Item 5 Fees and Compensation
INDIVIDUAL PORTFOLIO MANAGEMENT FEES
The annualized fee for Investment Advisory Services will typically range from 0.50% and
1.5% of the value of the client's assets under management. Fees may vary among
Penbrook's portfolio managers. The two primary fee schedules used by Penbrook's
managers are:
Assets Under Management Annual Fee (%)
Up to $1,000,000 1.50%
$1,000,000 to $20,000,000 1.00%
Assets Under Management Annual Fee (%)
Up to $10,000,000 1.00%
$10,000,000 to $20,000,000 0.50%
FINANCIAL PLANNING FEES
You may engage us to create a Financial Plan exclusive of Portfolio Management or request
we perform financial planning services outside the scope of services in our original Client
Agreement. In these situations, we charge hourly, or a flat fee based on estimating the
complexity and the total time to complete the plan.
Fees for ongoing financial planning renewal services, after the initial financial plan completion,
are based upon the projected hours necessary to maintain an effective planning process for
Client, the number of expected meetings during the year, the professionals used, and the
complexity of Client’s situation.
Consultation either in person, by e-mail or telephone is at no additional charge. An additional
fee will be charged for “special projects” not related to the Comprehensive Financial Plans.
ERISA PLAN SERVICES
The annual fees are based on the market value of the Included Assets and shall not exceed
1%. Fees may be charged quarterly or monthly in arrears or in advance based on the assets
as calculated by the custodian or record keeper of the Included Assets (without adjustments for
anticipated withdrawals by Plan participants or other anticipated or scheduled transfers or
distribution of assets) on the last business day of the previous quarter.
The fee schedule, which includes compensation to Penbrook for the services, is described in
detail in the ERISA Plan Agreement. The Plan is obligated to pay the fees; however, the Plan
Sponsor may elect to pay the fees. Clients may elect to be billed directly or have fees deducted
from Plan Assets. Penbrook does not reasonably expect to receive any additional
compensation, directly or indirectly, for its services. If additional compensation is received,
Penbrook will disclose this compensation, the services rendered, and the payer of
compensation.
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A minimum of $100,000 of assets under management is required for Investment Supervisory
Services. This account size is negotiable under certain circumstances. Penbrook has existing
relationships with clients who are billed quarterly in arrears. However, all new Penbrook clients
will be billed quarterly in advance in an amount equal to 1/4 of the annual fee and shall be
based upon the net asset value (market value or fair market value in the absence of market
value, plus any credit balance or minus any debit balance) on the last business day of the
preceding calendar quarter as indicated in our portfolio management system for that account.
Due to differences in how our portfolio management system and the custodian report trades
that are placed at month-end, there may be minor differences between our statement values
and those as reported by the custodian. Statements are "snapshots" of values at a given time;
minor differences in statement values generally reflect only the variance in the timing of the
"snapshots." We encourage you to compare the reports we send with those you receive from
your custodian. We will provide you with a reconciliation between the two at your request.
With the exception of the initial fee, which will be payable at or about the time the account is
opened and will be pro-rated to cover the period from the account opening date through the
end of the next full calendar quarter, the fees are due on the first business day of each calendar
quarter. Additional assets received into the account after it is opened may be charged a
prorated fee based upon the number of days remaining in the fee period. No fee adjustments
will be made for partial withdrawals or for account appreciation or depreciation within the billing
period. The investment advisory fee for any billing period, which is less than a full quarter, will
be prorated for that portion of the calendar quarter during which the assets are under the
management of Penbrook. Accordingly, Penbrook will promptly reimburse the client for
prorated prepaid unearned fees upon termination of a client’s advisory agreement. Penbrook
will fully refund all prepaid fees to any client who terminates an investment management
agreement within five business days after signing the agreement. See also Termination of the
Advisory Relationship under General Information below in this item.
Management personnel and other related persons of our firm are licensed as registered
representatives of Beech Hill Securities, Inc. As such, these individuals are able to effect
securities transactions for advisory clients for separate and typical brokerage commissions.
This practice presents a conflict of interest with you because it provides an incentive for our
advisors to recommend investment products based on the compensation received. Please refer
to Item 10 - Other Financial Activities and Affiliations for more information.
As noted above, Penbrook's fees are due quarterly. Penbrook advises the client's custodian of
the fee due. Penbrook’s clients instruct custodians of the client’s accounts to pay Penbrook its
fees from the funds held in such account or a designated account by the custodian. These
clients will receive a billing statement from Penbrook that details the period end account
balance and fees charged for the period. See also Item 15 of this Firm Brochure regarding
Custody. Clients can also elect to receive an invoice and pay their fee by check.
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