Acorn Financial Advisory Services Inc

Item 5 - Fees and Compensation

Description
The initial meeting with an Investment Adviser is complimentary and is considered an exploratory
interview to determine the extent to which a financial planning engagement, investment
management relationship, or pension planning service may be beneficial to the prospective
client.

Financial Planning and Analysis Contract
The fee for a Financial Planning and Analysis Contract is generally a flat fee and used to discuss,
design, and construct an Investment Policy Statement outlining the goals and objectives, the time
horizons and risk tolerances for the client engagement. The contract may be ongoing, but is
usually limited to a specific time period. AFAS has a stated firm minimum financial planning fee of
$3,750. AFAS has a stated firm maximum financial planning fee of $19,950,000. Clients may also
engage AFAS on an hourly basis. Hourly rate for consultations with advisers is $625 - $1,295 and
the hourly rate for staff time is $175. There is a minimum two-hour charge for all work billed
hourly.

Maintenance Contract
The Maintenance contract provides the continuity following the initial Financial Planning and
Analysis contract, usually for a lesser fee for ongoing consultations, meetings, annual updates
and reviews with financial advisers. These contracts are used both for business and
individual/family engagements where the Investment Policy Statement is already in place and
continuous monitoring and updates are requested. No asset management services are offered
through the maintenance contract. Fees for investment management are offered in addition to
the maintenance contract and are structured under a separate portfolio management contract.

Portfolio Management Contract - Investment Management
Program
There are several different platforms available for client portfolios that are designated by contract
as investment management. This means the portfolio will be managed to a target allocation that
is agreed to by the client in writing. Depending on the client’s objectives, risk tolerances,
management style attitudes, goals, time horizons and client suitability, the financial adviser can
help with recommendations to choose the appropriate portfolio options or management
approach. All fees and expenses are disclosed to the client before engaging the management
platform of choice.

The following Tiered Fee Schedule applies to all contracts detailed below, unless otherwise
noted:
    Tiered Fee                                                   Quarterly            Annually
     Schedule

   For Accounts         $1,000,000                                0.425%               1.70%
   Valued up to

   For Accounts        $1,000,001 to        $5,000,000            0.250%               1.00%
    Valued from

   For Accounts       $5,000,001 to        $10,000,000            0.225%               0.90%
    Valued from

   For Accounts       $10,000,001 to       $20,000,000            0.200%               0.80%
    Valued from

   For Accounts       $20,000,001 to       $50,000,000            0.175%               0.70%
    Valued from

   For Accounts        >$50,000,001                               0.150%               0.60%
    Valued from

The custodian of the account will provide all clearing, trading, and brokerage services for each
account. The client may incur additional brokerage commissions, “ticket charges” and other
similar expenses in connection with operating, maintenance and closing of brokerage account(s).

Strategy-Specific Fee Schedules
While Acorn Financial Advisory Services generally applies the standard tiered advisory fee
schedule described above—which features fee breakpoints that decrease the effective fee rate
as assets under management increase—certain specialized investment strategies and programs
are subject to separate, flat-rate fee schedules.

Specifically, clients participating in the strategicALPHA™ (equity only strategies), strategicCORE™
(asset allocation strategies using ETFs), and strategicOPPORTUNITIES™ strategy are assessed a
flat annual advisory fee of 1.50%, rather than the standard tiered schedule.

Important Disclosure Regarding Flat-Fee Strategies
Clients should carefully consider that because the strategic families of strategies utilizes a flat fee
of 1.50% without breakpoints, clients with higher asset levels (for example, accounts reaching or
exceeding $10,000,000) will pay a higher effective advisory fee in these strategies than they
would if their assets were managed under our standard, tiered "Custom" fee schedule.

Advisory Agreements for AFAS’s Investment Management
Services

Custom
AFAS charges fees for the administration of portfolio management based upon the value of
assets held in each account. Fees are computed and paid in advance quarterly based upon the
value of the account at the end of the quarter. The fee is payment for the completed period. The
maximum fee to be received by AFAS through the non-discretionary management program is
1.70% per annum (0.425% per quarter).

College Accounts
AFAS charges fees for the administration of portfolio management based on the value of assets
held in each account. Fees are computed and paid in the arrears based on the value of the
account at the end of the quarter. AFAS does not conduct the billing, it is conducted by the 529
sponsor and set standard to the firm. The maximum fees to be received by AFAS on college
accounts is 1.00% per annum (0.25% per quarter).

Subadvisory Agreement for Portfolio Management Services
Subadvisory platform services for affiliated and non-affiliated advisers and for clients of AFAS
who elect to participate and invest in these model strategies are offered at a cost ranging from
0.25% to 1.50%. When these strategies are implemented in accounts that are managed by
non-affiliated Registered Investment Advisers, they are considered an expense of investing and it
is the responsibility of the other firm to establish policies and procedures designed to make sure
...

Item 7 - Types of Clients
AFAS generally provides investment advice to individuals, families, pension and profit sharing
plans, trusts, estates, charitable organizations, corporations and other business entities. Client
relationships vary in scope and length of service. Subadvisory Investment Management Services
are offered to non-affiliated Registered Investment Advisers who are looking to allocate a portion
of their client’s assets to a particular platform strategy.

Account Minimums
AFAS services are detailed in Fees and Compensation. Certain programs, including portfolio
management, require an initial minimum account asset level, currently $1,000,000, which equates
to a minimum annual fee of $17,000. These minimum fees and minimum account asset level are
subject to negotiation.

Depending upon circumstances where assets values have diminished significantly below account
minimums due to withdrawals or other circumstances, AFAS may substitute a Financial Planning
and Analysis Contract on an hourly basis in place of the Portfolio Management Contract. This
would only be considered on a temporary basis after discussion with the client.