Item 5 Fees and Compensation
Wrap Fees. BAM generally charges new separately managed accounts a "wrap fee" as described
more completely below. Appendix 1 further describes BAM's wrap fee program, and a copy of
Appendix 1 is provided to wrap fee clients.BAM's standard fee for equity accounts is 1.25% annually.
This fee is negotiable. BAM, in its sole discretion, may negotiate to charge a lesser fee based upon
certain criteria, such as account composition, anticipated future earning capacity, anticipated future
additional assets, related accounts in the household, re-existing/legacy accounts, retention, or
employee-related or pro bono activities. For instance, if an account classified as an equity account has
a significant exposure to fixed income securities, a reduced rate may be applied to the fixed income
portion of the account. Depending on a client's circumstances, actual fees may be higher than, or
discounted from, this standard fee or may be set at a flat amount, and there may be minimum fee
requirements. Fees for other types of accounts - e.g., balanced or fixed income accounts - are
individually negotiated and are generally less for fixed income accounts than for equity accounts. Each
portfolio manager negotiates the exact fee for each of the portfolio manager's client accounts. BAM
may allocate a portion of the advisory fee it receives to the portfolio managers. The client's account is
charged fees quarterly in advance, based on the value of the account (unless BAM and the client
otherwise agree). The method of valuation for purposes of fee calculations will be set forth in the
client's investment advisory agreement. The client may authorize the Adviser by separate
memorandum to direct the custodian to deduct the advisory fees directly from the account and to pay
such fees to the Adviser. In the case of any client who has not directed that fees be deducted from the
account, such fees will be due and payable upon receipt of an invoice.
If the Adviser's management of the account commences at any time other than the beginning of a
calendar quarter or terminates at any time other than the end of a calendar quarter, the fee will be
prorated based on the number of days the Agreement was in force. Contracts are generally terminable
by clients upon notice to BAM and generally provide that termination is effective after a specified period
after notice.
The "wrap fees" described above ("Separate Account Wrap Fees") generally include brokerage
commissions, custodial costs and nominal ticket charges and administrative or service fees. Clients
may direct BAM to use a broker of the client's choice; however commissions would not be covered by
the wrap fee and, as a result, your brokerage costs may be higher than those of a client using
broker/custodian that is part of BAM's "wrap fee" program. The Separate Account Wrap Fees do not
include brokerage commissions for transactions executed through other broker-dealers as directed by
the client; custodial costs other than BAM approved custodial costs; margin costs and costs associated
with unsolicited short sales; mark-ups, mark-downs and spreads; wire transfer fees; US treasury
auction fees; SEC fees in connection with trades; mutual fund distribution, shareholder servicing or
administrative fees; IRA fees; extraordinary fees and other fees that BAM may disclose as excluded
from time to time. In addition, some portfolio managers may exclude specific positions from the fee
calculation.
BAM currently has a brokerage agreement with Schwab Advisor ServicesTM ("Schwab") for its wrap fee
program and may enter into brokerage agreements with additional broker-dealers in the future.
BAM has incentives to use approved broker-dealers/custodians such as Schwab for execution of
transactions for clients in the wrap fee program. These incentives may include, but are necessarily not
limited to, those benefits listed in Item 12 - "Brokerage Practices - Soft Dollars" and Item 12 -
"Brokerage Practices - Other Benefits." These incentives create a conflict of interest for BAM. More
information about brokerage commissions can be found in "Brokerage Practices" below.
Because the Separate Account Wrap Fees encompass both advisory services and brokerage
commissions, it is possible that the separately managed account program could cost more or
less than separate charges for advisory services and brokerage commissions. For accounts that
trade more frequently and/or in markets with relatively higher commissions, the Separate Account
Wrap Fees may be less than if fees were charged separately. For accounts that trade less frequently
and/or in markets with relatively lower commissions, the Separate Account Wrap Fees may cost more
than if fees were charged separately.
Managed Account Fees - Non Wrap Accounts. In the case of clients who do not wish to participate in
the Adviser's wrap fee program, fees are generally within a range of 0.5% to 2.00% per annum of the
assets under management, based on a number of factors, such as size of the account, its investment
objective and commissions paid by the account, if any.
The following information is for accounts that are NOT part of BAM's wrap fee program:
Fees are generally charged quarterly in advance, based upon the value of the portfolio at the end of
the preceding quarter. Clients may also elect to be billed directly for fees or to authorize BAM to
directly debit fees from client accounts. Contracts are generally terminable by clients upon notice to
BAM and generally provide that termination is effective a specified period after notice, and in the event
of the termination prior to the end of any calendar quarter, fees payable thereunder are to be prorated
based on the portion of the calendar quarter during which the contract remained in effect. Each
portfolio manager negotiates the exact fee for each of the portfolio manager's client accounts. BAM
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