Financial Management Inc

Item 5 – Fees and Compensation

How We Are Compensated for Our Advisory Services

Our fees vary among the different types of advisory services we offer and may be negotiated at our
sole discretion. The specific fees and manner in which fees are charged and calculated are described
in your investment advisory agreement. You should carefully review the investment advisory
agreement prior to signing it.

Fees for our advisory services may be higher than fees charged by other advisers who offer similar
services. You may be charged different fees than similarly situated clients for the same services. You
should carefully review this brochure to understand the fees and other sources of compensation that
exist among our services prior to entering into an investment advisory contract with our firm.

Asset and Wealth Management Services

FMI offers investment and wealth management services for an annual fee based on the amount of
assets under the firm’s management. Fees are generally billed in advance each calendar quarter
based on the market value of the assets under management/advisement on the last day of the
previous calendar quarter as valued by independent third party sources or fair market value in the
absence of market value. Client account balances on which FMI calculates fees may vary from

account custodial statements based on independent asset valuations and other accounting variances,
including mechanisms for including accrued interest in account statements or timing of reporting.

Advisory fees are calculated based on a graduated schedule or a flat rate of up to 2% annually. For
fees based on a graduated schedule, the following table represents the advisory fee for asset
management services:

              Portfolio                                Maximum Rate for
              Value                                    Annual Fee Calculation

              First $250,000                           2.00% of Value

              Next $250,000                            1.00% of Value

              Next $500,000                            0.80% of Value

              Next $1,000,000                          0.60% of Value

              Next $2,000,000                          0.40% of Value

              Over $4,000,000                          0.20% of Value

Fees may be based on cumulative household assets under management. However, certain ERISA
rules prevent householding corporate plans with personal assets for fee reductions. You should refer
to your advisory agreement for your specific fee rate(s).

Consulting Services

Fees for consulting services are billed at a fixed or hourly rate or based on assets under advisement
and are billed in advance. Our hourly rate is generally $300 an hour and range up to $20,000.

Fees for consulting services are due and payable as incurred. While financial planning and
consulting services are available on a stand-alone basis, certain services may also be rendered in
conjunction with asset and wealth management services at no additional cost as part of a
comprehensive portfolio management engagement.

Factors we consider when determining our consulting fees include, but are not limited to:

   •   The amount of time we expect to spend completing the services and providing related
       advice;

   •   The complexity of your goals, issues and/or needs;

    •   The extensiveness and complexity of the data needed regarding your personal financial
        information;

    •   Your net worth or the value of your investment accounts and/or other assets that are the
        subject of the consulting services; and/or

    •   Special circumstances related to life changes, marital status, health or special income needs,
        or growth or decline of a personal business.

You may engage FMI for additional investment management services to assist with implementing
one or more financial planning or consulting recommendations. You will incur additional fees if you
retain our firm for such services. You have complete freedom in selecting an investment adviser to
assist you in implementing any recommendations by FMI and are under no obligation to act upon
the advice we provide.

For consulting services, the investment advisory agreement between FMI and the client will
continue in effect until terminated by either party upon 30-days written notice.

Fiduciary and Non-Fiduciary Services for Plan Sponsors

Fees for retirement plan sponsors are negotiable. Fees are based upon the value of the plan assets
that are the subject of the consulting services and are generally payable in advance on a quarterly
basis.

Payment of Fees

Clients can authorize FMI to instruct the account custodian to directly debit fees from the client’s
account or may pay fees directly from the invoices sent to them from FMI. Accounts initiated or
terminated during a calendar quarter will be charged a prorated fee.

Fees for our advisory services generally require you to pay investment advisory fees in advance of
receiving services. Any pre-paid, unearned fees will be promptly refunded. Advisory fees are
prorated for additions and withdrawals of more than $25,000 to or from an account throughout the
quarter (additions for deposits; reductions for withdrawals). If invoices are provided to the client, the
adjustment will be reflected on the invoice prepared at the next regular billing cycle.

    •   For asset management and fiduciary and non-fiduciary consulting services, refunds are
        calculated by taking the total advisory fee billed for the calendar quarter, dividing that
        amount by the number of days in the calendar quarter and multiplying that amount by the
        number of days services were not provided during the calendar quarter.

    •   For consulting services, refunds are calculated based on the value of the services that were
        completed prior to termination of the advisory agreement.

Other Types of Fees and Expenses You May Incur
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Item 7 – Types of Clients
FMI provides investment advisory services to individuals, high net worth individuals, retirement
plans, non-profit organizations and foundations, and businesses/corporations.

FMI generally does not require a minimum initial investment for investment management services.
The firm, in its sole discretion, will accept clients based upon each client’s particular circumstances.