Phillips Financial Management LLC

Item 5:      Fees and Compensation
A. Methods of Compensation and Fee Schedule

PFM offers its services on a fee basis, which may include hourly and/or fixed fees, as well as fees
based upon a percentage of assets under management. Additionally, certain of PFM’s Supervised
Persons, in their individual capacities, may offer insurance products under a commission
arrangement.

 A.1. Financial Planning and Consulting Fees

PFM may charge a fixed fee and/or hourly fee for financial planning and consulting services. These
fees are negotiable, but generally range from $1,500 to $30,000 on a fixed fee basis and/or from
$100 to $300 on an hourly rate basis, depending upon the level and scope of these services and
the professional rendering the financial planning and/or the consulting services.

Prior to engaging PFM to provide financial planning and/or consulting services, the client is
required to enter into a written agreement with PFM setting forth the terms and conditions of the
engagement. Generally, PFM requires one-half of the financial planning and/or consulting fee
(estimated hourly or fixed) payable upon entering into the written agreement. Clients are never
required to pay $1,200 or more, six months or more in advance. The balance is generally due upon
delivery of the financial plan or completion of the agreed upon services. For certain clients, PFM
will make inflationary adjustments on January 1 of each even numbered year.

Clients seeking to terminate this service must do so in writing.

 A.2. Investment Management Fees

PFM's annual fees for Investment Management services are calculated quarterly, in advance, as a
percentage (%) of the market value of the assets under management on the last business day of
the previous quarter-end. Those percentages are tiered based on assets under management and
generally range from .40% – 1.25% as set forth in the fee schedule in the client’s advisory

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agreement. PFM generally charges a minimum fee of $500 per quarter.

Certain legacy clients may be subject to a different fee schedule than those set forth above. In
addition, PFM may negotiate to charge a lesser management fee based upon certain criteria (i.e.,
anticipated future additional assets, dollar amount of assets to be managed, related accounts,
account composition, pre-existing client, account retention, pro bono activities, etc.).

Asset-based fees are always subject to the investment advisory agreement between the client and
PFM. Such fees are payable quarterly in advance. The fees will be prorated if the investment advisory
relationship commences otherwise than at the beginning of a calendar quarter. The fee is calculated
by multiplying the quotient by the applicable number of basis points (one basis point equals 1/100
of one percent). The result is then multiplied by the number of days in the quarter and divided by
365 (or 366 in the case of a Leap Year) to determine the quarterly fee.

Clients may make additions to, and withdrawals from, their account at any time, subject to PFM’s
right to terminate an account that falls below a minimum portfolio size of $100,000. However, we
may waive the minimum account size at our discretion. Additions may be in cash or securities
provided that PFM reserves the right to liquidate any transferred securities or decline to accept
particular securities into a client’s account. Clients may withdraw account assets on notice to PFM,
subject to the usual and customary securities settlement procedures. However, PFM designs its
portfolios as long-term investments and the withdrawal of assets may impair the achievement of a
client’s investment objectives. PFM may consult with its clients about the options and ramifications
of transferring securities. However, clients are advised that when transferred securities are
liquidated, they are subject to transaction fees, fees assessed at the mutual fund level (i.e.,
contingent deferred sales charge) and/or tax ramifications.

For deposits made into the account, on any single day in a given quarter, that is greater than or
equal to $50,000, an additional management fee will be charged with respect to such assets and
prorated based on the number of days remaining in the quarter. For partial withdrawals made from
the account, on any single day in a given quarter, that is greater than or equal to $50,000, an
additional credit shall be issued equal to the management fee that would have been charged with
respect to such withdrawn assets on each of the days remaining in the quarter, towards the next
quarter’s management fee. Each management fee or credit will be reflected on the account
statement for the next quarter’s management fee. For example, if a client withdraws $50,000 and
a few days later withdraws an additional $60,000 from the same account, the client will be issued
two credits, which may be combined on the billing statement, for the $50,000 and $60,000
withdrawals toward the next quarter’s management fee. This credit (or debit) is per account, per
day. However, if a client withdraws $20,000 and a few days later withdraws an additional $30,000
from the same account, the client will not be issued any credits for the withdrawals.

The client authorizes the qualified custodian to automatically deduct the fee and all other charges
payable hereunder from the assets in the account when due. Such payments will be reflected on
the next account statement sent to the client. If insufficient cash is available to pay such fees,

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securities in an amount equal to the balance of unpaid fees will be liquidated to pay for the unpaid
balance. PFM may modify the fee at any time upon written notice to the client. In the event the
client has an ERISA-governed plan, fee modifications must be approved in writing by the client.
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Item 7:       Types of Clients
PFM provides its services to individuals and high-net-worth individuals, pension and profit sharing
plans, trusts, estates, charitable organizations and endowment funds, corporations and business
entities, and other investment advisors.