Item 5 Fees and Compensation
INVESTMENT SUPERVISORY SERVICES ("ISS")
Our annual fees for Investment Supervisory Services for Model and Individual Portfolios, Advisors Choice,
LMK Advisors, Mid Atlantic Financial Product Management Strategy, Institutional Investment Consulting,
Manager of Managers services (Mid Atlantic Portfolio Solutions and Separate Account Solutions), are
generally based upon a percentage of assets under management. The fee is payable quarterly or monthly in
advance and may be adjusted during the billing period for additional contributions, but not for withdrawals.
When additional assets are deposited into the client's account after inception of the applicable billing
period, the fee payable to Mid Atlantic Financial Management, Inc. with respect to additional contributions
is prorated based on the number of days remaining in the billing period. The asset value of client's account
for purposes of determining the fee payable to Mid Atlantic Financial Management, Inc. is based on the
market value of the client's account as of the last trading day prior to the billing date.
We have changed our practices regarding 12b-1 fees. Certain MAFM advisory Programs have higher
total fees than other advisory Programs based on a number of factors including, but not limited to
management fees and administrative fees. A conflict of interest exists to the extent that we have a
financial incentive to recommend a particular advisory Program that results in additional or greater
compensation to MAFM.
MAFM does not seek to offer mutual funds or share classes that are necessarily the least expensive.
Investing in mutual funds will generally be more expensive than other investment options available in
your advisory Account, such as ETFs. In addition to the Management Fee paid to MAFM, you will also
bear a proportionate share of each fund's expenses, including investment management fees that are
paid to the fund's investment adviser, distribution, shareholders services or other fees. These expenses
are an additional expense to you and not covered by the fees for Program services; rather, they are
embedded in the price of the fund. You should carefully consider these underlying expenses, in addition
to the Management Fee, when considering any advisory Program and the total compensation MAFM
receives.
Most of the mutual funds included on the MAFM platform do not pay MAFM or our affiliates 12b-1 fees.
Any 12b-1 fee payments we do receive for eligible mutual funds held in advisory accounts are credited
back to the Client.
Although Mid Atlantic Financial Management, Inc. has established the aforementioned fee schedule(s),
we retain the discretion to negotiate alternative fees on a client by client basis. Client facts,
circumstances and needs are considered in determining the fee schedule. These include the complexity
of the client, assets to be placed under management, anticipated future additional assets, related
accounts, portfolio style, account composition and reports, among other factors. The specific annual fee
schedule is identified in the contract between the adviser and each client.
Depending on the advisory Program selected, clients will have two fee options under the
aforementioned fee schedule(s). Clients can select a Wrap based “Inclusive Management Fee”
arrangement which includes the investment management fee and execution expenses. Alternatively,
clients may select a “Management Fee + Per-Trade Charge” arrangement in which the client pays the
investment management fee plus an additional charge for securities transactions on a per transaction
basis. Details related to the per-trade costs will be noted in the specific advisory contract between the
advisor and the client. In the event that a client selects the “Management Fee + Ticket Charge” option,
the management fee portion would be lower than the management fee paid by the client if the client
had selected the “Inclusive Management Fee” option.
In addition, Mid Atlantic Financial Management, Inc. may provide investment management or advice for
its employees and their family members at a reduced charge. As a result, clients of Mid Atlantic
Financial Management, Inc. may have differing fee schedules. The fees payable to Mid Atlantic Financial
Management, Inc. are generally debited from the client's account and noted on the statement received
from the broker/dealer or custodian.
Mid Atlantic Financial Management, Inc. is not compensated on the basis of the share of capital gains
upon, or capital appreciation of, the funds or any portion of the funds of the client.
The annualized fee for Investment Supervisory Services for Individual Portfolios is charged as a
percentage of assets under management, according to the following schedules:
Advisors Choice
Equity and Balanced Accounts Inclusive Mgmt Fee Mgmt Fee (Per Trade option)
$25,000 - $1,000,000 2.25% of assets 2.05% of assets
$1,000,000 - $2,000,000 2.00% of assets 1.80% of assets
Over $2,000,000 1.75% of assets 1.55% of assets
Fixed Accounts
$25,000 - $500,000 2.25% of assets 2.05% of assets
$500,000 - $1,000,000 2.00% of assets 1.80% of assets
$1,000,000 - $2,000,000 1.75% of assets 1.55% of assets
Over $2,000,000 1.50% of assets 1.30% of assets
A minimum of $25,000 of assets under management is generally required for the Advisors Choice
service. This account size may be negotiable under certain circumstances. Mid Atlantic Financial
Management, Inc. may group certain related client accounts for the purposes of achieving the minimum
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