Capstone Investment Group LLC

Item 5: Fees and Compensation

Compensation for Our Advisory Services
CAPSTONE receives fees for the investment management services which are noted within your Advisory
Agreement.

Fees and/or other terms included in the client agreement may not be amended or negotiated without prior
written notice and signed consent of all parties. Fee calculations are based upon the asset values provided by
the custodian, and in most cases, fees are electronically debited as previously authorized by the client.
However, it is possible to be invoiced for investment management services.

The following outlines our basic fee schedules, initial consultation and/or financial planning fees will be applied
to services as agreed to by client and CAPSTONE as noted below.

Page | 5

Planning Fees

Plan only fees are charged and pre-approved by Client up to the following amounts:
Initial consultation:   $195/hour
Financial planning:     $195/hour*
Monitoring and review: $195/hour

*Based upon our estimate of the total time required and the complexity of the client situation, the fee for
planning services could vary. An engagement agreement would be signed by both client and CAPSTONE as to
exact costs, with modifications to such plan likewise pre-approved by both parties. Our planning engagement
exists to help you discover and define what you want out of life, how present and projected future financial
circumstances effect those objectives, family needs and general lifestyle dynamics. Recognizing each client has
unique and special considerations our services can be either limited or very broad. Areas that can be covered
include, but are not limited to, the following:

    •   Identification of goals and objectives
    •   Estimate of assets, liabilities, and net worth
    •   Investment portfolio analysis
    •   Financial independence/retirement income needs
    •   Income tax situation review
    •   Disability/capital needs analysis
    •   Education funding needs
    •   Estimate of estate value and settlement costs
    •   Estate planning including meeting with client attorney(s) and tax advisor(s)
    •   Advanced planning techniques and strategies to help clients maximize their financial, social and
        personal wealth

We do not collect fees of $500 or more per client, but may collect fees under $500 per client, six months or
more in advance as agreed to by CAPSTONE and client. Half the agreed upon fee is due in advance with the
balance due at completion and signatory by client. Unused fees will be returned to client.

Standard Annual Asset Management Fees

(Tier Based Schedule)
$      0-     250,000 = 1.85%
$250,001 – 500,000 = 1.65%
$500,001 – 750,000 = 1.50%
$750,001 – 1,000,000 = 1.35%
$1,000,001 – 2,000,000 = 1.15%
$2,000,001+            = 0 .75%

Billing is done monthly in arrears. In cases when the Advisory Agreement does not span the full billing period,
asset management fees are pro-rated for the days the account has been open. You can terminate the
management agreement at any time with written notice to: CAPSTONE Investment Group, LLC 2405 Evergreen
Park Drive SW Bldg. A, Olympia, WA 98502, attention Chief Compliance Officer. A client can terminate new
agreements within 5 business days without penalty. CAPSTONE does not charge separate termination fees,
though the custodian may. Investment Advisor Financial Advisors may negotiate with client certain
adjustments to our regular fee schedule.
Page | 6

Clients can view their fee information on their monthly statements provided by the custodian. Requests for a
formal statement of charges and calculations can be made at any time.

Selection of Other Advisers Fees – SEI

CAPSTONE may direct clients to third-party investment advisers. CAPSTONE will be compensated via a fee
share from the advisers to which it directs those clients. The fees shared are negotiable and will not exceed
any limit imposed by any regulatory agency. The notice of termination requirement and payment of fees for
third-party investment advisers will depend on the specific third-party adviser selected.

                 Total Assets          CAPSTONE’s Fee         Third Party’s Fee          Total Fee
                  All Assets               1.00%                   0.45%                  1.45%

Fees are paid monthly in arrears and will be disclosed to the client prior to entering into a relationship with SEI.

In addition to the advisory fees charged by CAPSTONE, costs incurred include clearing firm transaction charges,
commission on brokerage products, custodial fees or other charges. For information on brokerage expenses,
please review the Brokerage Practices section of this brochure. If you have investments in mutual funds or
other investment companies’ funds that are used in calculating your advisory fees, those assets will be subject
to additional advisory and other fees and expenses, as set forth in the prospectuses of those funds, paid by the
funds but ultimately borne by the investor. CAPSTONE encourages you to compare the monthly asset
management fee (invoice) charged against your account(s) to the fee posted on your account statement.
Lower fees for comparable services may be available from other sources.

CAPSTONE offers referrals, investment advice, and management services. CAPSTONE Financial Advisors are
also Registered Financial Advisors with M.S. Howells & Co.”), a FINRA/SIPC member broker/dealer and SEC
Registered Investment Advisor. The Financial Advisor may recommend to clients or take an order from a client
to sell or purchase securities or insurance products, which may produce additional compensation
(commissions) for the Financial Advisor. This can create a conflict of interest in that there may be a financial
incentive to recommend one product over another based on the amount of commissions paid. The
investments, accounts and services offered by the broker/dealer are separate and distinctly different from the
...

Item 7: Types of Clients

Most CAPSTONE clients are individuals and high net worth individuals. Clients may also consist of ERISA
pension and profit-sharing plans, corporations, and charitable organizations. While there is a minimum of
$200,000 household asset size set by CAPSTONE, CAPSTONE may adjust the account minimum at its own
discretion.