Davies Financial Advisors Inc

Item 5 – Fees and Compensation
Asset Management Services

Davies Financial Advisors Discretionary Investment Management
Clients participating in the PPS Custom program will generally pay the firm and their advisor for those
services with an annual asset management fee based on a percentage of assets under management,
including cash and money market positions. The management fee typically ranges from 0.75% to 1.4%
on a blended fee basis for a household, with a maximum fee of 2.25% on any single account.

PPS Custom
Clients participating in the PPS Custom program will generally pay the firm and their advisor for those
services with an annual asset management fee based on a percentage of assets under management,
including cash and money market positions. The management fee typically ranges from 0.75% to 1.4%
on a blended fee basis for a household, with a maximum fee of 2.25% on any single account.

Blended Fees
A blended fee schedule looks at the account value and compares it to a set fee schedule. Based upon
the value of the account at the end of the billing period, the fee schedule identifies specific portions of
the account value to be charged at different fee rates. The total value of the account is compared
against this schedule and based on the account size, the different fee rates are blended to determine
the total account fee for that period.

For example, assume the following blended fee schedule:

Account Value                                               Fee
Greater than or equal to                       Less than
                                            $0 $50,000            2.25%
Next $50,000                                   $100,000           2.00%
Next $100,000                                  $250,000           1.75%
Next $250,000                                      -              1.50%

Also, assume that the account value at the end of the billing period is $200,000. In this hypothetical
example, and assuming an advanced quarterly billing cycle is applied, the account fee for the upcoming
quarter would be assessed as follows: First $49,999 of the account value would be billed at a rate of
2.25% ($49,999 x 2.25% = $1,125; $1,125 ÷ 4 = $281.25); the next $50,000 would be billed at a rate of

2.00% ($50,000 x 2.00% = $1,000; $1,000 ÷ 4 = $250); the next $100,000 would be billed at a rate of
1.75% ($100,000 x 1.75% = $1,750; $1,750 ÷ 4 = $437.50).

Each of the different fee rate amounts is added together to determine the total quarterly account fee
for that period, as follows:

$281.25 + $250 + $437.50 = $968.75 advance quarterly account fee

PPS Select
Clients participating in the PPS Select Program will pay a total account fee that consists of a combination
of a management fee and a program fee. The management fee typically ranges from 0.75% to 1.4% on a
blended fee basis for a household, with a maximum fee of 2.25% on any single account.

In addition to the annual management fee, all clients participating in PPS Select will pay an annual
program fee. There are several different PPS Select model portfolios with program fees that vary;
however, the maximum fee within the PPS Select program is as follows:

Account Value                                   Maximum Program Fee*
First $250,000                                                  0.60%
Next $250,000                                                   0.50%
Next $500,000                                                   0.45%
Next $1,000,000                                                 0.40%
Next $3,000,000                                                 0.35%
Next $5,000,000 or more                                         0.30%

*Commonwealth will charge a minimum annual program fee of $600 ($150 quarterly) for certain
accounts, which may exceed the maximum annual program fee percentage based on account size.

Clients are urged to carefully review and discuss the contents of this Brochure with their advisor,
including descriptions of the various programs and services offered, the fees and charges clients will pay,
the means by which Davies Financial Advisors and your advisor are compensated, and the conflicts of
interest that exist between the client and Davies Financial Advisors and your advisor in respect to each
program or service offered, to determine the most appropriate programs or services for your specific
needs.

In substantially all cases, the annual account management fee is payable quarterly in advance and is
computed as one-quarter of the annual fee based on the AUM on the last business day of the previous
calendar quarter. In limited circumstances, estimated quarter-end values of alternative investments
provided by the product issuer may be used when calculating billable AUM. Please refer to the
respective program description in this Brochure, Commonwealth’s brochure or to the respective client
agreement for specific information about the maximum fee allowed, the varying fee schedules of each
program, and the methods of fee billing for the program(s) you select.

All Davies Financial Advisors advisory program and service fees are negotiable. Davies Financial Advisors
may waive a particular fee, whether on an ongoing or a one-time basis, in its sole discretion. In the
event a client terminates an advisory agreement with Davies Financial Advisors, any unearned fees
resulting from payments made by clients in advance will be refunded to the client. Likewise, in the event

Davies Financial Advisors bills clients in arrears for services that have already been rendered, Davies
Financial Advisors will prorate such fees up to the termination date of the advisory agreement.

Financial Planning Services
We offer our financial planning services on an hourly or fixed fee basis.

Hourly Fees
We perform services where the price of the service is based upon the amount of time to complete the
service times an hourly rate. The rate per hour depends upon the level of complexity of the service and
...

Item 7 – Types of Clients
Davies Financial Advisors generally provides advisory services to the following types of clients:

     x   Individuals (other than high net worth individuals)
     x   High net worth individuals
     x   Business development companies
     x   Pension and profit-sharing plans
     x   Charitable organizations
     x   Insurance companies
     x   Corporations or other businesses not listed above

Davies Financial Advisors’ managed account programs generally require a minimum investment of
$500,000. We reserve the right to waive the minimum in our sole discretion. In some cases, account
balances may be combined at the household level to satisfy the account minimum.