Item 5: Fees and Compensation
Description
The Fee for advisory Services is an asset-based fee calculated as a percentage of the aggregate market value of the
assets. See below for the Fee breakpoints associated with the various Services.
As agreed by the Client and Advisor in the Agreement, fees typically will be billed in arrears at the end of each
month or quarter. The monthly Fee will equal the Annual Fee Rate described in the Agreement divided by twelve, or
in the case of quarterly by four, and will be applied to the aggregate value of the Portfolio, as such value is reported
by the Custodian (or other third-party valuation service engaged by the Custodian) as of the last trading day of
each month or quarter end. When available, MainStreet uses readily available market prices and/or independent
pricing sources to value Client assets. When market prices are not readily available, MainStreet provides fair
valuations. Because this presents a potential conflict of interest, MainStreet has developed policies and internal
pricing controls designed to ensure that valuations represent market prices or fair valuations based on what it
reasonably expects to realize upon a current sale. Cash and cash equivalents will be included in the aggregate value
used to calculate the Fee. Depending on the nature of the account and if disclosed in the terms of your Agreement,
in the event of a partial month or quarter, the first or last billed month or quarter will be pro-rated from the date
of the Agreement or to the date of termination. Fees are not charged based on a share of capital gains upon or
capital appreciation of the Portfolio or any portion of the Portfolio.
Clients may be billed directly for the fees, or the Client can elect to have their fees invoiced and debited from their
custodial account. In the latter case, MainStreet will coordinate with the Client’s custodian for fees as invoiced to
be debited by the custodian from the Client’s account and remitted directly to MainStreet.
The fee schedule will be a linear or tiered fee structure. A linear fee structure means, as total relationship assets
reach a new threshold, the entire portfolio of assets are billed at the lower percentage. Tiered means the advisory
fee is calculated by applying different rates to different portions of the total assets. When the plan assets reach a
new threshold, only those assets above the threshold are charged the successively lower percentages. The client
agreement shall specify which structure applies.
MainStreet uses third party portfolio management systems for some Clients to assist with reporting and billing.
For Client portfolios that are billed through those systems, the market value used to calculate the Fee will likely
vary compared to their Custodian statement. This could be due to the handling of accrued interest and trades
settling over month (or quarter end). This could be seen as a conflict as the market value used to calculate the
Fee could be higher than it is at the Client’s Custodian. Regarding accrued interest, MainStreet has no control
over the calculation and application of the accrued interest to the portfolio(s). MainStreet cannot affect more
trades or select certain securities that would generate a higher market value in portfolios. In the event the system
market value is greater than the Custodian, the accrued interest within the portfolio value will even out over the
subsequent month(s) or quarter(s) to have a lower market value from which to calculate the Fee.
Negotiability of Fees and Minimum Account Size
In certain circumstances, MainStreet can agree to negotiate its Fees and/or the minimum account size. MainStreet
can charge different Fees to Clients receiving the same Services. The fee schedules are MainStreet’s basic fee
schedules generally charged to Clients and minimum account size requirements absent negotiable circumstances.
Fees are negotiated on a case-by-case basis depending on a variety of factors including the nature and complexity
of the particular service, the availability of qualified personnel, and the Client’s relationship with the firm, the size
of the account, and the potential for other business among other factors.
Current clients’ fees will vary, higher or lower, from the fee schedules shown below depending on the fee schedule
in effect and/or negotiated at the time of account opening.
Fee Billing
The Agreement for Advisory Services/Investment Advisory Agreement will provide that the Client will pay MainStreet’s
Fees immediately upon receipt of MainStreet’s invoice (provided, all earned but unpaid Fees shall be paid immediately
upon termination of the Agreement), subject to adjustments agreed upon by MainStreet and the Client.
Fiduciary Advisory Services Fees Schedules
Separate Account Management (SAM)
Total Assets Under Management Asset Management Fee (per annum)
$0 to $15 Million 32 basis points
$15 to $25 Million 30 basis points
$25 to $35 Million 28 basis points
$35 to $45 Million 26 basis points
$45 to $75 Million 24 basis points
$75 to $125 Million 22 basis points
$125 Million & over 20 basis points
Fund Allocation Portfolios (FAP)
Total Assets Under Management Asset Management Fee (per annum)
$0 to $15 Million 32 basis points
$15 to $25 Million 30 basis points
$25 to $35 Million 28 basis points
$35 to $45 Million 26 basis points
$45 to $75 Million 24 basis points
$75 to $125 Million 22 basis points
$125 Million & over 20 basis points
Automated Portfolio Solution (APS)
Total Assets Under Management Asset Management Fee (per annum)
$0 to $15 Million 25 basis points
$15 to $25 Million 23 basis points
$25 to $35 Million 21 basis points
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