Fees and Compensation
Description of Fees
Clients pay an advisory fee to FM for our wealth management services based upon assets under
management and includes all securities held on margin. Client assets that are managed by a
Third-Party Manager (or its investment vehicle or within a TAMP) are included in a client’s
assets under management when calculating a Client’s FM advisory fee, as are assets managed by
a Third-Party Manager wrapped inside a private placement variable life insurance contract or
annuity contract. Clients also pay fees directly to the Third-Party Managers and/or their
investment vehicles and/or their TAMPs. Other fees and commissions apply relating to our
affiliate companies and non-affiliated providers.
FM Advisory Fees
Non-Retirement Plan Account (“Investment Account”) Fees
FM will charge either a percentage of Assets Under Management including the value of assets
held on margin (“AUM”) which will not exceed 2% or will charge different advisory fee levels
based on asset classes under management, as follows:
• For common stocks, convertible preferred shares, Third-Party Managers and TAMPs, and
all other equity-type assets managed by FM, the annual asset advisory fee (which is
payable quarterly) is:
Assets Annual Fee
Under $1,000,000 2.0%
$1,000,000 - $5,000,000 1.5%
Over $5,000,000 1.0%
• For bonds, cash (including money markets funds or bank deposit accounts), and other
fixed income securities, the annual asset advisory fee (which is payable quarterly) is:
Assets Annual Fee
Under $1,000,000 1.00%
$1,000,000 - $5,000,000 0.75%
$5,000,000 - $10,000,000 0.50%
Over $10,000,000 0.40%
• For purposes of calculating our annual asset advisory fees, FM categorizes certain
investment strategies as a single asset class, and investment company securities (mutual
funds) as either equity or fixed income based upon the mutual fund's investment objective.
The annual advisory fee and commission/fee schedules may differ among Investment Account
clients depending upon the date of commencement of a client's account, the size or type of a
client's account, any related-party accounts, and certain other variables. Although FM has
established the fee schedule(s), FM may, at its discretion, negotiate alternative fees on a client-
by-client basis. The combination of the annual FM advisory fee and PAS commission/fee
schedules can be higher than those available for similar combinations of services from other
advisers and broker-dealers. Further, employee and related accounts of FM are generally not
subject to the FM fees noted herein.
Excluding private placement variable life insurance and variable annuity products, the value of
any policies, contracts, or other products issued by insurance companies (including premiums
paid) for which principals of FM may act as agents (through FHCC) are not subject to FM advisory
fees. Insurance commissions/fees (paid to FHCC) are in addition to amounts payable to FM by a
client pursuant to the fees set forth above.
ERISA Plan and IRA Account (“Retirement Plan Account”) Fees
FM charges a level advisory fee of 1% for all Retirement Plan Account assets, whether managed
by FM or a Third-Party Manager or in TAMPs. Such fees cover FM’s advisory services. Clients
pay custodial and other unaffiliated third-party fees, charges and expenses separately.
Retirement Plan Accounts for FM employees, and certain of their family members, will not pay
an Advisory Fee to FM. These employee accounts will be charged for the direct expenses
incurred by FM in the performance of services, including, but not limited to, custody, clearing
and exchange fees.
Computation of Advisory Fees for All Account Types
A client’s FM advisory fee is generally due and payable at the end of each calendar quarter in
arrears based on the market value of the client's accounts on the last business day of March, June,
September and December (the "Computation Date"). At each Computation Date, each client's
accounts are billed the applicable annual advisory fee rate for the quarterly period ended. The
exception to this is Held Away Accounts. The advisory fee for any Held Away Account will be
deducted directly from another client account, and if there are insufficient funds available in
another client account or FM believes that deducting the advisory fee from another client account
would be prohibited by applicable law, it will invoice the client.
For calculating the annual advisory fee, the first quarter will commence during the first calendar
quarter in which the client's advisory agreement becomes effective. Fees on additions and
withdrawals to a client's accounts within a quarter are not pro-rated, except that fees for partial
quarters at the commencement or termination of a client's advisory agreement are prorated (in the
case of termination, such pro-ration is based on the most recent quarterly period that has ended).
FM utilizes trade date (not settlement date) for calculating its fees.
In general, the market values of clients' assets are computed by valuing a security listed on a
national exchange at the closing sale price on the Computation Date. Client assets that are
managed by Third-Party Managers are valued according to the net asset value (or estimate)
provided by the Third-Party Manager or their administrator. For individual bonds, the value of
the bond will include accrued interest. Investments in mutual funds are valued at the net asset
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