Financial Management Strategies Inc

ITEM 5 FEES AND COMPENSATION

Portfolio Management and Model Portfolio Management Fees

Fees are specified in the client’s Investment Advisory Agreement. Annual fees for both our
Individual and Model Portfolio Management Services are based upon a percentage of assets under
management and may range from .50% to 1.50%. We use both a flat or level fee schedule anda
tiered fee schedule.

For fees based on a flat or level fee schedule, the maximum annualized fee for Portfolio
Management Services is 1.50% of the assets under management.

For fees based on a tiered fee schedule, the maximum annualized fee for Portfolio Management
Services is as follows:

               Tiered Assets Under Management              Annual Fee
                       $ 0 - $ 100,000                       1.50%
                      $100,001 - $250,000                    1.50%
                      $250,001 - $500,000                    1.25%
                     $500,001 - $1,000,000                   1.00%
                     $1,000,001 and Above                    1.00%

For example, based upon the above fee schedule, for an account with $600,000 in assets the annual
fee would be as follows:

          Tiered Assets Under Management                Annual Fee Calculation
                 $ 0 - $ 100,000                       $100,000 x 1.50% = $1,500
               $100,001 - $250,000                     $150,000 x 1.50% = $2,250
               $250,001 - $500,000                     $250,000 x 1.25% = $3,125
              $500,001 - $1,000,000                    $100,000 x 1.00% = $1,000
                                                          Total Fee $7,875

Fees are deducted from cash assets held in a client’s account. The initial fee is charged on the first
day of the month after the account is funded. It is pro-rated from that date through the end of the
current calendar quarter and is based on the account’s value on the last business day of the
previous month. Thereafter, the client's fee will be payable at the beginning of each calendar
quarter for such quarter and the fee will be based on the fair market value of the assets in the
account on the last business day of the preceding calendar quarter. There is no additional fee
charged for any subsequent deposits made to the Account during a quarter or any fee refund for any
subsequent withdrawals made from the account during a quarter. If this Agreement is terminated
or the account is closed for any reason, Adviser will refund to the client a pro-rata portion of any
pre-paid, but unearned, fee paid for the current quarter. The amount refunded will be based on the
number of days remaining in the quarter after the date of termination.

Transaction Fees and Charges
In addition to the fee for advisory services, clients may also incur account fees and charges from
Cetera Wealth Services LLC (“Cetera”), the broker-dealer used by Adviser’s Investment Adviser
Representatives, and/or Pershing LLC (“Pershing”), the clearing firm used by Adviser. Normal
transaction charges and account fees (i.e. returned check fee, overnight charges, IRA Custodian,
paper statement, trade confirmation, etc.) apply to all accounts. Cetera charges and fees are
included in a “Supplemental Disclosure” that is provided to the Client at the time the account is
opened. A schedule of Pershing charges and fees are sent to the Client directly by Pershing at the
time the account is opened. Should there be a change to these transaction charges or account
fees, Cetera and/or Pershing will provide client with a new fee schedule prior to any changes
becoming effective.

Limited Negotiability of Advisory Fees
Although we have established the aforementioned fee schedule(s), we retain the discretion to
negotiate and determine fees on a client-by-client basis. The client’s individual circumstances are
considered in determining the fee schedule. Factors include the complexity of the client's needs,
the total amount of assets to be placed under management, anticipated future, or additional
deposits to accounts; related accounts, and other factors. The specific annual fee schedule for a
client is contained in the Investment Advisory Agreement between FMS and each client.

There is no minimum account size. We group all household related client accounts together for
the purpose of determining fees for those related accounts. A different fee schedule may be used
for a specific household account under special circumstances with the approval of the firm’s
Chief Compliance Officer.

Retirement Plan Advisory and Consulting Fees

Fees for services to pension, profit-sharing, 403(b), and 401(k) plans are specified in the client’s
Investment Management or Consulting agreement and are determined by the nature and scope of
the services to be provided and the complexity of each client's situation. Consulting services may be
offered on a limited time basis (up to five (5) months) for a one-time fee or on an hourly fee basis.
Services may also be offered on a continuous basis pursuant to a recurring fixed fee or on an hourly
fee basis.

For services based upon an hourly fee arrangement, the hourly rate generally ranges from $75 to

$250 per hour. Although the length of time it will take to provide our consulting services will
depend on each client's situation, we will provide an estimate for the total hours at the start of the
advisory relationship.

For services based on a fixed fee basis, fees typically fees range from $1,000 to $25,000, depending
on the scope of services to be provided and the specific arrangement agreed upon with the client.

For retirement plans where Adviser acts as the “Investment Manager” for the plan within the
meaning of ERISA § 3(38) and as a “fiduciary” of the Plan within the meaning of ERISA
§3(21)(A), fees are based on a percentage of assets under management and generally range from
.10% to 1.50%. We use both a flat or level fee schedule and a tiered fee schedule. For fees based on
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ITEM 7       TYPES OF CLIENTS

Financial Management Strategies, Inc. provides advisory services to the following types of clients:
    •   Individuals (other than high net worth individuals)
    •   High net worth individuals

   •   Trusts and Estates
   •   Charitable Organizations
   •   Corporations or other businesses not listed above
   •   Pension and profit-sharing plans
   •   VEBA Trusts