Item 5: Fees & Compensation
How We Are Compensated for Our Advisory Services
Comprehensive Portfolio Management:
Our firm’s annual fees for investment management services provided under the Comprehensive
Portfolio Management Agreement shall be based on the market value of assets under management
and shall be calculated at up to one percent (1.00%) of all assets under management. These fees are
billed on a pro-rata annualized basis, quarterly in advance, based on the value of your account on
the last day of the previous quarter, including any accrued interest or dividends, adjusting for
inflows and out flows during the billing period.
We price our services based upon various objective and subjective factors. As a result, our clients
could pay diverse fees based upon the market value of their assets, the complexity of the
engagement, and the level and scope of the services rendered. The services provided by our firm to
any particular client could be available from other advisers at lower fees.
In some cases, we offer direct billing as an option to our clients. However, fees will generally be
automatically deducted from your managed account. As part of the automatic fee deduction
process, you understand and acknowledge the following:
a) The qualified custodian sends statements at least quarterly to you showing the market values
for each security included in the account and all disbursements from your account including the
amount of the advisory and custodial fees paid;
b) You provide authorization permitting us to be directly paid by these terms;
c) As required by paragraph (a)(2) of Rule 206(4)-2 under the Investment Advisers Act of 1940, if
we send our own statement to our clients, we urge them to compare information provided in
their statements with those from the qualified custodian in account opening notices and
subsequent statements.
You pay compensation to Independent Managers for services rendered by these firms. This
compensation is typically equal to a percentage of the overall investment advisory fee charged by
our firm or an agreed upon fixed fee. The advisory fee paid to Independent Managers shall be
negotiable in certain circumstances, but shall never exceed the overall amount in their published
fee statement.
Portfolio Monitoring:
Our firm’s annual fees for investment management services provided under the Portfolio
Monitoring Agreement shall be based on the market value of assets under management and shall be
calculated at up to one percent (1.00%) of all assets. We will directly bill you for our portfolio
monitoring service. Our bill is due and payable within thirty (30) days. These fees are billed on a
pro-rata annualized basis quarterly in advance based on the value of your account on the last day of
the previous quarter.
Other Types of Fees & Expenses
Non-Wrap fee clients will incur transaction charges for trades executed in their accounts. These
transaction fees are separate from our fees and will be disclosed by the firm that the trades are
executed through. Also, clients will pay the following separately incurred expenses, which we do
not receive any part of: charges imposed directly by a mutual fund, index fund, or exchange traded
fund which shall be disclosed in the fund’s prospectus (i.e., fund management fees and other fund
expenses).
If our client chooses to have a mutual fund position, we will manage those securities under our
Wrap Fee Program. Wrap fee clients will receive our Form ADV, Part 2A, Appendix 1 (the “Wrap Fee
Program Brochure”). Our wrap fee clients will not incur transaction costs for trades. More
information about our “Mutual Fund Wrap Fee Program” is disclosed in our separate Wrap Fee
Program Brochure.
We may recommend that clients enter into an “Asset-Based” pricing agreement with the account
broker-dealer/custodian. Under an “Asset-Based” pricing arrangement, the broker-dealer/
custodian charges the client a fixed percentage fee for all account commissions/transactions based
on the amount of assets placed in custody and/or on the broker-dealer/custodian’s platform, and
not based upon the number of transactions executed. Generally, in an Asset-Based pricing
arrangement, the applicable fixed percentage fee decreases as the account value increases. In the
alternative, the broker-dealer/custodian could charge a separate commission/transaction fee upon
the execution of an account transaction. This is referred to as a “Transaction-Based” pricing
arrangement. Under a Transaction-Based pricing arrangement, the amount of fees charged by the
broker-dealer/custodian to the client will vary depending upon the number of and type of
transactions placed for the account. Under either scenario, you will not directly incur these fees if
you engage us on a wrap fee basis.
Termination & Refunds
We charge our advisory fees quarterly in advance. In the event that you wish to terminate our
services, we will refund the unearned portion of our advisory fee to you. You need to contact us in
writing and state that you wish to terminate our services. Upon receipt of your letter of
termination, we will proceed to close out your account and process a pro-rata refund of unearned
advisory fees.
Commissionable Securities Sales
We do not sell securities for a commission. In order to sell securities for a commission, we would
need to have our associated persons registered with a broker-dealer. We have chosen not to do so.