I. How to use the Financial Planning Report
The financial planning analysis generated and delivered through eMoney Advisor by Principal Securities, Inc. (the “Planning Report”) is designed to assist you in making personal financial decisions related to your stated financial needs, priorities, and concerns. The ultimate goal is to recommend actions designed to help you achieve your stated financial objectives. It is based on the information you have provided and may not reflect all your holdings or transactions, their costs, or proceeds received by you. As such, the recommendations, reports, graphs, and other analyses contained in the Planning Report are dependent upon the accuracy of the data you have provided. The Planning Report and the terms, "plan" or "planning" when used in this report are not an offer or solicitation for the purchase of any particular security, financial product, investment vehicle or investment advice with respect to any specific security, investment product or qualified plan asset or benefit.
Any final decisions relating to tax and investment strategies and cash flow management are yours to make. Before making any decisions, however, you should consult with your attorney, accountant or other professional advisors regarding the legal and tax implications of any proposed course of action. The Planning Report should be used only in conjunction with tax, legal, and accounting advice from qualified specialists. Changes in laws and regulations occur on a regular basis and may affect the analysis provided. Tax analysis if made a part of this Planning Report is not meant to replace advice from a tax professional nor is it a complete analysis of your situation. Principal Securities Registered Representatives and Financial Advisors may not provide tax or legal advice.
The future cannot be forecast with any certainty. Your financial goals, objectives, and personal circumstances, and various laws and market conditions will likely change over time. As a result, the actual results you experience may vary from the hypothetical illustrations contained in this Planning Report. Because of these constant changes, periodic reviews (at least annually) are important to fine-tune your personal financial plan.
II. How Planning Reports are Prepared, Assumptions, Limitations and Important Disclosures
The Planning Report contains calculations from data you have provided and that has been obtained from financial institutions where you have accounts. Your current levels of savings, income, expenditures, investments, participation in retirement savings programs, assets, liabilities and assumptions when certain events in the future are expected to occur are used to develop various scenarios of what your levels of income and assets are expected to be in the future. Principal Securities® and its representatives have not independently verified the accuracy of this information and do not guarantee their accuracy.
In providing you with future scenarios of what your income and levels of assets may be in the future, we have to make assumptions about investment outcomes. These assumptions are purely hypothetical, are not guarantees and the actual outcomes will differ from what is shown in the Planning Reports. No one can predict what the market will do tomorrow or at any time in the future.
The Planning Report may present an analysis that uses hypothetical assumed annual rates of returns of asset classes that are matched to your existing investments. The assumed asset class rates of returns are based on historical returns of market indexes that are believed to be good approximations of the asset classes your current assets are invested in. The assumed rates of returns of these asset classes reflect the unmanaged results for the market segment. There is no assurance the asset class return assigned will match the performance of the market segment tracked.
The presentation of investment returns set forth in this report does not reflect the deduction of any commissions. Projected valuations and/or rates of return may not take into account surrender charges on products you might own. They will reflect any fees or product charges when entered by the financial professional. Deduction of such charges will result in a lower rate of return.
The Planning Report may also contain some proposals on how you might change your investment mix of asset classes from what you have now. If you see references to proposed “Models” anywhere in this Planning Report, these are our recommendations for you to consider. These Models are composed of general asset classes, not actual investments. We have developed these Model Asset Allocations that we believe correlate favorably to your investing risk tolerance, investment objectives and investing time horizon based on information you provided. The Model Asset Allocations also have a hypothetical assumed growth rate which is not guaranteed, and actual performance will differ.
The Assumption Details section of the Planning Report contains information about market indexes and the historic returns which are used to generate assumed annual rates of returns of asset classes. But historic returns and past performance is not an indicator of future performance. Actual performance will be different, and could be lower than what is illustrated here. These assumed rates of returns of the asset classes may show positive performance returns – and consequently your asset values assumed in the future in these Planning Reports may show an increase in value. This occurs because the past performance of the market indexes tied to the asset classes have trended in a positive return direction over the long run. Please keep in mind it very well could be that the actual rates of returns in any of these asset classes in the future could be negative in one year or over a period of years. The value of your future assets (and consequently your investments) could be much less than what is shown. There is no guarantee that any of these assumed rates of return will actually be achieved, and as always, past performance is no guarantee of future results.
Tools such as the Monte Carlo simulation will yield different results depending on the variables inputted, and the assumptions underlying the calculation. For those reports that perform a Monte Carlo analysis, the term 'Monte Carlo' will be included in the report title. The assumptions with respect to the simulation include the assumed rates of return and standard deviations of the portfolio model associated with each asset. The assumed rates of return are based on the historical rates of returns and standard deviations, for certain periods of time, for the benchmark indexes comprising the asset classes in the model portfolio. Since the market data used to generate these rates of return change over time your
results will vary with each use over time.
Monte Carlo Analysis is a mathematical process used to implement complex statistical methods that chart the probability of certain financial outcomes at certain times in the future. This charting is accomplished by generating hundreds of possible economic scenarios that could affect the performance of your investments. The Monte Carlo simulation uses at most 1000 scenarios to determine the probability of outcomes resulting from the asset allocation choices and underlying assumptions regarding rates of return and volatility of certain asset classes. Some of these scenarios will assume very favorable financial market returns, consistent with some of the best periods in investing history for investors. Some scenarios will conform to the worst periods in investing history. Most scenarios will fall somewhere in between.
The outcomes presented using the Monte Carlo simulation represent only a few of the many possible outcomes. Since past performance and market conditions may not be repeated in the future, your investment goals may not be fulfilled by following advice that is based on the projections.
All investments involve risks that your investments will lose value. With respect to securities, you could lose your initial investment. Investments that may offer potentially higher rates of return are associated with higher levels of risk, while lower risk investments generally offer lower potential returns. The higher the risk level of your portfolio, the higher the volatility you can expect from month to month regarding the value of your investments.
Life insurance, while possessing certain tax advantages and investment features, is primarily an insurance product. Cash withdrawals from, or unpaid loans against, the cash value of a life insurance policy will reduce the policy's cash value and its death benefit, and it will likely result in an adverse tax liability. Any life insurance, long term care or disability insurance premium amounts shown are subject to underwriting approval and should be regarded as an assumption only for planning purposes. Premiums may be higher or lower and may be required for more or fewer years depending on actual policy terms and performance.
Prices of securities or current values of accounts at financial institutions appearing in the Planning Report are obtained from outside sources and no representation or guarantee is made regarding the accuracy or completeness of the information. You should rely on the statements from the product sponsors as the official record of your account. Direct Participation Programs and Real Estate Investment Trust securities are generally illiquid. The value of illiquid securities will be different from its purchase price.
III. How Principal Securities will use this Planning Report
Principal Securities acts as an investment adviser in preparing this Planning Report. Besides being a registered investment adviser, Principal Securities also sells financial products as a securities broker-dealer registered with the Securities and Exchange Commission and is a member of the Financial Industry Regulatory Authority. They are two different businesses and our duties and obligations to customers differ depending on which role we are playing.
Our fiduciary role as an investment adviser in preparing the Planning Reports includes the duty to make recommendations based on your current financial information, needs and objectives, to put your interests ahead of ours and disclose any conflicts of interest that could affect our judgment. Principal Securities conflicts of interest are described in its Form ADV Part 2A Disclosure Brochure, Form CRS Customer Relationship Summary and in the Principal Securities Regulation Best Interest Client Disclosure. A Planning Report may contain suggestions of how you can meet certain financial needs and objectives through the purchase of certain types of securities or other financial products but should not be construed as a recommendation that you purchase any particular security or other financial product. Our investment advisory services do not include specific securities or insurance sales recommendations. You should not consider any solicitations or recommendations made to you by our representative for the purchase or sale of a certain security or other financial product as being part of this Planning Report, even though the recommendations may be based on information contained in it.
Many Principal Securities representatives also represent Principal National Life Insurance Company and/or Principal Life Insurance Company®. Principal Securities representatives and/or representatives of Principal National or Principal Life are able to use this Report to identify specific securities or insurance products to help you meet your financial needs and objectives. The Principal Securities and/or Principal National or Principal Life sales representative may ask that you consider purchasing products offered by Principal Securities, Principal National or Principal Life, and other affiliated companies of the Principal Financial Group®, but you are under no obligation to implement any of the recommendations in the Planning Report by purchasing securities or other financial products through representatives of Principal Securities, Principal National or Principal Life. When recommending the purchase of securities or other financial products, except when providing advice on your assets held as a participant in an employer-sponsored retirement plan, Principal Securities, Principal National or Principal Life and the sales representative will be acting solely in the respective capacities of a securities broker dealer, insurance company, and securities salesperson or insurance agent and not in the capacity of an investment adviser, financial planner, financial advisor or similar term. This change in the role from an investment adviser to a securities broker dealer means Principal Securities and its representatives may face conflicts of interest and our interests may be different than yours. If you purchase securities or other financial products through Principal Securities, Principal National or Principal Life, Principal Securities and the sales representative will be compensated either by you, third parties who compensate us based on what you buy, or both.
Please read this Disclaimer section and understand how the assumptions and limitations affect this Planning Report and understand that no calculations or results contained in this Planning Report are guaranteed. If you have any questions about the information on this Disclaimer or how the assumptions and limitations affect this Planning Report, please ask your financial advisor.
Insurance products issued by Principal National Life Insurance Company (except in NY) and Principal Life Insurance Company®. Securities and advisory products offered through Principal Securities, Inc., Member SIPC. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. eMoney Advisor, LLC is not an affiliate of any member company of the Principal Financial Group.
Principal®, Principal Financial Group®, and Principal and the logomark design are registered trademarks of Principal Financial Services, Inc., a Principal Financial Group company, in the United States and are trademarks and service marks of Principal Financial Services, Inc., in various countries around the world.
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