KMS Financial Services is an independent investment advisory firm that provides its services through various supervised financial professionals or investment advisory representatives (IARs). The firm operates as a registered investment advisor (RIA) and a registered broker dealer. Its IARs also may work with other professionals such as accountants and attorneys to construct comprehensive financial advisory plans for their clients.
The firm currently oversees more than $6 billion in assets under management (AUM).
KMS Financial Services Background
CEO Erinn Ford founded KMS in 1971. With more than 30 years of experience in the financial services industry behind her, she’s the recipient of several awards and accolades, including a ranking among the “Ten to Watch” in WealthManagement magazine. She has also started several mentoring programs including the Erinn Ford Leadership Scholarship to benefit female undergraduates at the University of Washington.
Ladenburg Thalmann Financial Services Inc. currently serves as the sole owner of KMS. Through this framework and its collaboration with other individuals and entities in the financial space, the firm is equipped to offer various services, including trust management and institutional-level asset management. Some IARs are registered to do business under the names of unaffiliated businesses such as Capital Financial Planners and Delta Financial Group.
What Types of Clients Does KMS Financial Services Accept?
KMS works with numerous client types, including:
- High-net-worth individuals
- Profit-sharing plans
- Charitable organizations
- Government entities
Employer-sponsored retirement plans (under the Employee Income Retirement Security Act)
KMS Financial Services Minimum Account Size
Independent advisors providing services through KMS may require their own account minimums, so minimums vary across advisors. For entry into the firm’s automated portfolio program through Charles Schwab (see more below), the minimum is $5,000 (it’s $50,000 for the additional tax-loss harvesting feature).
Services Offered by KMS Financial Services
KMS provides various financial planning and investment advisory services through its IARs. Depending on your needs, these may include the following:
- Portfolio management
- Automated investment services
- Retirement planning
- Trust services
- Estate planning
- Budgeting and savings advice
KMS also offers Institutional Intelligent Investment Portfolios managed on a platform through Schwab Performance Technologies (SPT), a division of Charles Schwab. A KMS advisor would manage this portfolio utilizing SPT technology along with his or her expertise.
KMS Financial Services Investment Philosophy
Advisors working through KMS construct portfolios based on numerous strategies depending on the client’s needs. The IAR would consider several factors such as the client’s risk tolerance, investment goals and time horizon before devising an asset allocation deemed appropriate based on these variables.
Depending on your needs, your portfolio may invest in some of the following:
- Mutual funds
- Exchange-traded funds (ETFs)
- Real estate investment trusts (REITs)
When evaluating these or any other investments, advisors working through KMS may adopt various analysis methods. These may include fundamental analysis, which entails studying financial information available about different companies in order to make decisions regarding investing in their stocks.
Some advisors may engage in active investing and adopt certain strategies in an attempt to time the market. For instance, they may buy securities in large volumes when they believe they are significantly undervalued and can experience rapid growth.
In any case, investment strategies and other key details would be outlined in the investment policy statement (IPS) or relevant advisory contract that clients develop with the advisor.
Fees Under KMS Financial Services
Advisors working through KMS generally charge financial planning and consulting fees by the hour, on a fixed basis or as an ongoing annual consulting fee depending on the scope of the services desired.
Investment advisory fees are negotiable, but they generally align to the following current fee schedule:
|On the first $100,000||1.75%|
|On the next $150,000||1.50%|
|On the next $250,000||1.25%|
|On the next $500,000||1.00%|
|On amounts over $1,000,000||0.75%|
However, an advisor may engage in more complex investment strategies that involve additional research and costs. In such cases, the advisor may apply the following schedule.
|On the first $100,000||2.75%|
|On the next $150,000||2.50%|
|On the next $250,000||2.25%|
|On the next $500,000||1.50%|
|On amounts over $1,000,000||1.25%|
What to Watch Out For
KMS and many advisors working through the firm are broker-dealers registered to sell securities and products. In doing so, they may earn compensation from unaffiliated third parties. This framework could create a conflict of interest as advisors may be incentivised to recommend or sell specific products as opposed to others that may be better suited to you based on your situation.
However, this type of structure is common in the financial services industry. Plus, KMS must uphold its fiduciary duty to always work in your best interests.
KMS Financial Services Disclosures
In July 2017, the SEC found that prior to 2014, KMS had violated sections of the Investment Advisers Act of 1940 by “failing to disclose compensation received from its clearing broker-dealer (Pershing) related to the NTF [No Transaction Fee] program.”
The SEC also determined that KMS did not “conduct sufficient analysis to determine best execution for its clients as a result of reductions in certain transaction charges in 2014 and 2015.”
Following an SEC review, KMS altered its policies to address these concerns. KMS also instructed Pershing to cease sharing FundVest revenue from the NTF program in its advisory accounts.
Without admitting or denying the SEC’s findings, KMS agreed to a “cease-and-desist order from committing or causing further violations of these provisions.”
KMS paid a disgorgement of $382,568.64, plus prejudgment interest and a $100,000 penalty.
Opening an Account With KMS Financial Services
You can start opening an account with KMS by visiting its website at https://welcome.kms.com/ and looking under the “Joining KMS” tab. You can also contact the firm by calling (206) 441-2885.
Where Is KMS Financial Services Located?
KMS is based at the following location:
2001 Sixth Avenue, Suite 2801
Seattle, Washington 98121
All information was accurate as of the writing of this article.
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