Financial Freedom LLC

Item 5 – Fees and Compensation

Description
All fees payable to Financial Freedom, LLC are discussed and agreed upon in advance and are
documented as part of a Client Agreement. Fees are primarily based on hourly effort and are
negotiable.

Initial Comprehensive Financial Planning Fees
Initial comprehensive financial planning fees are based on an hourly fee basis of $150 per
planner hour. Maximum fees are agreed to in advance and a 50% retainer is payable at the start
of the engagement with the remainder due at the time of project completion. Generally, a
comprehensive financial plan will require 20-30 hours ($3,000 - $4,500). All fees are
documented in advance and in writing as part of a Client Agreement.

On-Going Wealth Management Fees

   A. Annual Retainer / Flat Fee Arrangement
      Annual retainer based on $150 per planner hour. After understanding each client’s needs,
      we jointly develop a list of specific comprehensive financial planning and investment
      management activities to be completed over an annual period. Based on those activities
      and the amount of effort involved, an annual retainer amount is jointly agreed-to in
      advance and in writing. Annual retainers generally range from $8,000 - $25,000 per year
      depending on the needs of each client.

   B. Fees As a % of Assets (special situation or client request)
      In certain situations where it makes sense, or if a client specifically requests it, we can
      charge based on a percentage of assets under management. While we are almost
      exclusively using the annual retainer fee structure with new clients (point A above), some
      limited number of long-term clients continue to pay fees based on a percentage of assets
      under management formula which was the primary fee structure when we started working
      with them. Percentage of assets under management fees range from 1.0% to 0.25%
      depending on the value of assets under management.

All on-going wealth management fees are agreed to in advance and in writing as part of a Client
Agreement. Fees are payable quarterly in arrears and are normally deducted from a client’s
Fidelity investment account. Each client provides approval to directly deduct fees from their
Fidelity account. Each client receives a billing statement from Financial Freedom, LLC
documenting the fee deduction as well as independent confirmation on their investment
statement provided by custodian Fidelity Investments.

Special/One-Time Project Fees
In addition to the above services, we sometimes provide financial planning advice on a subject-
by-subject basis when a client has a specific identified need. In this case, fees charged would be
hourly based at $225 per hour. Again, all fees would be agreed to in advance in writing with a
50% retainer payable at the start of the engagement with the remainder due at the time of project
completion.

Other Fees
Custodian Fidelity Investments may charge transaction fees on purchases or sales of certain
mutual funds, stocks, bonds, and exchange-traded funds. These transaction charges are usually
relatively small and are incidental to the purchase or sale of a security. These fees will be
documented and discussed in advance.

Mutual funds and exchange traded funds generally charge a management fee for their services as
investment managers. The management fee is included in the expense ratio. Mutual fund fees
also include transaction charges for the purchase or sale of securities within the fund and may
charge other fees as disclosed in the fund prospectus. These fees are in addition to the fees paid
by the client to Financial Freedom, LLC. When purchasing a mutual fund, our general
philosophy is that we only use “no-load” mutual funds. If for some reason it might make sense
to use a “loaded” fund (highly unusual), we would discuss that in advance and obtain client
approval prior to making any trade.

Compensation for Sales of Investment Products
Our compensation is solely from fees paid directly by clients. We do not receive commissions
based on the client’s purchase of any financial product, including insurance. No commissions in
any form are accepted.

Client Agreement
We develop and sign a Client Agreement with each client. The primary purpose of the
agreement is to clearly articulate the services provided and the specific fees and fee structure that
will be used. For Initial Comprehensive Financial Planning, the Client Agreement may be
cancelled at any time, by either party, without cause. Financial Freedom, LLC will refund any
unearned fees within 14 days and the client is responsible for any outstanding work billable to
the date of termination. For On-Going Wealth Management services, the Client Agreement may
be cancelled by either party, without cause, at the end of any calendar month. Accounts initiated
or terminated during a calendar quarter will be charged a prorated fee.

Item 7 – Types of Clients

Financial Freedom, LLC generally provides investment advice to individuals, families, trusts and
estates. Advice may extend to entities related to the client such as small businesses and
charitable organizations, including foundations and endowments. Client relationships vary in
scope and length of service.

We do not impose a set minimum dollar value of assets or other condition for opening or
maintaining an account. We instead look at each potential client situation to determine if there is
an opportunity to develop a mutually beneficial relationship.