Item 5 – Fees and Compensation
SMA Clients
Amount of Our Fees
We generally calculate our fees as a percentage of the assets we manage for you. Our
maximum annual fee is 1.0%of the value of your account. On occasion, we offer our advisory
services to SMA clients for a fixed fee. Our SMA fees are generally paid in advance. Typically,
we determine our SMA fee for a given quarter based on the market value of your account on
the last business day of the preceding quarter. If an advisory agreement with us begins
during a quarter, we will prorate the fee for the initial partial quarter, based on the number of
days from the beginning of the agreement until the end of the initial quarter.
We reserve the right to negotiate fees. Some clients pay more or less than others
depending on certain factors, including the type and size of the account, our fee schedule in
effect at the time the client engaged us, the range of additional services provided to the client,
anticipated future additional assets, and the total amount of assets managed for a group of
related clients. Your fee is specified in your agreement with us.
We may group related accounts together to allow clients to determine our fee. We
sometimes also offer fee discounts to family members and friends of our firm’s associated
persons.
Termination of Services
Our advisory agreement may be terminated within five business days after signing by
both parties and thereafter on 30 days’ written notice by either party. If the advisory
agreement is terminated within five business days after signing by both parties, Alpha will fully
refund all prepaid fees. If the agreement with us terminates during a quarter, we will refund a
pro rata portion of the fee paid for that quarter, based on the number of days between the end
of the 30- day notice period and the end of the quarter.
Other than at the beginning and termination of a client relationship, we do not adjust
quarterly fees due to assets added or withdrawn during a quarter.
Other Expenses
If you have mutual funds or ETFs in your portfolio, you will incur fees in addition to our
fees. For example, you may incur a commission or transaction fee when the mutual fund or
ETF is purchased, and you will incur an internal management fee payable to the manager of the
fund, neither of which is shared with us. If a fund also imposes sales charges, you may pay an
initial or deferred charge. These fees and expenses are described in each fund's prospectus.
When considering an investment in a mutual fund or ETF, we use a no- load, open- end fund
when appropriate. We evaluate the relative annual costs as a part of our decision process.
You could invest in a mutual fund or ETF directly, without our services. In that case, you
would not receive the services we provide, which are designed in part to help you determine
which, if any, mutual funds and ETFs are best suited to your financial condition and objectives.
You should review the fees charged by the mutual fund and/ or ETFs and our fees to fully
understand the total amount of fees you will pay and to evaluate the advisory services we
provide.
For investment other than mutual funds or ETFs, in addition to the advisory fees paid
to Alpha, clients bear certain charges that are imposed by other third parties, such as broker-
dealers, custodians, trust companies, banks and other financial institutions. These additional
charges include securities brokerage commissions, transaction fees, custodial fees, fees
charged by the Subadvisors, margin costs for accommodating a client’s transient need for cash,
reporting charges, odd- lot differentials, transfer taxes, wire transfer and electronic fund fees
and other fees and taxes on brokerage accounts and securities transactions.
When we use a Subadvisor there is a management fee charged by the Subadvisor that
you pay in addition to the management fee charged by Alpha. Subadvisor fees do not exceed
0.5%per year. That means that if you have an account with Alpha with $10 million of assets
under management, you could pay up to $100,000 to Alpha and a maximum of $50,000 to
Subadvisor(s) on an annual basis.
All clients will be responsible for brokerage and other transaction costs, as discussed
below in Item 12.
Financial Planning
For our financial planning services, we charge a flat fee ranging from $5,000 to
$30,000O. Our fee will be specified in our agreement with you and will be payable on such
terms and with such frequency as we mutually agree. We do not deduct fees from client assets
for financial planning services.
Estate Planning
Alpha Principle has partnered with Snug and Griffin Bridgers to provide estate planning
opportunities for our clients. For any clients using estate documents, tools, etc. through Snug,
there will not normally be an additional fee charged, though Alpha reserves the right to charge
an additional fee, at our sole discretion, depending on the amount of work necessary. In these
instances, the fee will be specified in our agreement with you and will be payable on such terms
and with such frequency as we mutually agree. Any client using the services of Griffin Bridgers
will be charged an additional fee for their services. This fee will be specified to the client. Any
fees collect for these services will be split evenly between Griffin Bridgers and us.
No Compensation from Sales of Securities
Alpha and its employees do not accept compensation for the sale of securities or other
investment products, including asset- based sales charges or service fees from the sale of
mutual funds.