ITEM 5 FEES AND COMPENSATION
A. Methods of Compensation and Fee Schedule
A.1. Investment Management Services
Covenant provides investment advisory services on an asset-based fee basis. Covenant’s annual
investment advisory fee shall be calculated as a percentage (%) of the market value of the assets
placed under Covenant’s management between negotiable and 2.0%.
Covenant’s investment advisory fee is negotiable at our discretion, depending upon objective and
subjective factors including but not limited to: the amount of assets to be managed; portfolio
composition; the scope and complexity of the engagement; the anticipated number of meetings and
servicing needs; related accounts; future earning capacity; anticipated future additional assets; the
professional(s) rendering the service(s); prior relationships with us and/or our representatives, and
negotiations with the client. As a result of these factors, similarly situated clients could pay different
fees, the services to be provided by Covenant to any particular client could be available from other
advisers at lower fees, and certain clients may have fees different than those specifically set forth
above.
Asset-based fees are always subject to the investment advisory agreement between the client and
Covenant. Such fees are payable quarterly or monthly in advance or in arrears, based on the market
value of the assets on the last business day of the previous quarter or month respectively. The fees
will be prorated if the investment advisory relationship commences otherwise than at the beginning of
a calendar month or quarter; no adjustments will otherwise be made for contributions or withdrawals.
A.2. Financial Planning and Consulting Services
To the extend specifically requested by a client, Covenant may provide financial planning and/or
consulting services (including investment and non-investment related matters, including estate
planning, insurance planning, etc.) on a stand-alone fee basis, either as a one-time or ongoing service.
Covenant’s planning and consulting fees are negotiable, but generally may range from $4,000 to
$50,000 on a fixed fee basis, and from $75 to $350 on an hourly rate basis, depending upon the level
and scope of the service(s) required and the professional(s) rendering the service(s).
Covenant will provide the prospective client with an estimate of the cost associated with preparing the
financial plan and ongoing financial planning services prior to finalizing the financial planning
agreement. The client will be billed directly for such services. Invoices will be mailed out on a periodic
basis reflecting completed work performed. For prepaid fees in excess of $1200, services will be
completed within six months of the date fees are received. Clients seeking to terminate this service
must do so in writing.
To the extent specifically requested by the client and at the full discretion of the advisor, financial
planning and/or consulting services may be provided to investment advisory clients at no additional
charge.
A.3. Tax Consulting and Preparation Services
In addition to investment management and financial planning services, Covenant may also provide its
clients with tax consulting and preparation services on a mutually agreed upon fixed fee basis,
pursuant to the terms and conditions of a separate written agreement.
Although several of Covenant’s employees are licensed as certified public accountants, no
corresponding CPA-client relationship is established. All tax preparation services are provided
exclusively by Covenant-Covenant is not a certified public accounting firm.
A.4. Automated Investment Strategy Fees
Clients are charged based on a percentage of assets under management with Covenant. The
maximum annual fee for this service is 110 bps for assessing and helping clients choose the portfolios,
and assisting with any account related paperwork and communication with the custodian.
A.5. Private Fund Fees
Please refer to the applicable fund’s offering documents for a description of fees, conflicts of interest,
risks and related matters.
B. Client Payment of Fees
Asset-based fees are always subject to the investment advisory agreement between the client and
Covenant. Covenant generally requires fees to be either prepaid on a quarterly basis or paid monthly
in arrears. Covenant may require clients to authorize the direct debit of advisory fees from their
custodial accounts. Both Covenant’s Investment Advisory Agreement and the custodial/clearing
agreement may authorize the custodian to debit the account for the amount of Covenant’s investment
advisory fee and to directly remit that management fee to Covenant in compliance with regulatory
procedures. Exceptions may be granted subject to the firm’s consent for clients to be billed directly for
our fees. For directly debited fees, the custodian’s periodic statements will show each fee deduction
from the account. Clients may withdraw this authorization for direct billing of these fees at any time by
notifying us or their custodian in writing.
Covenant will deduct advisory fees directly from the client’s custodial account provided that (i) the
client provides written authorization to Covenant and the qualified custodian, and (ii) the qualified
custodian sends the client a statement, at least quarterly, indicating all amounts disbursed from the
account. The client is responsible for verifying the accuracy of the fee calculation, as the client’s
custodian will not verify the calculation.
A client investment advisory agreement may be terminated by either party for any reason upon receipt
of written notice. Upon termination, Covenant shall refund any unearned, prepaid fees based upon the
number of days remaining in the billing cycle, and any earned, unpaid fees will be immediately due
and payable. The client has the right to terminate an agreement without penalty within five business
days after entering into the agreement.
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