Item 5 Fees and Compensation
Investment Advisory Services
If a client determines to engage Registrant to provide discretionary investment advisory services
on a fee basis, Registrant’s annual investment advisory fee shall be based upon a percentage
(%) of the market value of assets placed under Registrant’s management. Registrant’s fee is
negotiable and will not exceed 1.25% under any circumstances. Registrant’s annual investment
advisory fee shall be prorated and paid quarterly, in advance or arrears (as the case may be),
based upon the market value of the assets on the last business day of the previous quarter.
Registrant will individually negotiate fees with each client, with annual fees not exceeding 1.25%
of assets placed under Registrant’s management.
Registrant, in its sole discretion, may charge a lesser investment advisory fee and/or charge a flat
fee based upon certain criteria (i.e. anticipated future earning capacity, anticipated future
additional assets, dollar amount of assets to be managed, related accounts, account composition,
prior fee schedules, competition, complexity of the engagement, anticipated services to be
rendered, grandfathered fee schedules, employees and family members, courtesy accounts,
negotiations with client, etc.). As a result, similarly situated clients could pay different fees. In
addition, similar advisory services may be available from other investment advisers for similar or
lower fees.
Registrant includes the value of certain month or quarter end interest or dividend payments when
calculating client fees. Because these payments may be credited to the appropriate account
subsequent to the issuance of the applicable brokerage statement, the market value reflected on
the client brokerage statement may differ slightly from the value used in Registrant’s fee billing
process.
Registrant shall generally compensate its representatives based upon the revenues derived from
accounts that they service. The representative generally maintains the authority to
determine/negotiate the percentage advisory fee. Thus, a conflict of interest is presented because
the higher the advisory fee, the greater the representative’s (and Registrant’s) compensation.
Although Registrant will invest client assets consistent with the client’s designated investment
objective, the fact that Registrant earns a higher fee for management of securities other than fixed
income as referenced in the above fee range, Registrant has a conflict of interest since it will
present an economic incentive to allocate more assets to those types of securities from which it
will earn a higher advisory fee.
The Investment Advisory Agreement between Registrant and the client will continue in effect until
terminated by either party by written notice in accordance with the terms of the Investment
Advisory Agreement. Upon termination, if billed in advance, Registrant shall refund the pro-rated
portion of the advanced advisory fee paid based upon the number of days remaining in the billing
quarter. Upon termination, if billed in arrears, Registrant shall debit the account for the pro-rated
portion of the unpaid advanced advisory fee based upon the number of days that services were
provided during the billing quarter Registrant’s policy is to treat intra-quarter (intra-month, if billing
is monthly) account additions and withdrawals equally, where deposits or withdrawals in excess
of 25% of the account’s value will result in an intra-period adjustment to the client’s quarterly fee.
Margin Accounts: Except with respect to its Leveraged Opportunity Strategy (see Item 6 below),
Registrant does not recommend the use of margin. A margin account is a brokerage account that
allows investors to borrow money to buy securities. By using borrowed funds, the customer is
employing leverage that will magnify both account gains and losses. The broker charges the
investor interest for the right to borrow money and uses the securities as collateral. Should a client
determine to use margin, Registrant will include the entire market value of the margined assets
when computing its advisory fee. Accordingly, Registrant’s fee shall be based upon a higher
margined account value, resulting in Registrant earning a correspondingly higher advisory fee.
As a result, the potential of conflict of interest arises since Registrant may have an economic
disincentive to recommend that the client terminate the use of margin.
Neither Registrant, nor its representatives, accept compensation from the sale of securities or
other investment products.
Sub-Advisory Services
Registrant can also be engaged to serve as a sub-advisor to unaffiliated registered investment
advisors according to the terms and conditions of a written Sub-Advisory Agreement. Registrant’s
annual sub-advisory fee shall be based upon a percentage of the market value of assets placed
under Registrant’s management. Registrant will individually negotiate fees with each sub-advisory
client, with annual fees not exceeding 1.25% of assets placed under Registrant’s management.
See Limitations of Sub-Advisory Services above.
Clients may elect to have Registrant’s advisory fees deducted from their custodial account. Both
Registrant's Investment Advisory Agreement and the custodial/clearing agreement may authorize
the custodian to debit the account for the amount of Registrant's investment advisory fee and to
directly remit that management fee to Registrant in compliance with regulatory procedures. In the
event that Registrant bills the client directly, payment is due upon receipt of Registrant’s invoice.
Registrant shall deduct fees and/or bill clients quarterly in advance or arrears (as the case may
be), based upon the market value of the assets on the last business day of the previous quarter.
Custodial Fees
As discussed below at Item 12 below, when requested to recommend a broker-dealer/custodian
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