Item 5 - Fees and Compensation
Advisory Services Fees
How we are paid depends on the type of advisory service we provide. Please review the fee and
compensation information below. In our sole discretion, we may make exceptions to any stated fee
schedules or minimums and negotiate special fee arrangements where we deem it appropriate under
the circumstances. We may charge a different fee based upon various criteria (e.g., anticipated future
earning capacity, anticipated future assets, dollar amount of assets to be managed, related accounts,
type of services required, account composition, negotiations with client, etc.). Therefore, some clients
may pay more or less than other clients for the same services. Further, some clients’ fee schedules are
based on prior contractual arrangements or historical fee schedules that differ from our current fee
arrangements. Your specific fee arrangement is set forth in your advisory agreement with us.
Financial Planning Services Fees
We typically charge a fixed fee starting $10,000 for our Financial Planning Services, though fees could
be higher depending on the client’s needs and the complexity of their financial situation. Fees are due
upon engagement.
This service allows you to see how we think before committing to an ongoing engagement with our
Portfolio Management Services. In the event you decide to engage us for Portfolio Management
Services within 180 days of the date of the Financial Planning Services engagement, you will receive a
credit for the fixed fee already paid to be applied toward the first asset-based fee, up to the amount of
the first quarterly fee. Thereafter, Financial Planning Services are typically included for no additional fee
as part of the fees for Portfolio Management Services. However, we reserve the right to charge an
additional financial planning fee in the future, on a case-by-case basis based on the complexity of each
client’s individual circumstances. In those potential instances, the additional fee is negotiable and is due
upon presentation of the updated financial plan.
Under certain circumstances, we may request that you pre-approve travel and other reimbursable
expenses incurred in connection with the preparation of the financial plan.
Typically, Financial Planning Services will automatically terminate upon completion of the engagement,
unless you engage us for ongoing Portfolio Management Services. However, either party may terminate
the agreement earlier upon written notice.. If the agreement is terminated prior to presentation of the
financial plan, you will be charged a prorated fee based on the percentage of the work completed prior
to termination. After deducting fees for work completed, the balance of the unearned, prepaid fees will
be refunded to the client promptly.
Fees can be paid by check, electronic funds transfer, or debit or credit card through a third-party
payment processor’s secure portal through which the client can securely input banking information.
Portfolio Management Services Fees
The annual fee schedule for our Portfolio Management Services is based on a percentage of assets
under our management, according to the following:
First $500,000 1.25%
Next $4,500,000 0.90%
Next $5,000,000 0.75%
Assets over $10 million 0.50%
This is a blended tier fee schedule, which means that different fees are applied to the different levels
of assets under management. Accordingly, as an example, if an account is valued at $2,500,000 the
first $500,000 would be charged 1.25% annually, while the balance of $2,000,000 would be assessed
the lower fee of 0.90% per year.
Clients will be billed in advance at the beginning of each calendar quarter based upon the market value
of the average daily balance of the client’s account for the previous quarter. Your account will typically
hold investment options that are regularly traded on an open exchange with an observable market
value, which is used to calculate the fee. The custodian typically provides the valuation of these
securities. Because our services are provided on a discretionary basis, the fee is calculated on all assets
held in your account, including cash and cash equivalents.
The minimum portfolio value is generally set at $2,000,000. The minimum annual fee per client is
$10,000. However, we may waive or reduce these minimum requirements at our discretion. For clients
with multiple accounts, at our sole discretion, we may combine the amount of assets in more than one
account in determining the fee to be charged to that client for services on the client’s total amount of
assets. If services begin after the start of a quarter, fees will be prorated accordingly.
With your authorization and unless other arrangements are made, fees are normally debited directly
from client accounts. Fees for held away accounts (e.g., 401(k), 403(b), and 529 plans) using Pontera’s
platform will typically be deducted from a client’s taxable, non-retirement accounts or will be directly
invoiced to the client for payment. Additionally, fees may be paid by check, electronic funds transfer, or
debit or credit card through a third-party payment processor’s secure portal through which the client
can securely input banking information.
We use margin as an investment strategy in limited situations, as appropriate in light of client
circumstances. In addition, clients can elect to borrow funds against their investment portfolio for uses
other than investing inside the managed account. For accounts with a margin balance, our fee is
assessed based on the net value of the assets in your account. In other words, your account value upon
which the fee is calculated is not reduced by the margin balance. This could create a conflict of interest,
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