Item 5: Fees and Compensation
Compensation - Portfolio Management Services
Our fees for Portfolio Management Services are determined in advance based on individualized
factors and generally do not exceed 1% of the marketable securities for the full scope of our
multi-faceted advice. The fixed annual retainer is presented to a prospective client and is paid
on a quarterly basis in advance. Fees are determined depending on the nature and complexity
of each client’s circumstances.
Compensation - Consulting Services
Our fees for Consulting Services fees range from $150 to $600 per hour. In limited
circumstances, we charge a flat fee for Consulting Services. All Consulting Services Fees are
payable in arrears.
Typically, these services are offered for separate and additional compensation. However, we
may, at our sole discretion, waive or reduce these fees for our advisory clients or include them
in the overall Portfolio Management Services fee.
Cash Balances
Some of your assets may be held as cash and remain uninvested. Holding a portion of your
assets in cash and cash alternatives, i.e., money market fund shares, may be based on your
desire to have an allocation to cash as an asset class, to support a phased market entrance
strategy, to facilitate transaction execution, to have available funds for withdrawal needs or to
pay fees or to provide for asset protection during periods of volatile market conditions. Your
cash and cash equivalents will be subject to our investment advisory fees unless otherwise
agreed upon. You may experience negative performance on the cash portion of your portfolio if
the investment advisory fees charged are higher than the returns you receive from your cash.
Retirement Plan Rollover Recommendations
As part of our investment advisory services to our clients, we may recommend that clients roll
assets from their employer’s retirement plan, such as a 401(k), 457, or ERISA 403(b) account
(collectively, a “Plan Account”), to an individual retirement account, such as a SIMPLE IRA, SEP
IRA, Traditional IRA, or Roth IRA (collectively, an “IRA Account”) that we will advise on the
client’s behalf. We may also recommend rollovers from IRA Accounts to Plan Accounts, from
Plan Accounts to Plan Accounts, and from IRA Accounts to IRA Accounts.
If the client elects to roll the assets to an IRA that is subject to our advisement, we will charge
the client an asset-based fee as set forth in the advisory agreement the client executed with our
firm. This creates a conflict of interest because it creates a financial incentive for our firm to
recommend the rollover to the client (i.e., receipt of additional fee-based compensation).
Clients are under no obligation, contractually or otherwise, to complete the rollover. Moreover,
if clients do complete the rollover, clients are under no obligation to have the assets in an IRA
advised on by our firm. Due to the foregoing conflict of interest, when we make rollover
recommendations, we operate under a special rule that requires us to act in our clients’ best
interests and not put our interests ahead of our clients’.
Under this special rule’s provisions, we must:
• meet a professional standard of care when making investment recommendations (give
prudent advice);
• never put our financial interests ahead of our clients’ when making recommendations
(give loyal advice);
• avoid misleading statements about conflicts of interest, fees, and investments;
• follow policies and procedures designed to ensure that we give advice that is in our
clients’ best interests;
• charge no more than a reasonable fee for our services; and
• give clients basic information about conflicts of interest.
Many employers permit former employees to keep their retirement assets in their company
plan. Also, current employees can sometimes move assets out of their company plan before
they retire or change jobs. In determining whether to complete the rollover to an IRA, and to
the extent the following options are available, clients should consider the costs and benefits of
a rollover. Note that an employee will typically have four options in this situation:
1. leaving the funds in the employer’s (former employer’s) plan;
2. moving the funds to a new employer’s retirement plan;
3. cashing out and taking a taxable distribution from the plan; or
4. rolling the funds into an IRA rollover account.
Each of these options has positives and negatives. Because of that, along with the importance
of understanding the differences between these types of accounts, we will provide clients with
a written explanation of the advantages and disadvantages of both account types and
document the basis for our belief that the rollover transaction we recommend is in your best
interests.
Compensation in General
Fees and account minimums for all services are negotiable 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, negotiations with client, etc.).
Discounts, not generally available to our advisory clients, may be offered to family members
and friends.
We may group certain related client accounts for the purposes of determining the account size
and/or annualized fee.
Termination
Clients may terminate the agreement by providing us with oral or written notice. Upon
termination of any account, any prepaid, unearned fees will be promptly refunded, and any
earned, unpaid fees will be due and payable.
Mutual Fund and ETF Fees and Expenses
All fees paid to us for portfolio management services are separate and distinct from the fees
and expenses charged by mutual funds and ETFs to their shareholders. These fees and
expenses are described in each fund's prospectus. These fees will generally include a
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