Item 5. Fees and Compensation
Independently Managed Accounts
We base our annual charges for services as adviser on the market value of the assets ,which may
include accrued dividends and accrued interest, in a client’s account as computed at the end of
each quarter, and we charge them on a quarterly basis. A client’s advisory agreement with us
authorizes their custodian to deduct and pay our fee from their account upon receipt of billing; or
at a client’s request, we will bill them directly. A client, subject to our approval, may pay our fee
in advance. We would refund any unearned prepaid fee should the account close. A client will
incur other fees, including brokerage, transaction and custody fees, which other parties will
charge. We discuss brokerage more fully in Item 12.
The fee schedule that applies generally to accounts we manage (other than the FBP Appreciation
& Income Opportunities Fund and the FBP Equity & Dividend Plus Fund, which we discuss
under Item 10) is as follows:
Annual Fee Schedule
.75% on the first $ 1,000,000
.60% on the next $ 9,000,000
.50% thereafter
Under certain circumstances, we reserve the right to negotiate fees, which may result in different
fees for similar investment management services.
Clients’ funds held in exchange-traded funds (ETFs), mutual funds and trust certificates,
including custodians' money market funds or other similar investment vehicles, are charged a fee
within and by the fund's management in addition to the fee that our firm charges for managing
the account.
Either our clients or our firm may terminate investment advisory contracts without penalty upon
thirty days’ written notice, unless otherwise negotiated. In the event of termination prior to the
end of a quarter, we will prorate the fee for that quarter.
Upon request, we may also provide portfolio analysis and review through consultation at a
negotiable hourly rate, payable subsequently.
Form ADV 2A – Firm Brochure
Flippin, Bruce & Porter, Inc. Page 3
Sponsored Account Relationships
For accounts that we manage as an adviser, subadvisor or research provider in sponsored
programs, the sponsoring entity pays us our management fee on behalf of their client. That
sponsoring entity executes their client's portfolio transactions without separate commission
charges. The same sponsoring entity also monitors our performance, and may also act as
custodian, or provide some combination of these or other services, all for a single, all-inclusive
asset-based fee, which the sponsoring entity charges their client.
Sponsored program clients are encouraged to review materials prepared by the program
sponsors, such as a sponsor’s Form ADV 2A and Appendix I (Firm brochure and Wrap Fee
Program brochure). Those sponsor-provided documents should describe the business, financial
terms and arrangements between the program sponsors and investment advisers such as our firm.
The sponsoring entity generally will handle all brokerage for accounts managed under sponsored
programs and in instances where we are compensated though sponsored arrangements. We do
reserve the right though, to direct the brokerage in our client’s best interest. We may exercise
this right if we believe in good faith that a broker-dealer other than the sponsoring one can effect
a transaction at a price, including any brokerage commissions or dealer mark-up or mark-down,
more favorable than if the sponsoring entity effected the transaction. In many cases, brokers
other than the sponsoring entity will execute transactions that involve fixed income securities.
They will do so on a principal basis and the transaction will include a mark-up/mark-down or
spread. Under an all-inclusive asset-based fee arrangement, we do not typically negotiate
commissions; the fee that the client pays the sponsoring or referring entity includes brokerage
services, with a portion of the fee in place of commissions. If we use a broker-dealer other than
the sponsor to execute trades, the client's account will be charged for any additional costs
incurred in the transaction.
In evaluating an all-inclusive asset-based compensation arrangement, a prospective client should
consider the level of the all-inclusive fee in relation to the costs of obtaining similar services
independently, specifically:
Our investment management services
The commission costs
The value attributed to monitoring the account
The cost of custodial and any other services
The aggregate cost of the services listed above may be less than a single all-inclusive asset-based
fee. This all-inclusive fee structure, however, may make our investment management services
and other professional services available to clients with accounts not meeting our minimum size
requirement.
We may serve as a research provider to one or more investment advisers. We are compensated
based on a percentage of total assets attributable to accounts that use our research under a
research-provider arrangement.
Form ADV 2A – Firm Brochure
Flippin, Bruce & Porter, Inc. Page 4
Additional Required Disclosures Not Applicable to our Firm
Neither our firm nor any of our supervised persons accepts compensation for the sale of
securities or other investment products.