Item 5 Fees and Compensation
Direct Clients
FTIS generally charges management fees according to the following schedules:
Custom Options Solutions, Covered Call Strategies and Other Customized Investment
Strategies
Account Size Fee
Below $1,000,000 1.00%
$1,000,001-$2,500,000 0.65%
Above $2,500,001 0.50%
Premium Income and Target Income Strategies
Account Size Fee
Below $1,000,000 1.00%
$1,000,001-$2,500,000 0.65%
Above $2,500,001 0.50%
Tax Advantaged Equity and Long Only Equity Strategies
Account Size Fee
Below $1,000,000 0.65%
$1,000,001-$2,500,000 0.55%
Above $2,500,001 0.50%
The management fee specific to the First Trust Capital Strength Strategy is 0.55%. Fees charged
for our asset management services are negotiable based on the type of client, the complexity of the
client's situation, the composition of the client's account (i.e., equities versus mutual funds), the
potential for additional account deposits, the relationship of the client with the investment adviser
representative, and the total amount of assets under management for the client. Therefore, some
clients will be charged fees lower than those reflected above.
Financial planning services are included with the management fee of client accounts. FTIS does
not charge additional expenses for financial planning. Lower fees for comparable services may
be available from other sources.
ERISA Disclosure for Retirement Planning
When FTIS provides investment advice to you regarding your retirement plan account or
individual retirement account, FTIS is a fiduciary within the meaning of Title I of the Employee
Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are
laws governing retirement accounts. The way FTIS makes money creates some conflicts with
your interests, so FTIS operates under a special rule that requires FTIS to act in your best
interest and not put our interest ahead of yours.
Additional Fees and Expenses
In connection with FTIS’s management of a client account, a client will incur fees and/or
expenses separate from and in addition to FTIS’s Advisory Fee. The additional fees may include
transaction charges and the fees/expenses charged by any custodian, subadvisor, mutual fund,
ETF, SMA manager (and the manager’s platform manager, if any), limited partnership, or other
advisor, transfer taxes, odd lot differentials, exchange fees, interest charges, ADR processing
fees, and any charges, taxes or other fees mandated by any federal, state or other applicable
law, retirement plan account fees (where applicable), margin interest, brokerage commissions,
mark-ups or mark-downs and other transaction-related costs, electronic fund and wire fees, and
any other fees that reasonably may be borne by a brokerage account. The client is responsible
for all such fees and expenses. Please also refer to the "Brokerage Practices" section (Item 12)
of this Form ADV for additional information.
Fee Payment Schedule and Termination
Advisory Fees are billed on a quarterly basis in advance. When an account is opened, the
Advisory Fee is billed for the remainder of the quarter and is based on the month end value of
the account in the month it is funded. Thereafter, the Advisory Fee is based on the market value
of the account on the last business day at the end of the previous quarter and becomes due the
first day of the new quarter. Unless otherwise agreed to by FTIS and the client, an Advisory
Agreement will provide that FTIS’ Advisory Fee be deducted directly from the client’s account.
Either party may terminate the Advisory Agreement at any time without penalty. Upon
termination, the client will receive a refund for a pro-rated portion of the prepaid Advisory Fee.
If a client chooses to terminate the Advisory Agreement within 5 business days of signing, the
client will be entitled to a full refund of the Advisory Fee.
SMAs
FTIS charges an Advisory Fee as described in the tables above for SMAs unless negotiated
differently with the platform manager or specific client. Advisory Fees are paid to FTIS when it
acts as sub-advisor or SMA Manager to another investment adviser.
Under these programs, an adviser has a contract with its client to perform services as an
investment manager and possibly custodian services. The adviser, in turn, establishes a
contract with FTIS to provide Advisory Services to the adviser’s client. FTIS establishes a
contract with the adviser on the client’s behalf. FTIS does from time-to-time establish other such
relationships. A list of platforms and advisers is available under Item 4, SMAs/Sub-Advisor
Agreements.
For the Portfolio Strategies, and Covered Call Strategy, FTIS shall receive, on a quarterly basis
in advance, an Advisory Fee equal to a percentage of the fair market value of the account as
determined by the adviser. FTIS charges an Advisory Fee as specified in the fee tables above
for SMAs unless negotiated differently with the platform manager or specific client.
For the Custom Option Solutions strategy, FTIS shall receive, on a quarterly basis in advance,
an Advisory Fee equal to a percentage of the sum of the fair market value (as determined by
the adviser) of the assets in the Managed Accounts managed by FTIS, plus the value of assets
in accounts custodied at other broker-dealers managed by FTIS (“Outside Assets”) as
designated by the client (the “Total Account Value”). FTIS charges an Advisory Fee as specified
in the tables above for SMAs unless negotiated differently with the platform manager or specific
...