Item 5 Fees and Compensation
A.
INVESTMENT ADVISORY SERVICES
The client can determine to engage Grimes to provide discretionary investment advisory
services on a negotiable fee basis. Annual management fees are calculated as a percentage
(%) of the market valuation of assets under management, generally in accordance with the
following published schedule of fees. Note that multiple client accounts are aggregated for
fee calculation purposes.
Market Value of Portfolio % of Assets
Under $500,000 1.25%
$500,000.01- $2,000,000 1.00%
$2,000,000.01- $7,000,000 0.75%
$7,000,000.01- $10,000,000 0.65%
Over $10,000,000.01 0.50%
The published fee schedule is tiered in nature. Accordingly, the fee is 1.25% for the first
$500,000, 1.00% on the next $1,500,000, 0.75% for the following $5,000,000, etc. This
annual fee shall be prorated and paid quarterly in arrears based on the market value of the
assets on the last day of the previous quarter. In certain situations, the specific fee paid may
differ from the above published schedule if agreed to in advance.
B. Clients shall have Grimes’ advisory fees deducted from their custodial account. Both
Grimes’ Investment Advisory Agreement and the custodial/clearing agreement may
authorize the custodian to debit the account for the amount of Grimes’ investment advisory
fee and to directly remit that management fee to Grimes in compliance with regulatory
procedures. In the limited event that Grimes bills the client directly, payment is due upon
receipt of Grimes’ invoice. Grimes shall deduct fees and/or bill clients quarterly in arrears,
based upon the market value of the assets as of the last business day of the previous quarter.
C. As discussed below at Item 12 below, when requested to recommend a broker-
dealer/custodian for client accounts, Grimes generally recommends that Schwab, Fidelity
and/or TradePMR serve as the broker-dealer/custodian for client investment management
assets.
Broker-dealers such as Schwab, Fidelity and TradePMR charge brokerage commissions,
transaction, and/or other type fees for effecting certain types of securities transactions (i.e.,
including transaction fees for certain mutual funds, and mark-ups and mark-downs charged
for fixed income transactions, etc.). The types of securities for which transaction fees,
commissions, and/or other type fees (as well as the amount of those fees) shall differ
depending upon the broker-dealer/custodian. While certain custodians, including Schwab
and Fidelity, generally (with the potential exception for large orders) do not currently charge
fees on individual equity transactions (including ETFs), others do.
There can be no assurance that Schwab or Fidelity will not change their transaction fee
pricing in the future.
Schwab and Fidelity may also assess fees to clients who elect to receive trade confirmations
and account statements by regular mail rather than electronically.
Clients will incur, in addition to Grimes’ investment management fee, brokerage
commissions and/or transaction fees, and, relative to all mutual fund and exchange traded
fund purchases, charges imposed at the fund level (e.g., management fees and other fund
expenses).
Those clients who participate in the High Income Opportunity Fund may incur an additional
custodial charge between $125 and $250 (depending on the custodian) annually for costs
associated with reporting on the value of the Fund.
These fees/charges are in addition to Grimes’ investment advisory fee at Item 5 below.
Grimes does not receive any portion of these fees/charges.
D. Grimes’ annual investment advisory fee shall be prorated and paid quarterly, in arrears,
based upon the market value of the assets on the last business day of the previous quarter.
Grimes generally requires a minimum asset level of $500,000 for investment advisory
services. Clients referred to Grimes through either the Schwab Advisor Network or the
Fidelity Wealth Advisor Solutions Program® are generally subject to a minimum asset
requirement of $1,000,000.
Grimes, in its discretion, may waive its minimum asset level, charge a lesser investment
advisory fee, charge a flat fee, waive its fee entirely, or charge fee on a different interval,
based upon certain criteria (i.e., anticipated future earning capacity, anticipated future
additional assets, dollar amount of assets to be managed, related accounts, account
composition, complexity of the engagement, anticipated services to be rendered,
grandfathered fee schedules, employees and family members, courtesy accounts,
competition, negotiations with client, etc.).
As result of the above, similarly situated clients could pay different fees. In addition, similar
advisory services may be available from other investment advisers for similar or lower fees.
The Investment Advisory Agreement between Grimes and the client will continue in effect
until terminated by either party by written notice in accordance with the terms of the
Investment Advisory Agreement. Upon termination, a pro-rated portion of the earned but
unpaid advisory fee shall be due.
E. Neither Grimes, nor its representatives accept compensation from the sale of securities or
other investment products.