Fragasso Financial Advisors Inc

Item 5 – Fees and Compensation

The amount of advisory fees will be disclosed prior to services being provided and agreed upon in the
appropriate written investment advisory agreement. We will not require payment of more than $1,200
in fees more than six months in advance.

Asset Management Services

The annual advisory fee is based on a percentage of the market value of your accounts, including
cash holdings, according to the schedule below. Advisory fee is blended by tier. In addition, multiple
Program accounts for the same client or household (typically same decision maker) may be combined
to reach the next level of advisory fee. Fees are negotiable at the discretion of FFA and will be as
stated in the written investment advisory agreement.

                                                              Assets Under
Advisory Fee                                                   Management

1.25%          on the first                       $   500,000
1.00%          on the amount from                 $   500,001         to       $ 1,000,000
0.75%          on the amount from                 $ 1,000,001         to       $ 5,000,000
0.50%          on the amount from                 $ 5,000,001         to       $10,000,000

0.45%          on the amount from               $ 10,000,001        to       $20,000,000
0.30%          on the amount over               $20,000,000

Advisory fees are due quarterly in advance and calculated by FFA based on the account’s market
value on the last business day of the prior quarter. Instructions are provided to the custodian to
deduct the advisory fees from your account. The advisory fee is shared between FFA and its advisory
representatives.

In addition to the advisory fee you pay us for our services, you will pay certain transaction charges for
trade execution. These transaction charges are paid to the custodian, vary based on the type of
transaction (e.g., mutual fund, ETF, equity or option), and are communicated to you by FFA at the time
you establish your account. We do not receive any portion of the transaction charges.

The transaction charges assessed by the custodian may be lower than the charges customarily imposed
by the custodian when processing similar transactions for similar accounts. This is because FFA has
entered into an arrangement based on the scope of business FFA engages in with the custodian,
including the amount of FFA’s client assets with the custodian. This presents an incentive for FFA to
recommend that you use a specific custodian and executing broker/dealer for your account so that all
of FFA’s clients continue to receive favorable pricing. We believe this arrangement benefits you
because the transaction charges may be lower than they would be normally. As a result, we believe
that using the recommended custodian to execute transactions for your account is consistent with our
duty to obtain best execution.

When you select a third-party portfolio manager to manage your Program account on a discretionary
basis, we will pay a portion of our advisory fee noted above to the third-party portfolio manager for the
management services. The fees we pay to the portfolio manager range from 0.16% to 0.40% annually,
payable quarterly in arrears or in advance as required by the portfolio manager. Please note that in
certain situations, the level of fee we pay to a third-party portfolio manager will decrease when
aggregate assets our clients have under management with a portfolio manager reach certain
thresholds. This presents a conflict of interest in that we have a financial incentive to recommend a
portfolio manager where we will benefit from reduced fees.

In certain circumstances, you will also incur certain charges imposed by third parties other than FFA in
connection with investments made through the account depending upon the type of investments made
and type of account. FFA does not receive any portion of these fees. These charges include, but are
not limited to, the following:

   •    Mutual funds - mutual fund 12b-1 fees, mutual fund management fees and administrative
        expenses, mutual fund transaction fees and redemption charges (if applicable) and deferred
        sales charges on previously purchased mutual funds transferred into the account.
   •    ETFs – fund management fees and expenses
   •    Variable annuities – mortality, expense and administrative charges, fees for additional riders
        purchased by you on the contract, and charges for excessive transfers within a calendar year if
        imposed by the variable annuity sponsor.
   •    Certain retirement accounts - IRA and qualified retirement plan fees
   •    Certain trust accounts - Administrative servicing fees for trust accounts
   •    Alternative investments - hedge fund and managed future investment management fees, and
        managed futures investor servicing fees
   •    Sweep money market funds and cash balances – 12b-1 fees or other fees based on average
        daily deposit balances.
   •    Custodian fees – service fees imposed by the custodian for specific additional services
        requested by the client and interest on the uninvested cash in your account in the custodian’s
        cash features program.

   •   Other charges required by law and imposed by the executing broker/dealer or custodian.

If your account invests in mutual funds or ETFs, you will pay the fund a management fee as a
shareholder of the fund in addition to paying us an advisory fee for managing the assets. As some of
the funds available in the Program may be purchased directly, you could avoid the second layer of fees
by not using our management services and by making your own fund investment decisions.

Certain advisory representatives of FFA are also separately registered as licensed securities
representatives through Private Client Services, LLC (“PCS”). In this capacity, the advisory
...

Item 7 – Types of Clients

FFA provides services to individuals, trusts, corporations, retirement plan sponsors, municipal pension
plans, charitable institutions, foundations and endowments.

In general, individual clients interested in hiring FFA to provide investment advice typically must have a
minimum of $250,000 of investable assets for the household and retirement plans must have a minimum
of $500,000 in plan assets. Exceptions may be made by certain advisory representatives at the sole
discretion of FFA.