Item 5 - Fees and Compensation
Fees For Investment Consulting Services.
Fees charged by Clayborne for its Investment Consulting Services are negotiable and calculated
as a flat fee or are based upon the value of assets being reviewed and/or based upon account
performance. All fees, and the minimum account size, are negotiable.
Flat fees are quoted in advance and an initial payment which varies between 0% to 50% of the
total estimated fee is due upon contract signing with the balance due promptly after the advisory
services are provided. The fee and initial deposit varies based upon the nature of services
requested. A quarterly retainer may also be negotiated.
Asset-based fees are quoted as an annual percentage of assets under management and are payable
quarterly, before services are provided and usually range from .50 - 1.25% annually. Where
third-party manager fees are included, annual rates will range from .80 - 2.50%. The initial
asset-based fee is charged from the date of the agreement through the end of the first calendar
quarter in which the account is open for at least 30 days. Thereafter, asset-based fees are payable
quarterly based upon the market value of assets at the end of the immediately preceding calendar
quarter. Assets deposited to an account exceeding $20,000 during any quarter are charged a pro-
rated quarterly fee based upon the number of days remaining in the quarter. There is no refund
of fees paid or due for a particular calendar quarter or made if assets are withdrawn during the
quarter. In the event of contract termination, all unearned prepaid fees are pro-rated for the days
remaining in the quarter and returned to the client. The fees excludes all transaction and
custodian costs, including brokerage commissions and account maintenance fees.
Clients authorize the client’s account custodian(s) to deduct, upon Clayborne’s instruction, fees
when due from assets held in the account. Clients also authorize Clayborne to liquidate, without
obtaining prior permission of client, money market funds and other securities in the Account in
amounts sufficient to cover Clayborne’s fees.
Clients who have substantial net worth or a managed account meeting a minimum value, as
specified below, may wish to compensate Clayborne for its services by means of a performance-
based fee at rates which range from 10% to 30% of the amount, if any, by which the value of the
account at the end of each calendar quarter exceeds the highest value achieved for the account at
the end of any previous quarter (or the initial value of the account if managed for less than one
quarter). Clients agree to pay such accrued profits every quarter, commencing with the date of
the agreement. Each fee is calculated in a manner which includes realized capital gains and
losses and unrealized capital gains and depreciation of securities during the billing period. There
is no minimum fee. In the event an account experiences a decline in value during the billing
period, then the performance measurement period is extended to subsequent billing periods until
the decline is recovered. Fees applicable to capital contributions or withdrawals during any
quarter are prorated based on the number of days the capital is in the account. If the agreement
terminates, fees are due Clayborne only for the period services were provided.
Clients should be aware that this performance fee arrangement may create an incentive for
Clayborne to make investments that are more risky or more speculative than might be the case in
the absence of a fee based on performance. Clients should also know that Clayborne will receive
increased compensation with regard to unrealized appreciation as well as realized gains in the
client’s account and that where market quotations are not readily available for valuing securities,
a client may elect an independent third party to do so.
A performance-based fee client must be (I) a natural person or a company (as defined in
paragraphs (b)(2) and (g)(1) of Rule 205-3 of the Investment Advisers Act of 1940), who
immediately after entering into the agreement has at least $750,000 under management of
Clayborne, or (ii) be a natural person or company whose net worth at the time the contract is
entered into exceeds $1.5 million (either alone or held jointly with such person’s spouse).
Clayborne retains the right to amend any of its fees upon thirty (30) days advance written notice
to clients.
Fees For Management Services.
Fee to Third Party Manager. For management services, third party managers are typically paid
an annual fee which generally ranges up to 40% of the total asset-based advisory fee a client
pays to Clayborne for services to equity and balanced accounts, and up to 50% of the total asset-
based fee for services to fixed and mutual fund accounts. A few managers may have higher fees.
Fees to the Managers are paid by Clayborne from the asset-based advisory fee it receives from
the Client.
As explained below, there is one fee schedule available to clients: an Asset-Based Fee Schedule.
. Clayborne’s fees may be changed upon 30 days prior written notice to Client.
Asset-Based Fee Method. Under this fee arrangement, Clayborne receives an asset-based fee
which covers Clayborne’s and the manager’s advisory fees, but no other costs. All fees are
negotiable.
Asset based fees are calculated every three months based upon the market value of the Client’s
account on the last day of the previous three month period, and are payable in advance. Clients
pay an initial fee based on the days remaining in the quarter within which the Agreement is
executed, plus the next calendar quarter period. Thereafter, asset based advisory fees are
calculated for successive three month periods based upon the previous quarter-end value of the
account. Assets valued at more than $20,000 deposited to the Account during any period are
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