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 $15,000,000 of appraised market value.
0.75% annually on the next $30,000,000 of appraised market value.
0.65% annually on the appraised market value above $45,000,000.
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 certain
clients monitoring fees which are less than our standard advisory fee and are determined
on an individualized basis. We charge a separate, negotiated, fixed fee for estate
administration. We also provide financial planning, bookkeeping and investment advice
on a negotiated, fixed fee basis. In certain instances, we also charge an onboarding fee.
Where an employee of FDC serves as trustee for a client account, a separate trustee fee is
charged in certain circumstances. These fees are negotiated on a case-by-case basis.
For certain clients, we charge an advisory fee for services provided to the held-away
accounts mentioned above in Item 4, just as we do with client accounts held at our
primary custodian(s). The specific fee schedule charged by us is provided in the client’s
investment advisory agreement with us.
Our fees are payable in advance. We typically have the custodian bank holding client
assets deduct fees from those assets, 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 including cash and cash
equivalents. Margin and other borrowing balances are not included in the market value
on which fees are assessed. Either a client or 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.
Private Investment Funds
Our fees for the FDC Funds are billed at the advisory client level. While the FDC Funds
are subject to the fees of the underlying investment managers, advisory clients do not pay
additional fees for FDC’s management of the funds beyond the advisory fee. In addition
to advisory fees, investors in FDC Funds bear the expenses of the FDC Fund in which they
are invested, as set forth in the disclosure memorandum and limited liability company
agreement for the relevant FDC Fund.
In addition to our firm’s advisory fee, clients are responsible for the fees and expenses
associated with the investment of their assets. For example, clients are responsible for
custodian bank fees, as well as brokerage and other transaction costs, and fees and taxes,
related to the purchase and sale of securities for their accounts. Please see the Brokerage
section (Item 12) of this brochure for additional information. Certain investments we
select for clients that are managed or sponsored by third parties, such as mutual funds,
Exchange Traded Funds, private partnerships, and securities managed by external
managers of separately managed accounts, bear fees and expenses for their management
and operation
We offer clients the option of obtaining certain financial solutions from unaffiliated third-
party financial institutions through UPTIQ Treasury & Credit Solutions, LLC (together
with UPTIQ, Inc. and its affiliates, “UPTIQ”). Focus Financial Partners, LLC (“Focus”)
is a minority investor in UPTIQ, Inc. UPTIQ is compensated by sharing in the revenue
earned by such third-party financial institutions for serving our clients. Although the
revenue paid to UPTIQ benefits UPTIQ Inc.’s investors, including Focus, our parent
company, no Focus affiliate will receive any compensation from UPTIQ that is
attributable to our clients’ transactions. Further information on this conflict of interest is
available in Item 10 of this Brochure.
We help our clients obtain certain insurance solutions by introducing clients to our
affiliate, Focus Risk Solutions, LLC (“FRS”), a wholly owned subsidiary of our parent
company, Focus Financial Partners, LLC. FRS assists our clients with regulated
insurance sales activity by advising our clients on insurance matters and placing
insurance products for them and/or referring our clients to certain third-party insurance
brokers (the “Brokers”), with whom FRS has agreements, which either separately or
together with FRS place insurance products for them. FRS does not receive any
compensation from the Brokers or any other third parties for serving our clients.
Additionally, in exchange for allowing certain of the Brokers to offer their services to
clients of other Focus firms, FRS receives periodic fees (the “Platform Fees”) from such
Brokers. The Platform Fees are expected to change over time. Such Platform Fees are
revenue for FRS and, ultimately, for our common parent company, Focus, but we do not
share in such revenue and no portion of the Platform Fees is attributable to our clients’
use of the Brokers’ services. Further information on this service is available in Item 10 of
this Brochure.