Item 5 – Fees and Compensation
Advisory Fees
First Wilshire is generally compensated for providing investment management services by
charging Clients an annual investment management fee as set forth in the chart below.
First Wilshire’s general fee schedule for SMAs is tiered and based on a percentage of assets
under management, as follows:
Account Annual Fee
Assets (billed quarterly)
First $1 million = 1.75%
over $1 million up to $30 million = 1.50%
over $30 million up to $50 million = 1.25%
over $50 million = Negotiable
Custom accounts generally are assessed a different, lower amount.
The specific manner in which fees are charged is established in a Client’s written Investment
Management Agreement (the “Agreement”) with us. Fees are billed quarterly or monthly, in
advance. Fees will be deducted from the Client’s account as set forth in the Agreement.
First Wilshire reserves the right to negotiate individual SMA fees when appropriate. Factors that
might be considered include, without limitation, the amount of assets at account opening or the
expectation that assets are likely to increase in the near term, the investment climate, individual
account groupings, Client tenure, the extent of supplemental services to be provided to the
account, the broker holding custody of Client assets, and other account specific circumstances.
Fee arrangements for some existing long-tenured Clients differ from, and may be lower than,
the above schedule.
Assets of certain accounts can be aggregated by a number of different factors including
accounts in a household, to determine if a lower fee applies. The fees noted in the schedule
above may be reduced when a new account is related to or affiliated with a current Client.
Clients may be able to obtain services similar to those we provide from other investment
advisers for a lower fee.
For our Financial Review Services, unless otherwise noted in the Client’s Agreement, Financial
Review Services are provided at a fixed fee of $1,000.00.
Brokerage and Custodial Expenses
First Wilshire does not maintain custody of your assets. We have entered into arrangements
with certain registered broker-dealers that maintain Client accounts and effect trades for such
accounts. Those arrangements are summarized below:
A. SMAs held at Schwab Advisor Services, a division of Charles Schwab & Co., Inc.
(“Schwab”), a registered broker-dealer, member SIPC; or for certain legacy accounts,
Wedbush Securities, Inc. (“Wedbush”) a registered broker-dealer, member SIPC, are
subject to the fee schedule described above.2 In addition to the management fees
charged by First Wilshire, the Client is responsible for paying directly any commissions,
transaction fees, custodial fees and any other fees charged by Schwab or Wedbush.
First Wilshire does not mark these fees up. They are separate and independent of the
advisory fees you pay First Wilshire.
B. First Wilshire also manages SMAs held at other broker-dealers that act as custodian for
Client accounts, including Morgan Stanley Wealth Management, Raymond James
Financial, Inc., RBC Capital Markets, LLC, UBS Financial Services, Inc. and Wells Fargo
Advisors. These firms’ representatives may refer clients to us for investment
management services or their clients may select us as the investment manager.
First Wilshire charges Clients with accounts at these firms an annual management fee of
1.25%. In addition to the fee paid to First Wilshire, the Client is responsible for paying
commissions, custodial and other fees directly to the broker-dealer/custodian under a
separate agreement with the broker-dealer/custodian. First Wilshire does not mark these
fees up. They are separate and independent of the advisory fees you pay First Wilshire.
First Wilshire does not negotiate the amount of fees or commissions with these broker-
dealers. Clients of these broker-dealers may negotiate other arrangements directly with
the broker-dealer. Such arrangements may result in higher or lower costs compared with
other investment products.
Other information
Clients who want to terminate their accounts with us must send us a written notice of
termination via e-mail to ClientServices@firstwilshire.com or via mail to 200 South Los Robles
Ave., Suite 620, Pasadena, CA 91101 Attn: Client Services. First Wilshire will continue to
charge and collect a fee for 30 calendar days after receipt of the termination notice. We will
refund any prepaid fees collected for a period which extends beyond the 30-calendar day notice
period except that if a Client terminates us during the first quarter of management, we will keep
the prepaid fees to cover account set-up costs.
As of December 31, 2025, less than 1% of our assets under management were being held at Wedbush. Generally, only First
Wilshire legacy accounts hold accounts through Wedbush.
As noted above, Clients will incur brokerage and other transaction costs including any charges
imposed by custodians, third party investment advisers and other third parties such as transfer
taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts
and securities transactions. In addition, Clients whose uninvested assets are swept into money
market mutual funds for short-term cash management purposes by the Client’s selected
...