Item 5 – Fees and Compensation
Our Investment Management Services Agreement establishes the specific manner in
which we charge fees. Fees are calculated as a percentage of the assets under
management.
Separately Managed Accounts Invested Primarily in Individual Securities
Our annual fees for Separately Managed Accounts are based upon a percentage of
assets under management and generally range from 0.50% to 1.25%. Portfolio
management clients are charged an annual fee and billed quarterly in advance based on
total assets under management for each calendar quarter, prorated for any cash inflows
or outflows that occurred during the quarter, unless specified otherwise.
A minimum of $2,000,000 of assets under management is required for this service. This
account size and the fees may be negotiable under certain circumstances. Progressive
may group certain related client accounts for the purposes of achieving the minimum
account size and determining the annualized fee.
Fees for Portfolio Management Services
Fees may be negotiated in certain circumstances, including larger accounts. Fees are
specified in our Investment Management Services Agreement. We reserve the right to
waive fees for family members or decline services to any person or firm and for any
reason. We offer a 10% discount for charitable 501(c) (3) accounts.
Fees are billed quarterly in advance. In most cases, fees are deducted directly from a
client’s account at the beginning of each quarter, unless we both agree otherwise. The
fee will be equal to one-fourth of the applicable annual rate percentage specified in a
client’s Investment Management Services Agreement and multiplied by the value of the
account on the last trading day of the calendar quarter, as determined by the custodian
of the account. This value includes the market value of investments and accrued income.
If a client secures a margin loan through the account, this loan’s negative value will be
excluded from the value of the account; therefore, it will not lower the account’s value
when determining the management fee. If a client engages our services during a quarter,
we will prorate the fee paid for the initial partial quarter, based on the number of days
from the beginning of a client’s agreement until the end of the initial quarter. If a client
does not have enough cash in their account to pay our fee, we may sell some of the
account assets to pay the fee. A quarterly fee adjustment may be applied to assets
added to or withdrawn from an account during a quarter using a similar pro rata
calculation.
Consulting Services Fees
Consulting services may be offered in certain circumstances. The hourly rate is $250 per
hour based on the nature and complexity of the service provided. The applicable hourly
rate will be specified in our agreement that is presented prior to engaging our services.
Other Fees and Expenses
Our advisory fees are exclusive of custody charges, brokerage commissions, transaction
fees, wire transfer fees, and other costs and expenses that may be charged by service
providers unrelated to Progressive. Please see Item 12 of this disclosure document for
more information on Progressive’s brokerage practices. Clients are billed for services
from other service providers separately from Progressive and these amounts are
reported separately from Progressive’s fees.
Fees for Advisory Clients related to investments in Mutual Funds and ETFs
All fees paid to Progressive for investment advisory services are separate and distinct
from the fees and expenses charged by mutual funds and/or ETFs to their shareholders.
These fees and expenses are described in each fund's prospectus. These fees will
generally include a management fee, other fund expenses, and a possible distribution
fee. If the fund also imposes sales charges, a client may pay an initial or deferred sales
charge. A client could invest in a mutual fund directly, without our services. In that case,
the client would not receive the services provided by our firm which are designed, among
other things, to assist the client in determining which mutual fund or funds are most
appropriate to each client's financial condition and objectives. Accordingly, the client
should review both the fees charged by the funds and our fees to fully understand the
total amount of fees to be paid by the client and to thereby evaluate the advisory services
being provided.
ERISA Accounts
Progressive is deemed to be a fiduciary to advisory clients that are employee benefit
plans or individual retirement accounts (IRAs) pursuant to the Employee Retirement
Income and Securities Act ("ERISA"), and regulations under the Internal Revenue Code
of 1986 (the "Code"), respectively. As such, our firm is subject to specific duties and
obligations under ERISA and the Internal Revenue Code that include, among other
things, restrictions concerning certain forms of compensation. To avoid engaging in
prohibited transactions, Progressive may only charge fees for investment advice about
products for which our firm and/or our related persons do not receive any commissions
or 12b-1 fees.
Termination of Services
Our client agreement may be terminated on 30 days' written notice by the client or us.
If the agreement terminates during a quarter, we will refund a pro rata portion of the fee
paid for that quarter, based on the number of days between the end of the 30-day notice
period and the end of the quarter. The client is responsible for any transaction in the
account that was initiated but not settled prior to our receipt of a client initiated
termination notice.
No Compensation for sale of Securities
Neither Progressive nor its supervised persons accept compensation for the sale of
securities or other investment products.