Item 5 Fees and Compensation
How We Get Paid
Everest cannot and does not receive commissions, 12b-1 fees or trail compensation for
its advisory services. We are compensated by charging fee based on a percentage of
assets that is being managed by the firm. Fees are discussed with clients upon the
establishment of the account. In special cases where a client may be invested in an
investment with an Outside Adviser as described herein, we may bill an invoice for fee,
otherwise, fees are deducted or debited directly from the client’s investment account(s).
Fees from Schwab Relationship
Everest has an agreement with Schwab to offer qualified custodial services for our
client’s assets. Under this arrangement, Schwab will hold your assets in a brokerage
account which allows us access to various investment products and institutional
brokerage services such as trading, custody, reporting, support and related services.
Schwab does not separately charge for custody services for accounts that are
established through their advisory services platform. Custody services are
compensated by charging you commissions or other fees on trades that it executes or
that settle into your Schwab account. In some accounts, Schwab may charge you a
percentage of the dollar amount of assets in the account in lieu of commissions in the
same manner as described above. Schwab’s commission rates and asset based fees
applicable to our client accounts were negotiated based on our commitment to maintain
$100 million of our clients’ assets in accounts at Schwab. This commitment benefits
you because the overall commission rates and asset-based fees you pay are lower than
they would be if we had not made the commitment.
In addition, Schwab charges you a flat dollar amount as a “prime broker” or “trade away”
fee for each trade that we have executed by a different broker-dealer but where the
securities bought or the funds from the securities sold are deposited (settled) into your
Schwab account. These fees are in addition to the commission or other compensation
you pay the executing broker-dealer. Because of this, in order to minimize your trading
costs, we have Schwab execute most trades for your account.
When recommending investment managers (ETFs, mutual funds, professional money
managers), we may recommend managers that provide discount incentives to offset
certain research and portfolio management tools if a minimum amount remains invested
with the particular manager. While this does not affect the advisory fee that you are
being charged, it may influence our recommendation to invest in a particular manager
over another manager.
If your accounts are invested with Schwab, Everest will negotiate an annual percentage
fee with you for its advisory services. This fee is charged at the beginning of each
quarter. It is calculated as the annual percentage divided by the number of days in the
cycle based on the market value of your account at the end of the prior quarter.
For example: If your fee is 1.25% annually and the market value of your account on
December 31st is $1,000,000, then the fee for the first quarter, January through March,
will be:
$1,000,000 x .0125 = $12,500 annual fee
31 days in Jan; 28 days in Feb; 31 days in March = 90 days
90 days/365 x $12,500 = $ 3082.19
If Everest recommends that your account be managed by a professional money
manager, then the fees that will be charged by the manager, Schwab, and Everest will
be pre-disclosed to you.
Effective April 1, 2025, Everest will charge the negotiated annual percentage fee at the
beginning of each month using the same calculation method above, but for the change
of the number of days in the cycle (the cycle being monthly vs. quarterly) as follows:
For example: If your fee is 1.25% annually and the market value of your account on
December 31st is $1,000,000, then the fee for January is calculated as follows:
$1,000,000 x .0125 = $12,500 annual fee
31 days in Jan = 31 days
31 days/365 x $12,500 = $ 1,061.65
In cases, advisory fees will continue to be charged on a quarterly basis due to limitations
by a custodian, outside provider or third party administrator’s inability to charge the fee
on a monthly basis. In those cases, fees can and will continue to be collected on a
quarterly basis as described above.
Brokerage arrangements are further described below in Item 12, Brokerage Practices
Outside Advisers (Custodians, Broker-Dealers, Issuers) other than Schwab
Advisory Referral Fee Program
Everest may participate in Advisory Referral Fee program or Solicitation Agreement
with an Outside Adviser. Currently, there is only one such arrangement with
Oppenheimer & Co. Inc. (“Oppenheimer”). This agreement allows Everest to get paid
from Oppenheimer for referring clients to them. Although there are a few accounts still
maintained through this arrangement, Everest does not utilize this arrangement any
longer. In this arrangement, Oppenheimer collects an annual fee ranging from .50% to
2.5% (50 basis points to 2.5 percent) of the portfolio value, divided on a quarterly basis.
The percentage depends on the size of the account. Upon establishing your account,
full disclosure is provided to you of the total annual fee that will be collected.
Under the referral fee program between Everest and Oppenheimer, we are able to
share in up to .80% (80 basis points) of the total annual fee collected. This fractional
portion does not cause you to pay a higher fee nor will we separately charge you for
additional fees for our services.
Example: A client invests $1,000,000 with a professional bond portfolio manager and will
be charged .80 basis points per year for its management. In this case, the bond manager
will receive .10 basis points of the fee and the Outside Advisor will receive .70 basis points
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