Item 5: Fees and Compensation
We are compensated for our services based on a percentage of the client’s assets under
management. Our standard fee schedule is as follows:
1% annually on the first $5,000,000 of appraised market value.
0.8% annually on the next $2,000,000 of appraised market value.
0.6% annually on the appraised market value above $7,000,000.
In special circumstances, fees are negotiated. For example, charitable organizations may
be offered a reduced fee schedule. Certain clients have requested that we provide special
family office services for which we charge a separate, negotiated fee. We charge a
separate, negotiated, fixed fee for estate administration. We also provide financial
planning and investment advice on a negotiated, fixed fee basis.
Where an employee of FDC serves as trustee for a client account, a separate trustee fee
may be charged. These fees are negotiated on a case-by-case basis.
Our fees are payable in advance. In some circumstances, however, we do charge in
arrears. We typically have the custodian bank holding client assets deduct fees from
those assets on presentation of our bill but clients may request, instead, to be billed
directly for fees incurred. Fees are calculated and payable four times each year, based
upon the most recent quarterly appraisal of the client’s account. Either a client or Foster
Dykema Cabot (FDC) may terminate our services on thirty days’ written notice. Upon
termination, fees shall be prorated and any unearned portion credited to the client’s
account. For example, if a client has prepaid fees for the period January 1 to March 31
and then notifies FDC on January 15 that they wish to terminate use of FDC’s services,
we will prorate our bill for services incurred between January 1 and February 13,
inclusive, thirty days after notice was received. We will refund the unearned fees for the
period from February 14 to March 31.
In addition to our firm’s advisory fee, clients will incur custodian bank fees, as well as
brokerage and other transaction costs related to the purchase and sale of securities for
their account. Please see the Brokerage section (Item 12) of this brochure for additional
information.
Some investments we select for clients, such as mutual funds, Exchange Traded Funds
(ETFs), and private partnerships, will have additional fees charged by their respective
managers. For example, mutual funds will deduct management fees and other charges
from the investment returns or principal.
FDC’s management fee does not include the fees of external managers of separately
management accounts.
FDC’s sole compensation is from the fees it receives from clients for the firm’s services.
Neither FDC nor its supervised persons receive compensation from third parties for the
sale or recommendation of securities or other investment products, including asset-based
sales charges or service fees from the sale of mutual funds. We try to be fee-sensitive for
our clients and select investment products we believe will produce returns that justify any
additional fees charged by the managers of underlying investments such as mutual funds,
ETFs, or private equity funds.
Occasionally, FDC’s supervised persons may receive token gifts or be invited to a
luncheon, dinner, or sporting event by firms with which we do business. To avoid
creating potential conflicts of interest with our fiduciary duty to clients, the value and
frequency of these gifts is informally monitored by the firm’s Chief Compliance Officer.