ITEM 5 FEES AND COMPENSATION
A. DESCRIPTION AND BILLING
Lower fees for comparable services may be available from other sources. Clients have the option
to purchase investment products that AWM recommends through other brokers or agents.
Wealth Management Services – Non-Performance Based Models
AWM will charge clients—both individuals and institutions—a wealth management fee for its
portfolio management, financial planning, and estate planning services. The wealth
management fee is an annual fee based on a percentage of the market value of the client’s
account(s). This fee is billed quarterly in advance based on the closing value of last business
day of the prior quarter multiplied by one-fourth of the annual percentage. AWM will deduct
the fee directly from the client’s account. If a client has more than one account, client may
select from which account to deduct advisory fees if they provide written instruction to AWM.
AWM may charge clients a wealth management fee of up to 2.5% per annum. The initial
quarterly payment will be due at the time assets are allocated to the account and will be pro
rata for the time remaining in the quarter based on the amount of such assets. If clients make
any additions to their account, they will be billed using the same methodology described
above. Any withdrawals from client accounts will not be refunded pro rata. Both additions
and withdrawals involve work by AWM to adjust client’s portfolio allocation.
The wealth management fee charged is subject to negotiation with each client based on the
client’s characteristics and may differ from client to client. AWM reserves the right to
negotiate, waive, or reduce fees at its discretion. The FSA is valid for a term of one year with
automatic one-year renewals. An increase in fees will require a new FSA to be signed by both
parties. AWM may decrease a client’s fee by amending the FSA.
Wealth Management Services – Performance Based Models
Cash Management Strategy
Qualified Clients, as defined in SEC Rule 205-3 (17 Code of Federal Regulations §275.205-3),
who are invested in the Cash Management Strategy will pay a performance fee of 20% based
on capital appreciation. If the client's portfolio rises in value, the client will pay 20% on that
increase in value, but if the portfolio drops in value, the client will not incur a new
performance fee until the portfolio reaches the last highest value which is generally known as
a “high-water mark.” The high-water mark will be the highest value of the client’s account on
the last day of any previous quarter, after accounting for the client’s deposits or withdrawals
for each billing period. In addition to the high water mark the performance fee will not exceed
.125% on a quarterly basis. For example, if a client’s account received a 5% return in a quarter,
the performance fee would be 5%*20% = 1%. However, since there is a cap, the fee would be
reduced to .125%.
The performance fee will be billed in arrears on a quarterly basis. AWM may receive increased
compensation with regard to unrealized appreciation as well as realized gains in the client’s
account. The performance fee is open to negotiation on a client-by-client basis. The
performance fee a client pays will be listed in the FSA.
For accounts employing margin transactions, clients will effectively pay higher fees for
securities purchased on margin. Because fees are charged based upon the value of securities
purchased on margin; this practice creates an incentive for AWM to engage in margin trading
in light of these higher fees.
AWM will deduct the fee directly from the client’s account. If a client has more than one
account, client may select from which account to deduct advisory fees if they provide written
instruction to AWM. AWM reserves the right to negotiate, waive, or reduce fees at its
discretion.
The performance fee charged is subject to negotiation with each client and may differ from
client to client. The FSA is valid for a term of one year with automatic one-year renewals. An
increase in fees will require a new FSA to be signed by both parties. AWM may decrease a
client’s fee by amending the FSA.
Employer Sponsored Retirement Plan Advisory Services
AWM will charge clients for its investment advisory services. This fee is an annual fee based
on a percentage of the market value of the client’s account(s). This fee is billed quarterly in
advance or in arrears and is dependent upon the record keeper. The fee is based on the closing
value of the last business day of the prior quarter multiplied by one-fourth of the annual
percentage. The fee will be deducted from the plan assets. AWM will rely on the plan’s
recordkeeper to perform the asset calculation and process the billing.
AWM may charge clients a fee of up to 2.0% per annum. The initial quarterly payment will be
pro rata for the time remaining in the quarter based on the amount of such assets. Any
withdrawals from client accounts will not be refunded pro rata.
This fee is subject to negotiation with each client and may differ from client to client. The
investment advisory agreement is valid for a term of one year with automatic one-year
renewals. Any changes, such as an increase or decrease to the investment management fee,
may be made to the investment advisory agreement in writing upon agreement of the parties.
Sub Adviser Services
AWM receives between .40% - 1% per annum, depending upon the services provided, for sub
adviser services. This fee will be collected quarterly in advance based on the ending day
balance of each calendar quarter based on the fair market value of the assets in the account.
The fee is an annual fee based on a percentage of the market value of the client’s account(s).
This fee is billed quarterly in advance based on the closing value of the last business day of the
prior quarter multiplied by one-fourth of the annual percentage. AWM will deduct the fee
directly from the client’s account.
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