Brennan John David

FEES AND COMPENSATION

    The firm charges fixed fees for the preparation of written financial plans and ongoing financial-
planning advice. The fees are negotiable in the range of $5,000 to $20,000 or more for the first year,
depending on the complexity of the client’s financial situation. For the first year, one half of the fee is
due at the time of the initial data-gathering interview; the remaining one half is due less than six months
later, at the presentation of the first written plan. In subsequent years, the fee is negotiable as a
percentage of the first year’s fee, again depending on the complexity of the client’s financial situation.
Ongoing fees are paid semi-annually, less than six months in advance. Any pre-paid fees are refunded on
a pro-rata basis, in the event of a cancellation. Over 68% of the firm’s annual revenue is generated by
financial-planning fees. The firm also manages client accounts for a percentage of assets under
management. Asset management fees are negotiable in the range of 0.10% to 1.00%, depending on
account size, and are paid in arrears. Less than 32% of the firm’s annual revenue is generated by asset
management fees. All fees are deducted from assets or billed directly, at the client’s option.

    Clients are free to implement the firm’s investment advice at any broker. If a client wants a
recommendation, the firm will do so based on the broker’s skills, costs, reputation, dependability, and
compatibility with the client, and never upon a financial arrangement between the firm and the
recommended broker. Personal Financial Management has arrangements with several brokerage firms
which provide us with “institutional platform services”. These relationships are described more fully in a
later section entitled Brokerage Practices. Clients may pay custodial fees, commissions or other charges
to these firms. Personal Financial Management does not share in any of these charges.

     Clients may purchase mutual funds directly through Personal Financial Management or through
their broker on our advice. Personal Financial Management generally recommends “no-load” mutual
funds. As stated in the prospectus of each one of those funds, the fund charges account holders
management and administration fees. Personal Financial Management does not receive any payments
in the form of sales charges or ongoing mutual fund management fees from any mutual fund company
or brokerage firm. Clients of Personal Financial Management pay us only a semi-annual financial
planning fee and/or an asset management fee.

    PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT

    Not applicable

TYPES OF CLIENTS

    Personal Financial Management provides investment advice primarily to high-net-worth individuals,
but also to individuals and to charitable organizations established by clients. There is no minimum to
open an investment account, but the firm generally requires a net worth of at least $5 million for
financial-planning services.

    METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

    Personal Financial Management pursues fundamental and technical security analysis through
financial newspapers and magazines; research materials prepared by others; annual reports,
prospectuses, and filings with the SEC; company press releases; and corporate rating services - all in
support of diversified, long-term investment strategies. Personal Financial Management does not offer
investment strategies based on short-term purchases, trading, short sales, margin transactions or option
writing. The primary goal is preservation and enhancement of net worth over the long term, not short-
term gains. Our primary investment vehicle is mutual funds, which carry the risk of principal loss in the
underlying investments of stocks and bonds. We try to minimize losses through diversification among
asset classes and within asset classes. However, clients and prospective clients should be aware that
there is no guarantee that they will not lose money if they invest with Personal Financial Management.