Chelsea Advisory Services Inc

Item 5.

Most investment advisory representatives of Chelsea Advisory are also registered with Chelsea
Financial. Some investment advisory representatives are also licensed as life and health insurance

agents. When appropriate, these individuals offer insurance products and services to advisory
clients and receive commissions that are in addition to any advisory fees charged by Chelsea
Advisory. To the extent our insurance-licensed advisory representatives recommend insurance
products, they have a financial incentive to do so because they receive additional compensation
when clients purchase insurance through them. This creates a conflict of interest which we mitigate
by training our representatives concerning their fiduciary duty to make recommendations solely in
the client’s best interest. Further, we inform clients of the conflict and notify them that they are
never required to follow our insurance recommendations. They are also free to purchase insurance
products through insurance agents unaffiliated with Chelsea Advisory or Chelsea Financial.

We have discretionary authority to select third party advisers, and we negotiate the fees charged
by those advisers. We limit the total fee paid by any advisory client to 2% and then pay third-party
advisers from that fee. The actual total fee is specified in the individual client advisory agreement.
Because our compensation goes up and down depending on how much we pay to third-party
advisers, we have an incentive to allocate assets to sub-advisers who charge us the lowest fees.
Depending on the circumstances, the client may be better served by a sub-adviser with higher fees.
We mitigate the conflict by working with sub-advisers who we believe provide competitive rates.
Further, we train our advisory representatives to understand their fiduciary duty and our
supervisory oversight includes reviews for appropriate allocation of client assets in light of
objectives, risk tolerance, and other client needs.

Neither the firm nor any of its management persons are registered, or have an application pending
to register, as a futures commission merchant, commodity pool operator, a commodity trading
advisor, or an associated person of the foregoing entities

Item 7 – Types of Clients
Chelsea Advisory provides investment advisory and consulting services to individuals, high net
worth individuals, trusts, and some corporate entities. We have a minimum account size of
$25,000, though this may be waived in some cases. There is usually a minimum custodian charge
for accounts holding less than $25,000.