Item 5 – Fees and Compensation
For CASTELLAN’S investment management services, we offer our clients with assets under
management (AUM) of $10MM an option of a performance-based fee schedule (beginning
at the $10MM level) or a tiered AUM fee schedule which both are outlined below.
$10MM+ Incentive Fee Schedule
4%+ LTD S&P
AUM FLOOR 1%+ LTD S&P 2%+ LTD S&P 3%+ LTD S&P CEILING CAP
$10MM-$49.99MM 0.40 0.55 0.70 0.85 1.00
$50MM-$99.99MM 0.30 0.45 0.60 0.75 0.90
$100MM+ 0.20 0.35 0.50 0.65 0.80
$10MM + Tiered Fee Schedule
First $10,000,000 0.75%
Next $15,000,000 0.50%
Next $25,000,000 0.40%
Next $50,000,000 0.30%
$100MM and Over 0.20%
CASTELLAN also offers cash management solutions through government securities at .15%.
CASTELLAN’S fees are calculated based on an aggregation of the client’s separately managed
accounts beginning the date the first purchase trade is placed. A client’s initial billing event
will occur after the first complete calendar quarter. If the account was established during a
calendar quarter, the fee will be prorated based on the number of days remaining in the
partial quarter, then added to the full quarter.
CASTELLAN’S performance fees are charged based on a share of capital gains on or capital
appreciation of the assets of the client’s portfolio account in accordance with the
requirements under Advisers Act Rule 205-3. The calculation is since inception performance
compared against the S&P 500 Index with a floor rate (minimum) and a ceiling rate
(maximum). Performance fees will be billed quarterly, in arrears. The client must understand
the performance-based fee method of compensation and its risks before entering a
management contract with CASTELLAN.
CASTELLAN’S tiered AUM fees will be billed quarterly, in advance, based on the market value,
including cash and cash equivalents, at the end of each calendar quarter.
CASTELLAN may add qualified investors as a client for investment services of less than
$10MM using the fee schedule outlined below.
Under $10MM Fee Schedule
$1MM to $3.99MM $30,000
$4MM - $9.99MM 0.75%
Client can direct and authorize Adviser’s fees to be debited from Client’s custodial account.
Fees are negotiable subject to additional services for clients and the discretion of
management. If a client terminates its relationship with CASTELLAN, any prepaid, unearned
compensation will be pro-rated from the date of notification and will be refunded to the
client. CASTELLAN does not impose any termination fees on separately managed accounts.
Individual clients of CASTELLAN that become investors in Exchange-Traded Funds managed
by CASTELLAN may be entitled to a negotiated rebate of fees charged by the advisor to the
ETF as to not be disadvantaged by entering the fund as a client of the firm.
Financial Planning
Financial planning services are charged in arrears through a fixed fee or hourly arrangement
as agreed upon between the client and CASTELLAN. There will never be an instance where
$1,200 or more in fees is charged six or more months in advance. Hourly fees are generally
charged when the scope of services cannot be determined or if the services are limited to one
meeting. Fixed fees are generally quoted to the client for longer term consulting projects.
Fees are negotiable and vary depending upon the complexity of the client situation and
services to be provided. Similar financial planning services may be available elsewhere for
a lower cost to the client. An estimate for total hours and charges is determined at the start
of the advisory relationship.
Typically, clients will be invoiced quarterly for all time spent by CASTELLAN as agreed upon
by client or upon completion of the services if less than a quarter. Clients who wish to
terminate the planning process prior to completion may do so with written notice. Upon
receipt of written notification, any earned fee will immediately become due and payable, and
any prepaid and unearned fees will be immediately refunded. A client may terminate an
advisory agreement without being assessed any fees or expenses within five (5) days of its
signing.
CASTELLAN does not receive any portion of the fees or commissions paid by clients to third
parties for our managed accounts. CASTELLAN operates in this way to promote transparency
of fees to help client families scrutinize and assess the fees being paid in relation to the
specific services being provided.
CASTELLAN does not sell securities for commission. To sell securities for a commission, we
would need to have our associated persons registered with a broker-dealer. We have chosen
not to do so.