Item 5. Fees and Compensation
We receive a management fee for managing client assets in CPA based on a client’s assets
under management in the respective CPA Program. Our fees are normally deducted directly from the
client’s account (that is, our clients are not separately billed for the amount of the fee), and asset-based
management fees are normally paid on a calendar quarterly basis in advance. Depending upon the
terms of the particular advisory service offered, asset-based management fees will not be prorated for
any additions to or withdrawals from a client’s account during a calendar quarter, but a prorated fee
will be charged or refunded on accounts opened or terminated during a calendar quarter. Upon
termination of any account, any prepaid, unearned fees for the balance of the quarter for which the
account will not be under management will be promptly refunded.
As noted above, we will utilize the brokerage services of CCO, our affiliated broker-
dealer, to execute transactions in CPA client accounts. CCO is an introducing broker-dealer that
clears its transactions on a fully disclosed basis through Pershing LLC (“Pershing” or the
“Clearing Firm”). Pershing will serve as qualified custodian for CPA client accounts. The account
statements you receive from Pershing, the custodian, will reflect the deduction of fees. You are
responsible for verifying that the fee you are charged is accurate. The custodian will not
determine whether the fee is properly calculated. Should you find an error, please contact your
Portfolio Manager immediately. If you are not satisfied with the action your Portfolio Manager
takes, you should contact CPA at the number on the cover page of this brochure.
Depending upon the advisory program in which a client participates, our asset-based
management fees range between .40% per year and 2.00% per year, based on the value of the
account as of the last business day of the calendar quarter. Such valuation is determined by the
account’s custodian in accordance with its standard policies and practices and is prepared on a
trade date basis. (Client statements are normally prepared on a settlement date basis and therefore
may differ as of the valuation date.) Such management fees will be paid in advance depending
upon the terms of the advisory program in which a client’s account is managed. The actual fee
charged to a client will be subject to agreement with such client, and will be based upon the terms
of the particular investment advisory program in which the client participates, the investment
strategy used within that program, the types of securities in which the account invests (i.e., fixed
income securities, which are normally not actively traded, are generally charged lower fees, while
accounts that use investment strategies that involve more active management, such as some equity
styles and options, would normally be charged higher fees), as well as the size of any particular
account, with larger accounts sometimes paying a lower fee. Fees may be negotiable based upon
several factors, including the size of the account, the relationship of the particular client to other
existing or potential clients or accounts, the management style used in the management of the
account, the particular services offered to the client, and possibly other factors that may be deemed
significant by us in any particular instance.
Some advisory programs we offer charge a management fee by CPA, as well as brokerage
commissions by our affiliated broker-dealer, CCO, and such brokerage commissions are not credited
against our management fee. In all cases, our fees are exclusive of related costs and expenses which
will be incurred by the client. Clients will incur odd-lot differentials, transfer taxes, interest charges on
margin transactions, wire transfer and electronic fund transfer fees, asset movement fees, postage,
foreign currency exchange fees, foreign securities costs, deferred sales charges (if applicable), ticket
charges, custodial fees, maintenance fees, confirmation fees, FX fees and other fees and taxes on
brokerage accounts and securities transactions and for other optional services elected by you as
applicable on a per event basis. CPA reserves the right to waive or absorb any such fees, costs or
expenses for a client if it decides, in its sole discretion, to do so. If an account is invested in mutual
funds or exchange traded funds, the managers of those funds also charge internal management
fees, which are disclosed in a fund’s prospectus. All of such charges, fees and commissions are in
addition to our asset-based management fee, and, if applicable, our performance-based fee, and
with the exception of brokerage commissions that will be paid to CCO, our affiliated broker-
dealer, as opposed to an unrelated broker-dealer (as explained in the following paragraph). All
such fees are subject to the pricing schedule set by the Clearing Firm and in some cases are shared
between the Clearing Firm and CCO, as our affiliated broker-dealer.
As noted earlier, our affiliated broker-dealer, CCO, is registered with the SEC, FINRA and
MSRB as a broker-dealer, and will execute the transactions that are affected for CPA clients’
accounts. In the event that CCO does execute such transactions, it will retain any commissions
earned on those transactions and will not credit those commissions against our fees. Such
commissions charged by CCO for transactions in CPA clients’ advisory accounts, are not shared
with our advisory personnel who manage portfolios under any of our advisory programs (“Portfolio
Managers”). However, this will give us an incentive to recommend investments based upon the
compensation received by CCO rather than on the needs of our clients. Our obligation is to
recommend and effect transactions that are solely in the best interest of our clients, but prospective
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