Item 5: Fees and Compensation
Compensation – Financial Planning
We do not charge for financial planning.
Compensation – Investment Management Services
Investment Management fees are charged quarterly, both in advance and in arrears, based on a
percentage of the client assets under management. A majority of clients are covered by the
following annual fee schedule:
Assets Under Management Annual Fee
First $2,000,000 1.25%
Next $3,000,000 1.00%
Next $5,000,000 0.75%
Over $10,000,000 0.60%
Securities that are not publicly traded are valued at cost unless otherwise agreed with the
client. In some special circumstances, we will negotiate the fees to be charged for account
management and advisory services. Certain clients may be charged on a different fee schedule
under legacy contracts.
In addition to the fees described above, the Firm provides account monitoring services, without
any advisory or management services, for a flat fee. Fees range from $600/month to
$1,500/month.
A reduced fee is made available for charities and certain accounts for which only minimal
services are rendered.
Smaller accounts, such as Individual Retirement Accounts (“IRAs”) and children's trusts, are
generally placed in brokerage accounts with Pershing Advisor Solutions LLC (“Pershing”), Fidelity
Investments (“Fidelity”), Charles Schwab (“Schwab”) and invested in a variety of mutual funds, as
appropriate. We charge a fee of one percent (1%) annually for selecting and monitoring these
investments, which is paid in addition to any fee that may be imposed by the individual fund into
which a client’s funds may be invested. This fee is payable annually in arrears or at such time the
client terminates its advisory agreement with us with respect to the account, prorated based on
the number of months in which the Firm maintained the account.
For a small number of clients, we provide bookkeeping services and share check signing
privileges with these clients on their individual bank accounts so that we may pay certain
expenses of these clients. These services are provided for a fixed monthly fee negotiated with
the client. Fees range from $300/month to $2,000/month.
Finally, we occasionally provide consulting services for a fixed fee. Fees range from $1,000/month
to $10,000/month. These fees are negotiated on a case-by-case basis.
All fixed fees are charged quarterly in arrears.
Compensation - Sub-advisory Fees
In the cases where we recommend the services of a sub-advisor for clients investing in a fixed
income strategy, there is an additional fee charged by the sub-advisor based upon the following
fee schedule:
0.175% per year for assets up to $5,000,000
0.150% per year for assets over $5,000,000
Sub-advisory fees are charged based on quarter-end values in arrears. All sub-advisory fees
charged are separate and distinct from any advisory fees charged by the Firm.
Fee Payment Options
As indicated in our advisory agreement with clients, there are two options to pay for our
services:
• Direct debiting: At the inception of the relationship and each quarter thereafter, we will
notify the custodian of the amount of the fee due and payable to us through our fee
schedule and contract. The custodian does not validate or check our fee, but it does
validate the account information on which the fee is based. They will “deduct” the fee
from the client account(s) or, if the client has more than one account with us, from the
account the client has designated to pay our advisory fees.
o Each month, the client will receive a statement directly from the custodian
showing all transactions, positions, and credits/debits into or from the account;
the statements after the quarter end will reflect these transactions, including the
advisory fee paid to us.
o We distribute quarterly reports to clients for each account under management.
This report includes a description of assets held, on both a market value and cost
basis, by category. The report also includes calculations of the total portfolio
value and yield.
• Pay-by-check: At the inception of a client account and each month thereafter, we will
issue an invoice for our services for payment by check or wire transfer within 30 days of
the date of invoice.
Cash Balances
Some of your assets may be held as cash and remain uninvested. Holding a portion of your
assets in cash and cash alternatives, i.e., money market fund shares, may be based on your
desire to have an allocation to cash as an asset class, to support a phased market entrance
strategy, to facilitate transaction execution, to have available funds for withdrawal needs or to
pay fees or to provide for asset protection during periods of volatile market conditions. Your
cash and cash equivalents will be subject to our investment advisory fees unless otherwise
agreed upon. You may experience negative performance on the cash portion of your portfolio if
the investment advisory fees charged are higher than the returns you receive from your cash.
Retirement Plan Rollover Recommendations
As part of our investment advisory services to our clients, we may recommend that clients roll
assets from their employer’s retirement plan, such as a 401(k), 457, or ERISA 403(b) account
(collectively, a “Plan Account”), to an individual retirement account, such as a SIMPLE IRA, SEP
IRA, Traditional IRA, or Roth IRA (collectively, an “IRA Account”) that we will advise on the
client’s behalf. We may also recommend rollovers from IRA Accounts to Plan Accounts, from
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