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Frequently Asked
Questions
PLEASE REVIEW
IMPORTANT DISCLOSURE INFORMATION
SET FORTH IN THE DISCLOSURES SECTION OF THIS WEBSITE.
Company
New Client Accounts
Account Services
Investment Portfolio Services
Q:
What is Spectrum Financial Inc.?
A: Spectrum Financial is a
Registered Investment Advisor that currently offers two
types of portfolio services. Spectrum's Strategic Asset
Allocation Strategy builds client's portfolio's using Direxionfunds
actively managed mutual funds. Tactical Asset Allocation
consists of managing portfolios made up of mutual funds,
variable annuities or life insurance on a discretionary
basis through a variety of management Strategies.
Q:
Does Spectrum do any retirement, tax, estate or insurance
planning?
A: No. Spectrum will provide
suitable investment recommendations regarding our mutual
fund management services but, Spectrum does not provide
retirement planning, estate planning, insurance planning
or tax planning.
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Q: What experience
does Spectrum have in managing money?
A:
During the late 1970's Mr. Doudera developed many of the
current strategies used by Spectrum to manage client accounts.
Prior to 1988, Mr. Doudera managed his family's assets and
a select few private accounts using these strategies. In
1988, he formed Spectrum as a Registered Investment Advisor
and since then has been managing clients' portfolios comprised
of stock, bond and international mutual funds. Spectrum
also manages variable annuity and variable life products
using tactical asset allocation.
Q: What was Spectrum's experience in managing money in the
1987 crash and recovery that followed?
A: Performance information
on several of Spectrum's Strategies that were in place during
that period of time has been compiled by Moni-Research,
an independent consultant. The data was supplied by Spectrum
Financial, using actual client statements. None of the Strategies
Spectrum used to manage client accounts were invested in
the market on the day of the crash in 1987.
Q: How many states are you registered
in?
A:
Spectrum is registered in more than 40 states.
Q:
How much money does Spectrum manage?
A: As of early 2006, Spectrum
manages approximately $275 million in approximately 1200
accounts for approximately 500 clients.
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Q: What is the largest
account currently open?
A: As of 2006, Spectrum manages
approximately $25 million for a single client.
Q: How are you compensated for the work you do for me? Do
you receive any compensation or incentives from any product
or service you recommend?
A: Spectrum's Tactical Asset
Allocation Strategy charges advisory fees based on the dollar
amount of assets under management. Fees are not based upon
a share of capital gains or capital appreciation of the
assets managed. Spectrum's Strategic Asset Allocation Strategy
receives a servicing fee (12b-1) generated by the actively
managed mutual funds as payment for ongoing account maintenance.
When these fees are paid, Spectrum's normal fee structure
does not apply.
Q: Describe Spectrum's investment philosophy and approach.
A: Our primary objective is
to achieve rates of return that are in excess of a buy and
hold investment strategy and provide liquidity by preserving
the purchasing power of assets under management. Spectrum
strives to avoid declining markets and participate in rising
markets. This is achieved by investing in several different
management Strategies which all have the ability to produce
attractive returns. Spectrum's methods include trend following,
momentum, relative strength and seasonal techniques.
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Q: Who makes the decisions about what to invest in and when
to do it?
A: Ralph Doudera, our Investment
Services Team, and selected sub-advisors (managers) review
information gathered daily using charting, technical and
cyclical analysis. The use of publications and other information
is also incorporated into the analysis. After review of
the information, decisions are made on what and when to
buy and sell. Clients are not consulted with prior to entering
orders on their behalf in their accounts.
Q:
Who will work with me on my portfolio?
A: Our Client Services Team,
who have nearly two decades of experience with all of Spectrum's
many investment Strategies, will work with you in crafting
and periodically reviewing your portfolio. Building a lasting
relationship with our clients is a crucial part of Spectrum's
long term focus.
Q:
What level of service will I get?
A: Initially Client Services
will help you create a diversified portfolio among Spectrum's
various management Strategies. This includes setting up
the accounts with a third party custodian and/or various
mutual funds. On the contract anniversary, holdings and
the performance for the 12-month period will be reported
to you. A quarterly newsletter is also provided outlining
a non-weighted average performance for Strategies during
that period. Statements are also generated by the custodian
on a monthly or quarterly basis.
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Q: Can you give me references of people you've worked with
who have circumstances similar to mine?
A: Our Privacy policy does
not permit us to give out information about our clients.
This will include you should you decide to become a client
of Spectrum.
Q: Can you provide me with other financial professionals
who are familiar with your work and monitor it for their
own clients?
A: Professional references
are available upon request.
Q: What are your account minimums?
A: Spectrum's investment strategies
have minimum account sizes ranging from $25,000 to $250,000
depending on the Strategy and the custodian selected.
Q: Why is the minimum for
International Sector, Worldwide, and Core Focus
Strategies
$100,000 rather than $50,000?
A: These
Strategies are offered on a brokerage platform that
incur some additional charges.
A larger minimum balance is required so that these
fees will not be material in the performance of the account.
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Q: Do you have online access so that I can see my accounts?
A: Many of the fund companies
and custodians we use offer online access to individual
account information. Links to those sites can be found at
Account Access.
Q: How often do I get statements?
A: Depending on your custodian
you will receive statements as often as monthly but no less
often than quarterly. Some companies send out confirmation
statements for each transaction. Many custodians provide
statements and confirmations online for easier access. Spectrum
will also provide a performance review on each anniversary
of the opening of your account.
Q: What is your fee structure for Spectrum's Tactical Asset
Allocation Strategy?
A: Accounts under $100,000
are charged 2.5% on an annual basis. Accounts over $100,000
are charged 2.9% on the Leveraged High Yield and all Sector
Strategies, and 1.9% on all other accounts over $100,000.
In addition to the aforementioned structure, each account
is charged a $100 administrative retainer fee annually.
The administrative fee is reduced to $50 for multiple accounts
after the initial $100 fee is satisfied. Spectrum's Strategic
Asset Allocation Service, this fee structure does not apply.
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Q: The Tactical Asset Allocation Strategy fee is collected
a year in advance. What happens if I cancel management of
my assets before 12 months have passed?
A: If you cancel your management
agreement with Spectrum during the course of your anniversary
year, the unused portion of the fee on a monthly prorated
basis will be refunded to you.
Q: How do I add money to my already established account
with you?
A: Just call Spectrum's office
and speak with our Client Services Team. Investment checks
should be made payable to the custodian holding your account
and sent to our offices. The Client Services Team will forward
your funds on to the custodian and track the deposit to
insure it is received and invested properly. Prorated fees
are due for the Tactical Allocation Service upon deposit.
Q: How do I get money from my account if I need it?
A: Just call Spectrum's Client
Services Team and they will arrange for a check to be mailed
to the address on record. If wiring instructions were established
on the account when it was set up, you may have the funds
wired. Also, a request can be made to have a check overnight
delivered to your address of record. The fund companies
often charge a small fee for this service.
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Q: Does Spectrum
ever take custody of securities or cash?
A: No. Spectrum will only process
checks for clients that are made out to the selected custodians.
Q: Does Spectrum vote proxies for the securities in my portfolio?
A: No, Spectrum does not vote
proxies on behalf of clients. Each client is responsible
for voting their own proxies, which they will receive directly
from the custodian for each of their accounts.
Q:
Does Spectrum have any Professional affiliations?
A: Spectrum is an active participant
in NAAIM, an association of active money managers and the
Market Technicians Association, an association that promotes
education on the use of technical analysis and related investment
strategies.
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Q:
What happens if something were to happen to one of the managers?
A: Spectrum's senior managers,
Ralph Doudera and Robert Grey are able to take over for
each other if one is unable to act as an investment manager.
Their investment philosophies, tools and techniques are
very similar and both are very well acquainted with what
the other is doing in their respective portfolios on a daily
basis. In addition to this continuity agreement, Spectrum's
Investment Services Team has more than 30 years of experience
trading mutual funds and individual equities. Many of the
buy/sell signals generated for our strategies are produced,
maintained and implemented by our Investment Services Team.
Spectrum's Management Team also reviews and maintains relationships
with outside money managers should the need develop to go
outside the firm.
Q:
Do you have a plan to operate in the event of an emergency
or disaster?
A: Yes. Spectrum has extensive
nightly offsite computer file back up and recovery plans.
On site, Spectrum has a natural gas powered generator to
run our office in the event of a power failure as well as
redundant data feeds and telecommunication capabilities.
In the event of a building or regional disaster, Spectrum
also has backup plans for personnel and facilities.
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Q: Do any of Spectrum's Strategies go short the market?
A: Yes. Some Strategies will
take an outright position in a short fund and some strategies
will use short funds only to hedge other funds held in the
portfolio.
Q: Do any of Spectrum's
strategies use margin or other types of leverage?
A: Yes. Spectrum's Leveraged
High Yield Bond Strategy uses margin from time to time.
A number of Spectrum's Strategies will use leverage provided
by enhanced beta funds that are designed to move 1.25 to
2.0 times as much as the index they are based on.
Q: Is the performance information I receive from your newsletters
and in my annual portfolio update net of fees?
A: Yes.
Q: Why does my portfolio update performance differ from
the performance in the quarterly newsletter?
A: Your annual portfolio update
reflects the actual performance for the specific funds you
have used in each of the Strategies you have selected. It
also is a report for the 12-month period since your anniversary.
Our newsletter reports performance on a calendar quarter
basis for the average (not weighted for account size) of
all accounts in each of the Strategies reported on. Your
personal performance may also be affected by funds that
charge a redemption fee upon their sale. Spectrum tries
not to use such funds but will use them when they are the
best or only funds available for a specific strategy.
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Q: How do I deal with Spectrum if I was introduced to you
through my financial representative?
A: Some clients are introduced
to Spectrum by independent financial representatives. The
investment Strategies offered, and the fees charged by Spectrum
for those Strategies, are the same for clients who come
to Spectrum through an independent representative as they
are for clients who come to Spectrum directly. Generally,
clients who are introduced to Spectrum through independent
Financial Representatives will use their representative
as their primary point of contact for questions regarding
their accounts that are managed by Spectrum.
Q: What types of Portfolio Services does Spectrum currently
provide to clients?
A: Spectrum offers two types
of investment portfolio services. Our Tactical Asset Allocation
Service is our traditional actively managed mutual funds
service. This service takes a 100% position in either an
invested (aggressive position) or a money market (defensive
position) fund. The Strategic Asset Allocation Service takes
a slightly different approach. This service has access to
three actively managed mutual funds whereby trading is done
internally within the fund based on strategies developed
by Ralph Doudera. A recommendation for allocation within
these funds is prepared by Spectrum with the client's investment
objective and risk tolerance in mind.
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Q: What is the relationship between
Spectrum and the Direxion funds?
A:
Spectrum has an arrangement with Direxion
funds which allows access to three actively managed
funds. The advisor for the funds pays a 1% 12-b1 fee for
services Spectrum provides to its clients.
Q: Who is Hundredfold Advisors, LLC?
A: Hundredfold Advisors, LLC
is the sub-advisor to the three actively managed mutual
funds used by Spectrum for its Strategic Asset Allocation
Service. It is owned by Simply Distribute Charitable Foundation,
a public foundation. All proceeds received by Hundredfold
Advisors are directly donated to charity to fund specific
projects in the areas of world poverty and evangelism.
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Spectrum Financial Inc.
2940 N. Lynnhaven Road | Suite 200
| Virginia Beach, Virginia 23452
Tel: 757-463-7600
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