate Director, Financial
Planning, is responsible for implementing and monitoring the EMAP Investment Selection Policy.
Voting members of the committee consist of EFS Investment Advisors and senior staff members
who are appointed by the President of EFS. Non-voting members, with the exception of Robert
Bowman, provide no investment advice to the committee and consist of managers from the
operations, trading and compliance areas; they provide operational and compliance guidance to
the committee’s voting members and assist with the implementation of decisions.
Ex-Officio Committee Members:
Ric Edelman Chairman and CEO
Ed Moore President
Voting Committee Members:
Al Burgos Associate Director, Financial Planning
Scott Butera Director, Financial Planning
Mary Davis Director, Financial Planning
Patrick Day Director, Financial Planning
Paul Jordan VP, Financial Planning
Jan Kowal Director, Financial Planning
J.B. Liebstein Director, Financial Planning
Andrew Massaro Director, Financial Planning
Betty O’Lear Director, Financial Planning
R.J. Reibel Manager, Retirement Plans Division
Ed Schweitzer Manager, TAMP Division
Tom Wood Director, Financial Planning
Non-Voting Members:
Mike Attiliis Director, Business Systems Group
Robert Bowman EMAP Portfolio Manager and Associate Director, Financial Planning
Darren Norwood Manager, Regulatory Compliance
Eric Olsen EMAP Trading & Risk Management Analyst
Dave Sheehan Operations Manager and Associate Director, Financial Planning
Form ADV Part 2B 2 June 20, 2012
Fredric (Ric) Mark Edelman
Chairman and CEO
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888‐752‐6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888‐752‐6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1958
Formal Education: Bachelor of Arts in Communications, Rowan University
Honorary Doctorate, Rowan University
Business Background: Ric Edelman has been an investment advisor for 26 years, and has been with
Edelman Financial Services that entire time.
Employment History: 1986 ‐ Present; CEO and Founder of Edelman Financial Services LLC
Professional Designation(s)*: Board Certified in Mutual Funds
Certified Fund Specialist®
Certified Retirement Counselor®
Chartered Mutual Fund Counselor℠
Qualified Financial Planner
Registered Financial Consultant
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Ric has no legal or disciplinary events to report.
Other Business Related Activities
In addition to serving as Chairman and CEO of Edelman Financial Services, Ric is the President, CEO and a
Director of its parent company, The Edelman Financial Group (NASDAQ: EF). He is responsible for the
leadership and strategic direction of both companies. Due to his role with TEFG, Ric may spend a
considerable amount of time serving the interests of EF shareholders.
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Ric can
accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker‐dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888‐752‐6742 Updated June 6, 2012
In accordance with our firm’s policy, Ric generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Ric also holds insurance licenses. As such, he may recommend the purchase of life, health, long‐term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Ric is a financial educator and spends a significant amount of time, usually outside of regular business
hours, engaged in that activity. This activity is unrelated to his position with the firm.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Ric’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The Team supervises all
advisory‐related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory‐related activities. The Team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251‐0167.
*Important Information About the Board Certified in Mutual Funds (BCM®) Designation: The BCM® designation is one of the most comprehensive mutual fund designations in the financial
service industry. BCM® professionals are educated in all aspects of mutual funds: selection, regulation, management, fees and strategies. Prerequisites include a letter of recommendation
from a client and superior; Certified Fund Specialist® designation; and completion of a graded case study. There is no continuing education requirement and this designation is no longer open
to new individuals.
Important Information About the Certified Fund Specialist® (CFS®) Designation: A Certified Funds Specialist® learns criteria such as alpha, beta, correlation coefficient, first‐auto correlation, R‐
squared, and standard deviation that should be incorporated in the selection process. With mutual funds training, a Certified Fund Specialist® is able to evaluate and compare financial
measurements and benchmarks when constructing a portfolio. Candidates of the CFS® must meet one of the following requirements: (1) a bachelor's degree or (2) one year of financial
services work experience. In addition, CFS® candidates must complete 30 hours of continuing education every two years.
InFRE's Certified Retirement Counselor® (CRC) was created to advance recognition among retirement planning professionals of the need for a retirement specific certification program that
demonstrates a mastery of subject matter, a commitment to the retirement planning profession, and adherence to a code of ethics and continuing education requirements. CRC candidates
must have a bachelor's degree or equivalent with two years relevant professional experience (within the past five years) or high school diploma or equivalent with five years relevant
professional experience (within the past seven years) and pass a background check. In addition, Certified Retirement Counselors must complete 15 hours of continuing education per year.
Important Information About the Chartered Mutual Fund Counselor℠ (CMFC®) Designation: The Chartered Mutual Fund Counselor℠ provides candidates with a thorough knowledge of mutual
funds and their various uses as investment vehicles. The case studies used throughout the course—presenting client scenarios and pointing out opportunities for candidates to make the most
of these popular investments—provide insight into effective use of these investment vehicles. There is no prerequisites/experience required for this designation. Candidates must pass a final
designation exam which is online, closed‐book and proctored. In addition, a Chartered Mutual Fund Counselor℠ must complete 16 hours of continuing education every two years.
Important Information About the Qualified Financial Planner (QFP) Designation: Candidates must have a minimum of three years experience in the field of Financial Planning and hold one or
more of the following designations: Chartered Financial Consultant® (ChFC®), CERTIFIED FINANCIAL PLANNER™ (CFP®), Master of Science with a Financial Planning concentration (MS), Master
of Science in Financial Services with a Financial Planning concentration (MSFS) or Personal Financial Specialist (PFS). Examination type varies according to the designations listed above. In
addition, a Qualified Financial Planner must complete 30 hours of continuing education every two years, or 15 hours annually.
Important Information About the Registered Financial Consultant (RFC) Designation: Registered Financial Consultant is a professional designation awarded by the International Association of
Registered Financial Consultants (IARFC) to those financial advisors who meet high standards or education, experience and integrity. Candidates must meet all of the following requirements:
(1) undergraduate or graduate financial planning degree, or have earned one of the following designations: AAMS, AEP, CEP, CFA, CFP, ChFC, CLU, CPA, EA, LUTC, MS, MBA, JD, Ph.D, or
completed a CFP equivalent, IARFC‐approved college curriculum, (2) if operating on a commission basis, must meet licensing requirements for securities and life and health insurance; if
operating strictly as fee‐only and not licensed, then must be registered as an investment adviser, and (3) four years full‐time experience as a financial planning practitioner. Candidates are
required to pass the IARFC self‐study course: final certification exam. In addition, candidates must complete 40 hours of continuing education per year.
Ric Edelman Updated June 6, 2012
Edward (Ed) Philip Moore
President
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1960
Formal Education: Bachelor of Science in Industrial Engineering and Operations Research, Virginia
Polytechnic Institute and State University
Business Background: Ed Moore has been an investment advisor since 1986, and has been with
Edelman Financial Services since 1990.
Employment History: 1990 Present; President of Edelman Financial Services
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Ed has no legal or disciplinary events to report.
Other Business Related Activities
In addition to serving as President of Edelman Financial Services, Ed is Executive Vice President of
Wealth Management with our parent company, The Edelman Financial Group (NASDAQ: EF). In that
role, he oversees a division of related Registered Investment Advisors and Registered Representatives.
He devotes a fair amount of time to those activities.
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Ed can
accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
In accordance with our firm’s policy, Ed generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Ed also holds insurance licenses. As such, he may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Ed is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Ed’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
* Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Ed Moore Updated April 1, 2012
Alfonso (Al) Burgos
Associate Director, Financial Planning
Voting Member of Investment Committee
6550 Rock Spring Drive
Suite 510
Bethesda, MD 20817
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1973
Formal Education: Bachelor of Arts in English, The State University of New York, Geneseo
Business Background: Al Burgos has been an investment advisor for 16 years, and has been with
Edelman Financial Services since 2006.
Employment History:
x 2006 Present; Associate Director, Financial Planning for Edelman Financial Services. Provides
financial advice to clients.
x 1999 2006; Financial Advisor at Brookstreet Securities. Provided financial advice to individuals
and small businesses.
x 1999 1999; Financial Advisor at MultiFinancial Securities. Provided financial advice to
individuals and small businesses.
x 1998 1999; Financial Advisor at Pacific Cortez. Provided financial advice to individuals and small
businesses.
x 1997 1998; Financial Advisor at Tasin & Co. Provided provided financial advice to individuals
and small businesses.
Professional Designation(s)*: Accredited Asset Management Specialist
Chartered Mutual Fund Counselor
Chartered Retirement Planning Counselor
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Al has no legal or disciplinary events to report.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Al can
accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
In accordance with our firm’s policy, Al generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Al also holds insurance licenses. As such, he may recommend the purchase of life, health, long term care
and disability insurance products, as well as fixed and variable annuities. There could be a conflict of
interest if such recommendation were to generate a commission.
Additional Compensation
Al is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Al’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team, which
is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all advisory
related activities using both technological and physical analysis to review and approve new accounts,
transactions and other advisory related activities. The team is a division of the firm’s Compliance
Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be reached at
eparker@ricedelman.com or by calling (703) 251 016
*Important Information About the Accredited Asset Management Specialist (AAMS®) Designation: The Accredited Asset Management Specialist or AAMS®
provides the advisor with a logical progression of topics, enabling them to think in terms of clients’ total financial situations, not just their investments. At the
conclusion of the studies, the candidate’s ability to identify opportunities and employ strategies is enhanced not only with regard to investments, but also related to
planning for insurance, tax, retirement, and estate issues. There is no prerequisite. The candidate must complete a self study course consisting of 12 modules,
requiring 100 120 hours. The candidate must also pass a final exam (online, closed book, proctored). The candidate is required to complete 16 hours of continuing
education every 2 years.
Important Information About the Chartered Mutual Fund Counselor (CMFC®) Designation: The Chartered Mutual Fund Counselor provides candidates with a
thorough knowledge of mutual funds and their various uses as investment vehicles. The case studies used throughout the course—presenting client scenarios and
pointing out opportunities for candidates to make the most of these popular investments—provide insight into effective use of these investment vehicles. There is
no prerequisites/experience required for this designation. Candidates must pass a final designation exam which is online, closed book and proctored. In addition, a
Chartered Mutual Fund Counselor must complete 16 hours of continuing education every two years.
Important Information About the Chartered Retirement Planning Counselor (CRPC®) Designation: The Chartered Retirement Planning Counselor (CRPC®)
program is issued by the College for Financial Planning and focuses on a course of study encompassing pre and post retirement needs and issues related to asset
management and estate planning. Although the CRPC® program requires no prerequisites, Candidates must complete a final designation exam that is online, closed
book and proctored. Additionally, Candidates much complete 16 hours of continuing education every two years.
Alfonso Burgos Updated April 1, 2012
Scott Christopher Butera
Director, Financial Planning
Voting Member of Investment Committee
6550 Rock Spring Drive
Suite 510
Bethesda, MD 20817
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1975
Formal Education: Bachelor of Arts in Economics, University of Maryland
Business Background: Scott Butera has been an investment advisor for 15 years, and has been with
Edelman Financial Services since 2006.
Employment History:
x 2006 Present; Director of Financial Planning for Edelman Financial Services. Provides financial
advice to clients.
x 2001 2006; Vice President / Senior Account Executive at Fidelity Investments. Provided
financial advice to clients.
x 2000 2001; Investment Advisor at Charles Schwab. Provided financial advice to clients.
x 1997 2000; Financial Advisor for American Express. Provided financial advice to clients.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Scott has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Scott
can accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
In accordance with our firm’s policy, Scott generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Scott also holds insurance licenses. As such, he may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Scott is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Scott’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
*Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Scott Butera Updated April 1, 2012
Mary Stone Davis
Director, Financial Planning
Voting Member of Investment Committee
4000 Legato Rd
9th Floor
Fairfax, VA 22033
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1959
Formal Education: Bachelor of Business Administration, Southern Methodist University
Business Background: Mary Davis has been an investment advisor for 31 years, and has been with
Edelman Financial Services since 1994.
Recent Employment History:
1994 Present; Director of Financial Planning for Edelman Financial Services. Provides financial advice
for clients.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Mary has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Mary
can accommodate her clients because she holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
In accordance with our firm’s policy, Mary generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
Mary also holds insurance licenses. As such, she may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Mary is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Mary’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
_____________________________________________________________________________________
*Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Mary Davis Updated April 1, 2012
Patrick (Pat) Ward Day
Director, Financial Planning
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1959
Formal Education: Bachelor of Science in Finance, University of Maryland
Business Background: Pat Day has been an investment advisor for 27 years, and has been with Edelman
Financial Services since 1992.
Employment History:
x 1992 Present; Director, Financial Planning for Edelman Financial Services. Provides financial
advice to clients.
x 1985 1992; Financial Advisor at Capital Analysts Inc. Provided financial advice to business
owners.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Pat has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Pat can
accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
In accordance with our firm’s policy, Pat generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Pat also holds insurance licenses. As such, he may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Pat is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Pat’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
*Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Patrick Day Updated April 1, 2012
Paul Jason Jordan
Vice President, Financial Planning
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1964
Formal Education: Bachelor of Arts in Communication, Virginia Polytechnic Institute and State University
Business Background: Paul Jordan has been an investment advisor for 19 years, and has been with
Edelman Financial Services since 2007.
Employment History:
x 2007 Present; Vice President of Financial Planning for Edelman Financial Services. Manages the
staff of financial planners.
x 2001 2007; Financial Advisor at SunTrust Investment Services. Managed a staff of financial
advisors.
x 1995 2001; Financial Advisor and Branch Manager at Quick and Reilly. Managed brokerage
office and provided financial advice to clients.
x 1993 1995; Financial Advisor at Merrill Lynch. Provided financial planning and advice.
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Paul has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interest, we may deposit,
transfer, purchase or liquidate securities in their account that they maintain with our firm. Paul can
accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 April 1, 2012
In accordance with our firm’s policy, Paul generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Paul also holds insurance licenses. As such, he may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Paul is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Paul’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
Paul Jordan Updated April 1, 2012
Jan Eric Kowal
Director, Financial Planning
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888‐752‐6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888‐752‐6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1958
Formal Education: Bachelor of Business Administration in Accounting, George Washington University
Masters of Business Administration in Finance and Investments, George Washington
University
Business Background: Jan Kowal has been an investment advisor for 28 years, and has been with
Edelman Financial Services since 1993.
Employment History:
1993 ‐ Present; Director, Financial Planning for Edelman Financial Services. Provides financial
advice to clients.
1986 ‐ 1993; Financial Planner for Tax Qualified Trusts. Provided financial advice to individuals
and small businesses.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Certified Public Accountant
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Jan has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Jan can
accommodate his clients because he holds the appropriate securities licenses as a Registered
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888‐752‐6742 Updated April 1, 2012
Representative with Sanders Morris Harris Inc., a broker‐dealer that is owned by The Edelman Financial
Group.
In accordance with our firm’s policy, Jan generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Jan also holds insurance licenses. As such, he may recommend the purchase of life, health, long‐term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Jan is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Jan’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory‐related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory‐related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251‐0167.
*The CERTIFIED FINANCIAL PLANNER™ (CFP®) certification represents proven expertise within the financial planning profession. Those with the
CFP® designation have demonstrated competency in all areas of finance related to financial planning. Candidates for the CFP® designation must
pass a certification exam administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to
the financial planning field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates
must also complete qualifying work experience (three years full‐time or equivalent part‐time experience in the financial planning field) and
agree to adhere to the CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® candidates
must complete 30 hours of continuing education every two years.
Important Information About the Certified Public Accountant (CPA) Designation: All CPA candidates must pass the Uniform CPA Examination to
qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. While the exam is the same no matter where it's
taken, every state/jurisdiction has its own set of education and experience requirements that individuals must meet.
Jan Kowal Updated April 1, 2012
Jerome Bruce (JB) Liebstein
Director, Financial Planning
Voting Member of Investment Committee
6550 Rock Spring Drive
Suite 510
Bethesda, MD 20817
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1961
Formal Education: University of Maryland, College Park, MD, 1983 1986
Tel Aviv University, Israel, 1982 1983
West Virginia University, Morgantown, West Virginia, 1981 1982
Business Background: JB Liebstein has been an investment advisor for 16 years, and has been with
Edelman Financial Services since 2006.
Employment History:
x 2006 Present; Director of Financial Planning at Edelman Financial Services. Provides financial
advice to clients.
x 2000 2006; Registered Representative for Next Financial Group. Provided financial planning to
clients.
x 1997 2000; Registered Representative at Lincoln Financial Group. Provided financial planning
to clients.
x 1996 1997; Registered Representative at Cigna Financial Group. Provided financial planning to
clients.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Chartered Financial Consultant®
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
JB has no legal or disciplinary events to report.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. JB can
accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
In accordance with our firm’s policy, JB generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
JB also holds insurance licenses. As such, he may recommend the purchase of life, health, long term care
and disability insurance products, as well as fixed and variable annuities. There could be a conflict of
interest if such recommendation were to generate a commission.
Additional Compensation
JB is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
JB’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team, which
is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all advisory
related activities using both technological and physical analysis to review and approve new accounts,
transactions and other advisory related activities. The team is a division of the firm’s Compliance
Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be reached at
eparker@ricedelman.com or by calling (703) 251 0167.
*Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Important Information About the Chartered Financial Consultant® (ChFC®) Designation: The Chartered Financial Consultant® (ChFC®) program
prepares candidates to meet the advanced financial planning needs of individuals, professionals and small business owners. Candidates gain a
sustainable advantage in this competitive field with in depth coverage of the key financial planning disciplines, including insurance, income
taxation, retirement planning, investments and estate planning. Candidates are required to have three years of full time business experience
within the five years preceding the awarding of the designation and pass a final proctored exam for each course. In addition, the Charter
Financial Consultant® must complete 30 hours of continuing education every two years.
Jerome Liebstein Updated April 1, 2012
Andrew Charles Massaro
Director, Financial Planning
Chairman of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888‐752‐6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888‐752‐6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1967
Formal Education: Bachelor of Science in Business Administration, Georgetown University
Business Background: Andrew Massaro has been an investment advisor for 24 years, and has been with
Edelman Financial Services since 1994.
Employment History:
1994 ‐ Present; Director of Financial Planning for Edelman Finanical Services. Provides financial
advice to clients.
1991 ‐ 1994; Senior New Business Specialist at Schoenke & Associates. Provided executive
benefits consulting to corporations.
1989 ‐ 1991; Registered Representative at Capital Analysts Inc. Provided estate planning and
investment management to business owners.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Certified Fund Specialist®
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Andrew has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Andrew
can accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker‐dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888‐752‐6742 Updated April 1, 2012
In accordance with our firm’s policy, Andrew generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Andrew also holds insurance licenses. As such, he may recommend the purchase of life, health, long‐
term care and disability insurance products, as well as fixed and variable annuities. There could be a
conflict of interest if such recommendation were to generate a commission.
Additional Compensation
Andrew is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Andrew’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory‐related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory‐related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251‐0167.
* Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full‐time or equivalent part‐time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Important Information About the Certified Fund Specialist® (CFS®) Designation: A Certified Funds Specialist® learns criteria such as alpha, beta,
correlation coefficient, first‐auto correlation, R‐squared, and standard deviation that should be incorporated in the selection process. With
mutual funds training, a Certified Fund Specialist® is able to evaluate and compare financial measurements and benchmarks when constructing
a portfolio. Candidates of the CFS® must meet one of the following requirements: (1) a bachelor's degree or (2) one year of financial services
work experience. In addition, CFS® candidates must complete 30 hours of continuing education every two years.
Andrew Massaro Updated April 1, 2012
Betty Jean O'Lear
Director, Financial Planning
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1939
Formal Education: Bachelor of Science in English, Texas Tech University
Master of Arts in English, Trinity University of Texas
Master in Business Administration, University of California at San Bernardino
Business Background: Betty O’Lear has been an investment advisor for 29 years, and has been with
Edelman Financial Services since 1994.
Employment History:
x 1994 Present; Director of Financial Planning for Edelman Financial Services. Provides
financial advice to clients.
x 1992 1994; Rental Agent at Charles E Smith. Agent for 900 unit apartment complex.
x 1988 1991; Not employed due to military assignment abroad.
x 1987; Registered Representative at Invest Corporation. Provided investment advice to bank
customers.
x 1986; Registered Representative at Barnett Banks of Florida. Advised and executed
purchases and sales of securities for clients.
x 1979 1985; Registered Representative at Merrill Lynch. Advised and executed purchases and
sales of securities for clients.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Betty has no legal or disciplinary events to report.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Betty
can accommodate her clients because she holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
In accordance with our firm’s policy, Betty generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Betty also holds insurance licenses. As such, she may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Betty is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Betty’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
*Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Betty O’Lear Updated April 1, 2012
Raymond James (R.J.) Reibel, II
Manager, Retirement Plans Division
Voting Member of Investment Committee
200 Westgate Parkway
Suite 202
Henrico, VA 23233
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1977
Formal Education: Bachelor of Arts in Public Policy, College of William & Mary
Master of Science in Business Finance, Virginia Commonwealth University
Business Background: R.J. Reibel has been an investment advisor for 9 years, and has been with
Edelman Financial Services since 2008.
Employment History:
x 2008 Present; Manager of Retirement Plans Division for Edelman Financial Services.
Investment Advisor to corporate retirement plans.
x 2004 2008; Planning Specialist at Financeware Inc. Designed and reviewed financial plans for
advisors and retirement plans for companies.
x 2001 2003; Financial Analyst at Marsh USA. Provided budgeting and forecasting analysis to
office manager.
x 2000 2000; Registered Representative at Mass Mutual. Sold life Insurance and mutual funds.
Professional Designation(s)*: Chartered Retirement Plan Specialist
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
R.J. has no legal or disciplinary events to report.
Other Business Related Activities
R.J. is not involved in any other business related activities.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
Additional Compensation
R.J. is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
R.J.’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
*Important Information About the Chartered Retirement Plan Specialist (CRPS®) Designation: The Chartered Retirement Plans Specialist
designation provides the advisor with the unique skills needed to implement and oversee internal retirement plans. As retirement plan options
evolve and tax complexities increase, many companies seek professional plan administrators to design, install, and maintain their company
retirement plans. There is no prerequisite/experience required to obtain the CRPS® designation. Candidates must pass a final designation exam
which is online, closed book and proctored. In addition, the candidate must complete 16 hours of continuing education every two years.
Raymond Reibel Updated April 1, 2012
Edward (Ed) Newton Schweitzer
Manager, TAMP Division
Voting Member of Investment Committee
200 Westgate Parkway
Suite 202
Henrico, VA 23233
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1962
Formal Education: Bachelor of Science in Aeronautical Administration, Parks College of
Saint Louis University
Business Background: Ed Schweitzer has been an investment advisor for 7 years, and has been with
Edelman Financial Services since 2007.
Employment History:
x 2007 Present; Manager of TAMP Division for Edelman Financial Services. Serves institutional
clients and oversees 100 non affiliated advisors.
x 2006 2007; Investment Counselor at Euro Pacific Capital. Broker specializing in foreign
securities.
x 2005 2006; Financial Representative at AXA Equitable. Offered retirement benefits products to
school teachers.
x 1988 2005; Pilot at USAirways. First officer on several aircraft types.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Ed has no legal or disciplinary events to report.
Other Business Related Activities
Ed is not involved in any other business related activities.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
Additional Compensation
Ed is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Ed’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
* Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Edward Schweitzer Updated April 1, 2012
Thomas (Tom) Walker Wood
Director, Financial Planning
Voting Member of Investment Committee
4000 Legato Road
9th Floor
Fairfax, VA 22033
888 752 6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888 752 6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1950
Formal Education: Bachelor of Science in Commerce, University of Virginia
Business Background: Tom Wood has been an investment advisor for 22 years, and has been with
Edelman Financial Services since 1999.
Employment History:
x 1999 Present; Director of Financial Planning for Edelman Financial Services. Provides financial
advice for clients.
x 1990 1999; Insurance Agent/Investment Adviser for MassMutual. Insurance and investment
planning and sales.
Professional Designation(s)*: CERTIFIED FINANCIAL PLANNER™
Chartered Financial Consultant®
Chartered Life Underwriter®
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Tom has no legal or disciplinary events to report.
Other Business Related Activities
Sometimes, when an appropriate situation arises and is in the client’s best interests, we may deposit,
transfer, purchase or liquidate securities in the client’s account that is maintained with our firm. Tom
can accommodate his clients because he holds the appropriate securities licenses as a Registered
Representative with Sanders Morris Harris Inc., a broker dealer that is owned by The Edelman Financial
Group.
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888 752 6742 Updated April 1, 2012
In accordance with our firm’s policy, Tom generally does not recommend the purchase of securities
products that generate brokerage commissions. However, purchasing or selling securities may be
appropriate at times, and in such cases the firm might charge the client a transaction fee. When this
occurs, the firm may offer discount brokerage rates as an accommodation to our clients.
Tom also holds insurance licenses. As such, he may recommend the purchase of life, health, long term
care and disability insurance products, as well as fixed and variable annuities. There could be a conflict
of interest if such recommendation were to generate a commission.
Additional Compensation
Tom is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the adviser or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Tom's investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251 0167.
_______________________________________________________________________________________________________
*Important Information About the CERTIFIED FINANCIAL PLANNER ™ (CFP®) Designation: The CERTIFIED FINANCIAL PLANNER ™ (CFP®)
certification represents proven expertise within the financial planning profession. Those with the CFP® designation have demonstrated
competency in all areas of finance related to financial planning. Candidates for the CFP® designation must pass a certification exam
administered by the Certified Financial Planner Board of Standards Inc. that focuses on over 100 topics of concern to the financial planning
field, such as retirement, estate, and investment planning. In addition to passing the CFP® certification exam, candidates must also complete
qualifying work experience (three years full time or equivalent part time experience in the financial planning field) and agree to adhere to the
CFP Board's code of ethics and professional responsibility and financial planning standards. In addition, CFP® must complete 30 hours of
continuing education every two years.
Important Information About the Chartered Financial Consultant® (ChFC®) Designation: The Chartered Financial Consultant® (ChFC®) program
prepares candidates to meet the advanced financial planning needs of individuals, professionals and small business owners. Candidates gain a
sustainable advantage in this competitive field with in depth coverage of the key financial planning disciplines, including insurance, income
taxation, retirement planning, investments and estate planning. Candidates are required to have three years of full time business experience
within the five years preceding the awarding of the designation and pass a final proctored exam for each course. In addition, the Charter
Financial Consultant® must complete 30 hours of continuing education every two years.
Important Information About the Chartered Life Underwriter® (CLU®) Designation: The Chartered Life Underwriter® designation provides
candidates with in depth knowledge on the insurance needs of individuals, business owners and professional clients. Candidates are required to
have three years of full time business experience within the five years preceding the awarding of the designation and successfully pass a final
proctored exam for each course. In addition, a Chartered Life Underwriter® must complete 30 hours of continuing education every two years.
Thomas Wood Updated April 1, 2012
Robert Scott Bowman
Portfolio Manager
Associate Director, Financial Planning
Member of Investment Committee
200 Westgate Parkway
Suite 202
Henrico, VA 23233
888‐752‐6742
This is a supplement to the Edelman Financial Services LLC brochure. Please contact us at 888‐752‐6742
if you have any questions about our brochure or this supplement.
Educational Background and Business Experience
Year of Birth: 1968
Formal Education: Bachelor of Business Administration Finance and Insurance, Radford University
College of Business and Economics
Business Background: Robert has been in investment management for 21 years, and has been with
Edelman Financial Services since 2008.
Employment History:
2008 ‐ Present; Portfolio Manager and Associate Director, Financial Planning for Edelman
Financial Services. Directs portfolio and risk management for EMAP. Provides financial advice to
clients.
2000 ‐ 2007; Managing Director at Trusco Capital Management. Directed portfolio and risk
management.
1994 ‐ 2000; Portfolio Manager at Crestar Asset Management. Directed portfolio and risk
management.
1990 ‐ 1994; Equity Trader at Capitoline Investment Advisory.
Professional Designation(s)*: Chartered Financial Analyst
Chartered Alternative Investment Analyst
Disciplinary Information
Like all Registered Investment Advisors, we are required to disclose all material facts regarding any legal
or disciplinary events that could materially influence your evaluation of your advisor.
Robert has no legal or disciplinary events to report.
Other Business Related Activities
In addition to serving as Portfolio Manager for Edelman Financial Services, Robert serves on the Sanders
Morris Harris Inc. Due Diligence Committee and the Investment Committee. In those roles, he provides
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CORPORATE HEADQUARTERS 4000 Legato Rd., 9 Fl., Fairfax, VA 22033 | RicEdelman.com | 888‐752‐6742 Updated June 1, 2012
input and guidance to both committees when making decisions. Sanders Morris Harris Inc. is part of The
Edelman Financial Group (NASDAQ:EF) and an affiliated broker/dealer and registered investment
adviser.
Additional Compensation
Robert is not engaged in any other business activity for compensation.
Supervision
Edelman Financial Services has adopted a formal compliance program designed to prevent, detect and
correct any actual or potential violations by the firm or its supervised persons of the Investment
Advisers Act of 1940, and other federal securities laws and rules adopted under the Advisers Act.
Robert’s investment advisory activity is supervised by the firm’s Compliance Supervisory Review Team,
which is located at the firm’s Corporate Headquarters in Fairfax, Virginia. The team supervises all
advisory‐related activities using both technological and physical analysis to review and approve new
accounts, transactions and other advisory‐related activities. The team is a division of the firm’s
Compliance Department, which is managed by Eraine Parker, Chief Compliance Officer. She can be
reached at eparker@ricedelman.com or by calling (703) 251‐0167.
*Important Information About the Chartered Financial Analyst (CFA) Designation: The CFA designation is highly revered in investment management field
and those who have the credential are expected to have an in‐depth knowledge of the investment industry, with many going on to careers as portfolio
managers or research analysts at hedge funds and private equity firms. Obtaining the qualification requires; a self‐study program which takes several
years to complete and participants must pass three six‐hour exams, as well as agree to abide by a strict code of ethics and standards of conduct.
Candidate must also meet one of the following requirements: Undergraduate degree and four years of professional experience involving investment
decision‐making, or Four years qualified work experience (full time, but not necessarily investment related).
•Undergraduate degree and four years of professional experience involving investment decision‐making, or
•Four years qualified work experience (full time, but not necessarily investment related).
*Important Information About the Chartered Alternative Investment Analyst (CAIA) Designation: The Chartered Alternative Investment Analyst program
provides individuals with the core competencies required to create, manage, and monitor an institutional‐quality portfolio consisting of both traditional
and alternative investments. Candidates must hold a U.S. bachelor's degree or the equivalent, and have more than one year of professional experience,
or alternatively have at least four years of professional experience. The candidate must pass a Level I and Level II exam, pay an annual membership fee
and agree on an annual basis to abide by the Member Agreement which includes adhering to a Professional Conduct Standard.
Robert Bowman Updated June 1, 2012
WHAT DOES EDELMAN FINANCIAL SERVICES LLC
FACTS DO WITH YOUR PERSONAL INFORMATION?
Financial companies choose how they share your personal information. Federal law gives consumers the
Why? right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and
protect your personal information. Please read this notice carefully to understand what we do.
The types of personal information we collect and share depend on the product or service you have with
us. This information can include:
Social Security number and income
What? Assets and investment experience
Account transactions and risk tolerance
Income and employment information
When you are no longer our customer, we continue to share your information as described in this notice.
All financial companies need to share clients’ personal information to run their everyday business. In
How? the section below, we list the reasons financial companies can share their clients’ personal information,
the reasons Edelman Financial Services chooses to share and whether you can limit this sharing.
Does Edelman Financial Can you limit
Reasons we can share your personal information
Services share? this sharing?
For our everyday business purposes —
such as to process your transactions, maintain your account(s),
respond to court orders and legal investigations, or report to credit Yes No
bureaus
For our marketing purposes —
Yes No
to offer our products and services to you
For joint marketing with other financial companies No We do not share
For our affiliates’ everyday business purposes —
Yes No
information about your transactions and experiences
For our affiliates’ everyday business purposes —
No We do not share
information about your creditworthiness
For our affiliates to market to you No We do not share
For nonaffiliates to market to you No We do not share
Questions? Contact us through RicEdelman.com or call us at 888-752-6742.
Who we are
Who is providing this
Edelman Financial Services LLC
notice?
What we do
How does Edelman To protect your personal information from unauthorized access and use, we use security
Financial Services protect measures that comply with federal law. These measures include computer safeguards and
my personal information? secured files and buildings, as well as:
information access controls
service provider oversight and confidentiality agreements
proper disposal of customer information
periodic security training for personnel
How does Edelman We collect your personal information, for example, when you:
Financial Services collect
my personal information? open an account or seek advice about your investments
direct us to buy securities or direct us to sell securities
enter into an investment advisory contract or tell us about your investment or
retirement portfolio or earnings
We also collect your personal information from other sources, such as credit bureaus,
affiliates or other companies.
Why can’t I limit all sharing? Federal law gives you the right to limit only:
sharing for affiliates’ everyday business purposes — information about your
creditworthiness
affiliates from using your information to market to you
State laws and individual companies may give you additional rights to limit sharing.
Definitions
Affiliates Companies related by common ownership or control. They can be financial and
nonfinancial companies.
Our affiliates include financial advisors such as SMH Capital Advisors, Inc. and GFS
Advisors, LLC; broker dealers such as Sanders Morris Harris Inc. and Global
Financial Services, Inc., and insurance agencies such as HWG Insurance Agency, Inc.
Nonaffiliates Companies not related by common ownership or control. They can be financial and
nonfinancial companies.
We do not share with nonaffiliates so they can market to you.
Joint marketing A formal agreement between nonaffiliated financial companies that together market
financial products or services to you.
We do not jointly market with nonaffiliated companies.
Revised 3/2012
2
