Item 5: Fees and Compensation
Please note, unless a client has received the firm’s disclosure brochure at least 48 hours prior to
signing the investment advisory contract, the investment advisory contract may be terminated
by the client within five (5) business days of signing the contract without incurring any advisory
fees. How we are paid depends on the type of advisory service we are performing. Please
review the fee and compensation information below.
Investment Management Services
Our standard advisory fee is based on the market value of the assets under management and is
calculated as follows:
Account Value Annual Advisory Fee
$1 - $500,000 0.75%
Next $1,000,000 0.60%
Next $1,500,000 0.50%
$3,000,000 and Above 0.40%
The annual fees are negotiable and are prorated and paid quarterly, in arrears, based on the
account’s average daily balance for the prior quarter. The advisory fee is a blended fee and is
calculated by assessing the percentage rates using the predefined levels of assets as shown in
the above chart, resulting in a combined weighted fee. For example, an account valued at
$2,000,000 would pay an effective fee of 0.6125%. This is determined by the following
calculation: ($500,000 x 75%) + ($1,000,000 x 0.60%) + ($500,000 x 0.50) = $12,250.00. No
increase in the annual fee shall be effective without agreement from the client by signing a new
agreement or amendment to their current advisory agreement. Our minimum account fee is
$250, and our minimum account size is $10,000. Therefore, a client could pay a rate of as much
as 2.5% on a $10,000 account.
Advisory fees are directly debited from client accounts, or the client may choose to pay by
check. Accounts initiated or terminated during a calendar quarter will be charged a prorated
fee based on the amount of time remaining in the billing period. An account may be terminated
with written notice at least 30 calendar days in advance. Upon termination of the account, any
unearned fee will be refunded to the client and any earned, unpaid fees will be due and
payable up to and including the effective date of termination. Paradigm will not bill an amount
above $500.00 more than 6 months in advance.
Comprehensive Financial Planning
Comprehensive Financial Planning consists of an initial fee ranging from $6,000 to $75,000 for
the first year and an ongoing fee in subsequent years at the rate ranging from $400 to $6,000
per month. Fees are based upon the complexity of the situation and the needs of the client and
are payable monthly or quarterly, in advance. Fees may be negotiable in certain cases. This
service may be terminated with 30 days’ notice. Upon termination of any account, the fee will
be prorated, and any unearned fee will be refunded to the client.
Financial Planning
Financial Planning will generally be offered on a fixed-fee basis. In special circumstances it may
be offered on an hourly basis at a rate of $150 to $400 per hour, depending on the nature of
the specified services. Fixed fees will be determined on a case- by- case basis with the fee
based on the complexity of the situation and the needs of the client. The fixed fee will be
agreed upon before the start of any work. The fixed fee can range between $2,500 and
$90,000. The fee is negotiable. If a fixed-fee program is chosen, half of the fee is due at the
beginning of the process and the remainder is due at completion of work; however, Paradigm
will not bill an amount above $500.00 more than 6 months in advance.
Other Types of Fees and Expenses
Our fees are exclusive of brokerage commissions, transaction fees and other related costs and
expenses which may be incurred by the client. Clients may incur certain charges imposed by
custodians, brokers and other third parties such as custodial fees, deferred sales charges, odd-
lot differentials, transfer taxes, wire transfer and electronic fund fees and other fees and taxes
on brokerage accounts and securities transactions. Mutual fund and exchange traded funds
also charge internal management fees, which are disclosed in a fund’s prospectus. Such
charges, fees and commissions are exclusive of and in addition to our fee, and we shall not
receive any portion of these commissions, fees and costs.
Item 12 further describes the factors that we consider in selecting or recommending broker-
dealers for client’s transactions and determining the reasonableness of their compensation
(e.g., commissions).
We do not accept compensation for the sale of securities or other investment products
including asset-based sales charges or service fees from the sale of mutual funds.