Item 5 - Fees and Compensation
Compensation to Registrant for its financial management and investment advisory services are
commensurate with work performed and level of responsibility assumed. For new clients
engaging Registrant, fees generally consist of: (i) an annual financial management retainer
ranging from $1,000 to $50,000, payable in quarterly installments, in advance, (i.e., on the 15th
day of each quarterly cycle for upcoming quarterly period); (ii) out of pocket expenses incurred
by Registrant; and (iii) an asset management fee based upon the total dollar value of assets
(including cash and money market funds held in accounts as managed by Registrant). This asset
management fee is billed quarterly, in advance, and calculated based on the prior calendar
quarter’s ending market value of client’s total assets under management with Registrant. For
example, clients are billed for 1st Quarter’s fees based on 12/31/xx (i.e., prior calendar quarter)
ending balance x annual fee x ¼. Such asset management fee generally ranges from .25% (25
bps) to 1% (100 bps) per year based upon client’s total assets under management with Registrant
and are negotiable. A client’s asset management fee is directly debited from the client’s custodial
account or accounts and billed in quarterly increments, such that ¼ of annual fee will be due each
quarter. Clients can arrange to pay outstanding fees directly to the Registrant or the Registrant
may also use its signature authority over a client’s account to withdraw fees directly from bill
payment accounts.
Related client accounts may be aggregated for purposes of calculating fees.
In certain cases, at the discretion of the Registrant, clients may make arrangements to pay fees in
arrears or on a monthly basis in arrears based on negotiated fixed rates. Applicable advisory fees
on cash balances are also negotiable at the discretion of the Registrant.
Registrant makes every attempt to negotiate preferred fees for Separate Account Managers on its
clients’ behalf. Neither Registrant nor any of its related persons receive any form of
compensation from any recommended Separate Account Manager; however, recommended
Separate Account Managers have their own fee structures to which clients are subject.
Fees may be assessed at the time Registrant begins to provide advisory services, as described
above, even though Registrant may not have direct access to the client’s assets at that time. Each
client initially engaging Registrant for advisory services during an ongoing quarter may be billed
a prorated quarterly fee in arrears based on the ending balance of their custodial accounts for the
initial quarter in which services are provided.
If clients make contributions greater than or equal to $5,000,000 during the quarter, Registrant
reserves the right to bill the client for a pro-rated portion of the contributed assets to the
investment account. Clients will be provided with a pro-rated refund when clients withdraw funds
greater than or equal to $5,000,000 from the investment account during a calendar quarter.
When deemed appropriate, based on the specific financial situation and risk tolerances for each
client, Registrant may recommend investing in certain private investment funds or real estate
partnerships. Registrant does not independently value any private securities held in client
accounts, including private investment funds. The quarterly financial information provided by the
private fund sponsors are used as the basis for client reporting and fee billing. This valuation is
determined independently of Registrant. In some instances, precise account balances are
unavailable to Registrant on a timely basis. Registrant’s billing in those situations is therefore
based on the most current information available to Registrant when fees are calculated. In all
instances, Registrant will bill asset management fees based on the most recent value provided to
Registrant by the private fund’s sponsor.
For clients participating in private partnerships investing in real estate properties, Registrant will
bill advisory fees based on the most recent third party appraisal information provided by the
partnership. If timely appraisals are not conducted on behalf of the these real estate partnerships,
Registrant will bill on the value of the client’s initial investment in the fund or most recent
appraisal so long as the client remains invested in the partnership.
For marketable securities, the prices provided by custodians are used for client reporting and fee
billing.
While the Registrant does not sponsor or serve as a portfolio manager to any wrap fee program, it
may recommend that clients invest their assets in one or more unaffiliated wrap fee programs.
Under a wrap fee program, the program sponsor arranges for an investor to receive investment
advisory services, the execution of securities brokerage transactions, custody and reporting
services for a single specified fee. Participation in a wrap fee program may cost the participant
more or less than purchasing these services separately. Depending on the program, either the
program sponsor or its portfolio manager will determine the broker-dealer for transaction
execution, and negotiate the amount of transaction fees and commission rates. If a program is
available on a non-wrap fee basis, clients will be responsible for transaction fees and
commissions. In this case, clients may pay higher commissions or other transaction costs or
greater spreads, or receive less favorable net prices on transactions for the account than would
otherwise be the case through alternative clearing arrangements recommended by Registrant.
Higher transaction costs adversely impact account performance.
The fees charged by Registrant are separate and distinct from the fees charged by recommended
custodians, Investment Managers, including Separate Account Managers. A description of these
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