ITEM 5 – FEES AND COMPENSATION
The Firm and/or your Advisor are compensated in several ways. We want to ensure that you understand how we, as a Firm, and our
Advisors are compensated, as well as the other costs associated with your account. Here are a few important facts about the fees and
costs associated with your account:
Cetera will typically earn compensation for managing these accounts by charging you an advisory fee. This fee is called an “assets under
management” (AUM) fee. Essentially, this means that on a quarterly basis, we will charge you a fee that is calculated as a percentage of
the market value of the assets held within your advisory account.
Fees associated with the wrap programs sponsored by our firm and co-sponsored by related firms are described in the appropriate
program’s Appendix 1 wrap brochure as described in Item 4.
Advisory Fee Schedules
Preferred Fee Schedule
Account Size Maximum Annual Fee
First $0 – $250,000 2.50%
Next $250,001 – $500,000 2.25%
Next $500,001 – $1,000,000 1.75%
Next $1,000,001 – $2,500,000 1.50%
Next $2,500,001 – $5,000,000 1.25%
Next $5,000,001 – Over 1.00%
You will also be responsible for any transaction costs associated with purchasing securities in a Preferred Account. Your executed
advisory services agreement lists the transaction costs associated with your account. With the exception of ERISA accounts, we mark
up the transaction costs that our clearing firm charges us, which is a source of additional revenue. The more transactions a client enters
into, the more compensation the Firm receives. The Firms’ transaction charges in non-ERISA accounts represent a conflict of interest
due to the fact that we have a financial incentive to establish a Preferred Account because of the additional revenue we receive. This
compensation, however, is retained by the Firm and is not shared with your Advisor, so your Advisor does not have a financial incentive
to recommend that you open a Preferred Account or engage in frequent transactions.
In addition to the assets under management fee, if you close a Preferred Account within the first year, you will pay a separate administration
fee of $200.
Preferred Asset Management and Prime Portfolio Services
Transaction costs are the costs associated with purchasing or selling securities. The Preferred and Prime Programs are materially the
same with one important exception. In the Prime Program, your Advisor pays for any transaction costs associated with your account. In
the Preferred Program, any transaction charges are paid by you. Because your Advisor pays for transaction costs in the Prime Account,
the management fees that you pay are higher.
Your Advisor has a conflict of interest in recommending that you open (and maintain) a Preferred or a Prime Program account because
of the costs associated with trading each type of account, which vary depending on the type of security being purchased or sold. In the
Prime Program, your Advisor pays for all transaction costs as an annual basis point fee that is recalculated annually, based on the prior
24 months of trade activity. If you trade infrequently, your Advisor retains more compensation from your Prime Program account than if
you were to open a Preferred Program account because you pay transaction costs in a Preferred advisory account, and the fee schedule
for the Prime program is generally 0.25% higher than the fee schedule for the Preferred Program. Additionally, in a Prime account, you
should understand that the transaction costs present a conflict of interest to your Advisor when deciding which securities to select and
how frequently to place transactions, as the Advisor has a financial incentive to recommend transactions in certain securities that do not
carry transaction costs and to limit the overall number of transactions it recommends. This conflict is mitigated because your Advisor does
not pay a transaction cost for each trade, and instead pays an annual basis-point fee for all trading activity that is recalculated annually,
based on the prior 24 months of trade activity.
For both Preferred and Prime Programs, other brokerage account fees and expenses will be charged when applicable and are listed in
the Firm’s schedule which is available from your Advisor. These other brokerage account fees and expenses defray our costs associated
with maintaining and servicing client accounts and includes compensation to the Firm. The additional compensation the Firm receives
Page 14 of 34 © 2010 Cetera Advisor Networks LLC
23-0095 CAN ADV PART 2A 05/23
represents a conflict of interest because the Firm receives a financial benefit when it provides services in connection with maintaining and
servicing your account. This compensation, however, is retained by the Firm and is not shared with your Advisor, so your Advisor does not
have a financial incentive to recommend certain transactions or for the Firm to provide such additional services.
Your executed advisory services agreement lists the transaction costs associated with your account. With the exception of ERISA
accounts, we mark up the transaction costs that our clearing firm charges us, which is a source of additional compensation. The more
transactions a client enters into, the more compensation the Firm receives. The Firms’ transaction charges in non-ERISA accounts
...