Item 5. Fees & Compensation
We are required to describe our brokerage, custody, fees and fund expenses so you will know how
much you are charged and by whom for our advisory services provided to you. Our fees are
generally negotiable at the sole discretion of the firm. Although we believe our advisory fees are
competitive, clients should be aware that lower fees for comparable services may be available from
other sources.
A. Description of how we are compensated for our advisory services:
As described in greater detail below, we charge different types of fees, including fees based on a
percentage of assets under management, fixed fees and hourly fees. The specific fees charged by
for our services will be set forth in the client’s agreement.
Fees are negotiable and arrangements with any particular client can differ from those described
below. In addition, for family and friends of the firm, we can, in our sole discretion, reduce or
waive fees in their entirety. Although we believe our fees are competitive, clients should be aware
that lower fees for comparable services could be available from other sources.
(i) Asset Management:
We provide Asset Management services to clients for a fee based upon a percentage of assets under
management (including cash and cash equivalents), which are calculated based on the following
annual percentages:
Assets Under Management Annual Percentage of Assets Charge
$0 - $5,000,000 1.25%
$5,000,000.01 - $10,000,000 1.00%
Over $10,000,000 0.75%
The Firm’s fees are a blended rate of the total assets under management. For example, a client with
$6M in assets under management would be assessed 1.25% on the first $5M, and 1.00% on the
remaining $1M. The total fee is achieved by adding up (blending) all fee calculations in each fee
tier.
Our Firm’s fees are billed on a pro-rata annualized basis quarterly in advance based on the market
value of your account on the last day of the previous quarter. The market value is provided to
CWM by the client’s custodian for billing purposes.
Should a client open an account during a quarter, the fee will be prorated based on the number of
days the account was open during the quarter. In the event our services are terminated mid-quarter,
any paid, unearned fees will be promptly refunded to the client. The number of days the account
was managed during the quarter until termination is used to determine the percentage of the
management fee earned (based on the total number of days in the quarter) and the balance is
refunded. Additions and withdrawals to Client accounts intra-quarter are subject to the same billing
practices.
At times, the Firm will employ margin strategies as part of a client’s account. In these instances,
margin is used to purchase additional securities, and the total value of eligible account assets
increases, as does the asset-based fee. Similarly, brokerage firms generally require you to have a
margin account to trade options, and while they do not allow you to use margin to purchase options
contracts, they typically will allow you to use margin to sell (or write) options contracts. When
employing such option selling strategies, the Firm will typically bill on the margin portion of these
accounts. Notably, the increased asset-based fee the client pays in these instances presents a
conflict since it creates an incentive for CWM to recommend the use of margin and/or options
strategies. Please note that using such strategies is not suitable for all investors; the use of margin
and options increases leverage in the client’s account and therefore increases overall risk. Please
see Item 8 below for additional information concerning risks associated with utilizing margin in a
client account.
(ii) Pension Consulting:
We provide Pension Consulting services to clients for a fee based upon a percentage of assets
under management (including cash and cash equivalents), which are calculated based on the
following annual percentages:
Assets Under Management Annual Percentage of Assets Charge
$0 - $1,000,000 1.00 %
$1,000,001 - $3,000,000 0.90%
Over $3,000,000 0.75%
The Firm’s fees are a blended rate of the total assets under management. For example, a client with
$2M in assets under management would be assessed 1.00% on the first $1M, and 0.90% on the
remaining $1M. The total fee is achieved by adding up (blending) all fee calculations in each fee
tier.
Our firm’s fees are billed on a pro-rata annualized basis quarterly in advance based on the value
of your account on the last day of the previous quarter.
(iii) Financial Planning and Consulting:
We charge on an hourly or flat fee basis for financial planning and consulting services.
The total estimated fee, as well as the ultimate fee that we charge you, is based on the scope and
complexity of our engagement with you. Our hourly fees are $350 for financial advisors. Flat fees
generally range from $1,000 to $20,000.
(iv) Referrals to Third-Party Money Managers:
Third-party money manager fees vary and are described in the manager’s respective Form ADV
Part 2A Firm Brochure. Such fees to third-party money managers are distinct from, and in addition
to, fees due our firm. Typically, the third-party money manager is responsible for the collection
of its own fee from the client account. Please note that total fees charged to clients by our firm
and the third-party money manager will at no time exceed three percent (3%) of assets under
management annually.
B. Description of whether we deduct fees from clients’ assets or bill clients for fees incurred.
(i) Asset Management:
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