Item 5 FEES AND COMPENSATION
Investment Advisory Fees
LTS generally bases its wealth and investment advisory fees on assets under management or
advisement. Normally our fee starts at 100 basis points (1.0%) of assets under management per
annum for accounts, with higher fees on smaller and more complex accounts. Fees can be reduced
for larger portfolios at our discretion. Portfolios consisting of assets on which LTS advises, but does
not actively manage, assets are billed at a lower rate.
Wealth and investment management fees are based upon the quarterly ending balance of all
securities (except LTS Capital Partners investments) and other managed or supervised assets in client
accounts. Wealth and investment management fees are billed quarterly, in advance, and are normally
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deducted from client accounts. LTS Access program clients are billed semi-annually, in advance, based
on either a) the total investment commitment, in the case of private equity and other funds that are
invested in multiple draws over a period of time, or b) the reported investment balance as of the
month end closest to the anniversary date of the investment, in the case of hedge funds and other
investments where the entire investment amount is paid upon subscription. LTS performs periodic
testing to ensure that fees are calculated and billed in accordance with the Agreement.
LTS also offers clients the option of paying on a consulting fee basis. Consulting fees are negotiated in
advance and are custom-tailored to the specific needs of the client.
Consolidated asset reporting and monitoring through the LTS private client portal permits clients to
consolidate information on assets, liabilities and cash flows, including private equity investments and
real estate assets. It is available to all LTS wealth and investment management clients. Assets included
in consolidated reporting that are not under LTS management are billed at a negotiated rate.
Fees for wealth and investment management services are specified in our Wealth and Investment
Management Services Agreement and in our LTS Access Investment Management Services
Agreement. The former are usually for a term of two years and are thereafter renewed automatically
unless notice is given by either party to terminate ninety days prior to the date of expiration. The
latter are typically for the life of the investment.
LTS clients receive monthly or quarterly account statements directly from the custodian, except in the
case of LTS Capital Partners investments, which issue annual Schedule K-1s. LTS clients may opt out
of electronic delivery of statements. The Firm also provides performance reports at least annually.
Fees for Other Services
Fees for financial planning are based on the complexity of the plan, and generally range from $2,500
to $15,000 for a custom Capital Sufficiency Analysis. Other financial planning and wealth management
consulting and implementation services are charged separately, based on an hourly rate of $250 to
$500 or a negotiated flat fee, depending on the needs of the client.
General
Asset-based fees are based on the quarterly ending balances of the reported fair market value of
publically listed assets managed or advised by LTS. Fees on hedge fund investments are based on the
latest month-end value reported by the fund manager as of the close of the billing quarter. Third party
private equity investments are generally billed on the investment value last reported by the fund
manager, except in the case of the LTS Access Program, which bases fees on total committed capital.
If wealth and investment management clients invest in LTS Capital Partners investment vehicles, the
Firm excludes the value of these investments from client portfolio values for wealth and investment
management fee purposes. LTS does not encourage clients to use margin trading, although margin
account balances may occur in some accounts, from time to time, because of cash flow timing issues,
especially for investors in third-party private equity investments. To the extent that margin is
employed, fess payable to LTS may be increased, since any margin debit will not be offset against the
value of the assets on which asset management fees are charged, unless agreed otherwise between
LTS and the client in advance.
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Wealth and Investment Advisory Services Agreement
LTS clients enter into a written agreement which details the nature of the advisory relationship, the
nature of discretionary investment authority, the fee basis and rate, and whether the client wishes to
have fees deducted from one or more accounts, or invoiced separately, among other matters.
Negotiated Fees
LTS may waive all or part of its fees, in its discretion, and may make lower fee arrangements or
otherwise negotiate different arrangements in certain circumstances. Advisory accounts of family
members and employees are generally charged a lower fee or no fee.
Fee Components
The Firm’s wealth and investment management fee, based on assets under management, covers
wealth and investment management services specified in the Wealth and Investment Management
Services Agreement. Other services, if requested, may be provided and charged separately.
Underlying managers of portfolio funds, separate accounts, exchange traded funds, mutual funds, and
private equity and hedge funds in which a client invests also charge management fees and in some
cases also charge incentive allocations or performance fees. LTS does not charge performance fees
for wealth and investment management services, although it has done so with certain clients in the
Access Program. LTS does not benefit, directly or indirectly, from any such fees paid by clients to third
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