Detailed Firm Information
Firm Brochure (Form ADV Part 2A)
THOMAS A. PAULSON, JR. dba (doing business as) THOMAS A. PAULSON, JR., CPA
883 CLEVELAND AVE.
LOVELAND, CO 80537
Phone: 970-669-7285
Email: Tom@ThomasPaulsonCPA.com
Website: www.ThomasPaulsonCPA.com
This document (which is designated as a “brochure” by the Securities and Exchange Commission) provides information about the qualifications and business practices of this investment advisory firm, a sole proprietorship with the name of THOMAS A. PAULSON, JR., dba THOMAS A. PAULSON, JR., CPA. The information in this brochure has not been approved or verified by the SEC, nor by any state securities authority.
Thomas A. Paulson, Jr. is licensed with the state of Colorado as a Registered Investment Adviser. The title ‘registered’ does not imply any certain level of skill or training. (See Brochure Supplement on page 6.)
Additional information about the firm is available on the SEC’s website at 
www.adviserinfo.sec.gov. On the left side of the screen click on Investment Adviser Search, and then, to begin your search, choose Firm. Use this firm’s CRD# 130738 to search.
If you have any questions about the contents of this brochure, please call or write using the contact information above.
This brochure dated: September 14, 2022
Material Changes
This page discusses material changes since the last update of my brochure. The date of the last update was September 14, 2022.
My hourly rate and range of flat fees has increased to $150 per hour.
Whenever you would like to receive a complete copy of this brochure, please contact the firm by telephone at: 970-669-7285 or by email at: Tom@ThomasPaulsonCPA.com.
This update was completed September 14, 2022.
Table of Contents
Page Number
Material Changes i
Advisory Business 1
Fees and Compensation. 1
Performance-Based Fees 2
Types of Clients 3
Methods of Analysis, Investment Strategies and Risk of Loss 3
Disciplinary Information. 3
Other Financial Industry Activities and Affiliations 4
Code of Ethics, Participation or Interest in Client Transactions and Personal Trading. 4
Brokerage Practices 5
Review of Accounts 5
Client Referrals and Other Compensation. 5
Custody. 6
Investment Discretion. 6
Voting Client Securities 6
Financial Information. 6
Requirements for State- Registered Advisers………………………………….……………...….……..7
Brochure Supplement ADV Part 2B………………………………..……..………...………….8&9
Advisory Business
THOMAS A. PAULSON, JR., dba THOMAS A. PAULSON, JR., CPA (a sole proprietorship) was founded in 2004.
Thomas A. Paulson, Jr. is the sole owner and the only investment adviser in this firm. I have one part-time administrative assistant.
I provide ongoing investment portfolio management services. I make recommendations as to asset allocation and specific securities, place buy and sell orders, process disbursement requests (including RMD’s), and monitor investments on at least a semi-annual basis. I utilize no-load mutual funds and ETFs (Exchange Traded Funds). Note: I can also obtain shares of commissioned mutual funds at net asset value (NAV) without any sales charge.
I am strictly fee-only. I do not receive any finder’s fees or commissions.
I do not hold custody of client assets. I place trades for clients and manage their portfolios through client accounts held primarily at Shareholders Service Group, a custodian utilizing clearing services through a separate financial organization. (See also Custody section on page 5.)
As of March 21, 2017 I managed approximately $3,350,000 in assets for approximately 22 clients, all on a discretionary basis. (See also Investment Discretion section on page 5.)
I tailor my investment services to the individual needs of my clients by taking into account their goals and objectives, personal data, risk tolerance, time horizon, and current and expected future financial situation.
Clients may impose restrictions on investing in certain securities or types of securities.
My most important investment and financial planning guidance comes from Austin Prior’s Sound Mind Investing. I value his Christian viewpoints on financial matters and often refer my clients to his publication.
My financial planning services include ascertainment of financial objectives, determination of investment temperament (aka risk tolerance), tax planning, insurance review (including annuities), education funding, retirement planning and projections, asset allocation and estate planning.
Fees and Compensation
Each advisory account is set up with an Investment Management Agreement. This agreement details how fees are calculated and collected for each client.
The method of calculation for my compensation is one of the following:
1. Hourly, at $150 / hour, billed monthly or quarterly and due within 30 days of bill date,
2. As a percentage of assets under management, between 1/2% and 2% per year calculated on the last day of the previous quarter and charged in arrears, or
3. A flat annual fee, billed quarterly or annually, ranging from $1,000 to $7,500 and due within 30 days of bill date.
The method of collection is one of the following:
1. Direct billing, either quarterly or more frequently with payment due 30 days from bill date, or
2. Quarterly deduction from one or more of the client’s accounts. (Note: The client must give me written authorization in the Investment Agreement to do this. I inform the client in writing each time I take such a deduction; furthermore the deduction appears on the monthly statement from the custodian. See also Custody section on page 5.)
Clients may select either one of the above methods.
I am required to disclose that no fees may be charged in relation to certain accounts and that family members may pay discounted fees as stated in their Investment Management Agreement.
Investment Agreements will terminate upon written notice from one party to the other, with or without cause. Any unearned fees which the client has already paid will be refunded.
Client Agreements and accounts may not be assigned to another financial entity without client consent.
New clients will not be paying any fees in advance.
Assets are invested primarily in no-load mutual funds, exchange-traded funds (ETFs) and common stocks. (See Brokerage Practices section on page 4.) Fees and expenses charged by the custodian and/or the mutual funds directly are:
1. Transaction fees – up to $25 per buy or sell. (Note: some funds can be bought and sold for no transaction fee (NTF).)
2. Early redemption fee of up to 2% for redemptions within a specified period from 7 to 180 days or $75 for a NTF fund sold within 90 days of purchase.
3. An annual expense fee ranging from 0.1% to 2.0%.
I do not receive any compensation, in any form, from fund companies or custodians (i.e. broker/dealers).
Clients have the option to purchase investment products that I recommend through other brokers or agents not affiliated with me.
The hourly rate for financial planning services is $150.00. If clients prefer, I offer a flat annual fee ranging from $1,000 to $7,500, depending upon the extent of my service.
Performance-Based Fees
I do not use a performance-based fee structure.
Types of Clients
My advisory clients are mainly individuals and trustees of trust accounts.
Methods of Analysis, Investment Strategies and Risk of Loss
My main source of investment guidance is Austin Pryor’s Sound Mind Investing, a monthly financial planning and mutual fund recommendation newsletter. Other sources of information that I may use are financial newspapers and magazines, prospectuses, and investment sites on the Internet.
The starting point for managing my clients’ investments is to understand their goals. From there I help them determine the proper asset allocation. Major factors in this determination include (besides client objectives) time horizon (i.e. how long before money needs to be withdrawn), investment temperament/risk tolerance, and prior investment experience. “Asset allocation” primarily means the percentage of stocks to bonds. Asset allocation can also include real estate, which I encourage as part of a diversified portfolio for clients who are comfortable with that.
As far as specific securities, I use primarily index funds, such as the Vanguard S&P 500 index and the Vanguard Extended Market Index, aka the Wilshire 4500, which is comprised of small and midcap stocks. These funds have low expenses and go with my philosophy of being content to match the market averages, as opposed to trying to beat the market. (I have tried beating the market using momentum and timing approaches, but they didn’t work.)
I may also include a small percentage of sector funds (such as biotechnology or finance), using Sound Mind Investing (SMI) recommendations, as well as some SMI-recommended international funds. I also include a small percentage of gold, for clients who want to have some in their portfolio.
Investment performance is not guaranteed. Investing in securities involves risk of loss that clients should be prepared to bear. Having stock/bond allocations that match my clients’ investment temperaments, as well as a good understanding of time horizon, is of utmost importance. When losses do occur, I strongly encourage my clients to maintain their asset allocation and wait until the market (hopefully) recovers.
There are many factors that contribute to the risk of loss: political, economic, currency issues, limited liquidity (credit risks), market risks, etc. I can provide further information on these investment risks, as requested.
Disciplinary Information
My firm and my employees have not been involved in legal or disciplinary events, such as fraud, related to past or present investment clients.
Other Financial Industry Activities and Affiliations
I provide and am compensated for tax preparation and small business accounting services through a separate corporation: Thomas A. Paulson, Jr., CPA, P.C. A conflict of interest could arise when, for example, an Investment Adviser recommends transactions that could benefit his CPA practice. I may provide accounting and tax services to my clients but to avoid any conflict of interest in these relationships I do not require my clients to use my CPA services.
Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
I strive to achieve ethical conduct based on fundamental principles of openness, integrity, honesty and trust.
Integrity includes the principle that client service should hold priority over personal gain or advantage.
I will not take on a client unless I am certain I can meet his/hers expectations. I need to be experienced and competent in relation to their specific financial area of need, and I need to be able to communicate well with them, and they with me. In addition, I need to have enough time to serve them well.
I take the time to ask extra questions to verify uncertain assumptions.
I seek out advice and/or confirmation when needed from an excellent network of other professionals.
I strive to be fair, both to clients and to myself, when it comes to compensation.
I strive to ‘do unto others as I would have them do unto me’ – and I am guided by similar Bible verses as well.
My clients’ personal and financial life is kept confidential. Furthermore, I utilize an information security program to reduce any risk of leaking client information and to safeguard my clients’ assets from inappropriate use.
I and my employees may personally buy or sell securities that are also held by clients, but because we deal only in mutual funds and ETFs, we have no conflict of interest in regards to participation in our client transactions.
Brokerage Practices
I routinely request that my clients house their accounts at Shareholders Service Group, Inc., (SSG) a custodian and broker/dealer. My choice of this custodian is based on the availability of mutual funds, proven integrity and financial responsibility of the firm as well as satisfactory execution of orders at reasonable fees.
Although I do prefer the use of my custodian, I do not require it. For example, my clients also have accounts with Fidelity, PERA, and TIAA-CREF.
I check periodically to ensure that my custodian’s fees are reasonable. (But note: It is possible that my clients may pay more in transaction fees when using my custodian vs. another custodian.)
I review the execution of trades as well as trading fees charged.
Shareholders Service Group, Inc. utilizes Pershing, LLC for clearing services.
I do not combine the purchase and/or sale of securities for client accounts.
In the event of a trade error, it is my policy to ensure that clients do not incur any losses from the error and that the client’s account is made whole. For all errors identified, the client will keep any gains and I will reimburse the client for any losses up to $5,000.
Review of Accounts
I review actual vs. target asset allocation percentages for each client, and rebalance if necessary, at least once a year. Moreover, I review and rebalance at additional times, such as when a disbursement request is made, when Sound Mind Investing recommends a different sector or international fund, or when I am preparing an annual report for a client.
I will review target asset allocation (i.e. stock vs. bond) percentages any time there is a substantial change in a client’s goals or other aspects of their financial situation.
I calculate the rate of return for my clients’ investment accounts at least annually and communicate that orally or in writing.
I prepare annual written reports for some of my clients. These reports contain sections on client issues, asset allocation, investment performance, tax projections and strategies, retirement projections, and other topics.
All the custodians that my clients deal through (SSG, TD Ameritrade and Fidelity, among others) send out monthly or quarterly statements directly to the clients’ addresses of record.
Client Referrals and Other Compensation
I do not receive any economic benefit from any non-client for providing advisory services to a client, nor do I compensate any person or entity for client referrals.
Custody
As stated in the Advisory Business section on page 1, I only place trades for clients and manage their portfolios. I do not act as a custodian of client assets.
A deduction from client accounts arrangement, as noted in Fees and Compensation on pages 1 and 2, constitutes ‘constructive custody.’
As stated in the Brokerage Practices section on page 4, all the custodians that I deal with provide my clients with account statements directly to their address of record at least quarterly. Clients are urged to carefully review the account statements as they are received. The client will receive an itemized invoice from me in addition to the custodian statement to enable the client to compare the fee deducted from the account.
Investment Discretion
My client accounts are managed on a discretionary basis, meaning that each client gives me the permission to buy and sell mutual funds and ETFs within their accounts without prior approval from them. In all cases, however, I exercise such discretion in a manner consistent with their target asset allocation. (Note: All cash disbursements from accounts must be signed for by the client. This procedure may take a few extra days but it ensures that any money going out of an account has been approved by the client.)
Discretionary trading authority facilitates my placing trades in client accounts so that I may implement in a timely manner any appropriate buys and/or sells.
Clients will receive a quarterly invoice from me, itemizing the fee.
Voting Client Securities
I do not vote proxies on securities. Clients are expected to vote their own proxies.
Financial Information
A balance sheet is not required in this brochure because I do not serve as a custodian for client funds or securities, and do not require prepayment of more than $500 in fees per client, six months or more in advance.
Requirements for State-Registered Advisers
In this section, as the only investment adviser in this firm, I am required to disclose my personal information. I, Thomas A. Paulson, Jr., the sole owner of the firm, manage all activities associated with the firm’s business.
Thomas A. Paulson, Jr., Proprietor – Formal education and business background:
Year of birth: 1944
Education: B.A. (Economics), Stanford University, 1965
M.B.A (Finance), Stanford University, 1969
Graduate level accounting classes, University of Colorado, 1981-1982
Business background:
1982 to present: CPA performing tax and accounting services for individuals, small businesses and estates and trusts. These activities take up about 65% of my time and are conducted through a corporation: Thomas A. Paulson, Jr., CPA, P.C.
1996 to 2004: Registered representative (i.e. broker), Investment Adviser Representative and financial planner with Royal Alliance and Multi-Financial Securities Corporation.
2004 to present: Registered investment adviser and financial planner, operating through this sole proprietorship.
In addition to other background information presented throughout this brochure, I hold the credential of Personal Financial Specialist through the American Institute of CPAs. The PFS credential demonstrates that an individual has met the minimum education, experience and testing required of a CPA in addition to a minimum level of expertise in personal financial planning. To attain the PFS credential, a candidate must hold an unrevoked CPA license, fulfill 3,000 hours of personal financial planning business experience, complete 80 hours of personal financial planning continuing education credits, pass a comprehensive financial planning exam and be an active member of the American Institute of CPAs (AICPA). A PFS credential holder is required to adhere to AICPA’s Code of Professional Conduct, and is encouraged to follow AICPA’s Statement on Responsibilities in Financial Planning Practice. To maintain their PFS credential, the recipient must complete 60 hours of financial planning continuing education credits every three years.
Brochure Supplement Cover Page
(Form ADV Part 2B)
This brochure supplement provides information about Thomas A. Paulson, Jr. that supplements the Thomas A. Paulson, Jr. dba Thomas A. Paulson, Jr., CPA firm brochure. You should have received a copy of that brochure. Please contact Thomas A. Paulson, Jr. if you did not receive the firm brochure for Thomas A. Paulson, Jr., dba Thomas A. Paulson, Jr., CPA or if you have any questions about the contents of this supplement.
Brochure Supplement
(Form ADV Part 2B)
THOMAS A. PAULSON, JR.
883 CLEVELAND AVE.
LOVELAND, CO 80537
Phone: 970-669-7285
CRD # 2687459
Adviser for:
THOMAS A. PAULSON, JR. dba THOMAS A. PAULSON, JR., CPA
883 CLEVELAND AVE.
LOVELAND, CO 80537
Phone: 970-669-7285
This brochure supplement dated: March 21, 2017
Educational Background and Business Experience
Please see page 7 of ADV Part 2A Firm Brochure.
Disciplinary Information
Please see page 3 of ADV Part 2A Firm Brochure.
Other Business Activities
Please see page 4 of ADV Part 2A Firm Brochure.
Additional Compensation
Please see page 5 of ADV Part 2A Firm Brochure.
Supervision
Please see page 7 of ADV Part 2A Firm Brochure.
Requirements for State-Registered Advisers
Please see page 3 of ADV Part 2A Firm Brochure. I have no additional disciplinary events to disclose here for me or my employee.
