Item 5: Fees and Compensation
How we are paid depends on the type of advisory service we are performing. Please review the
fee and compensation information below.
Standard Advisory Fee
Our standard advisory fee is 2% and based on the market value of the assets under management.
The annual fees are negotiable in certain cases and are generally pro-rated and paid in advance
on a monthly basis. 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.
Advisory fees are directly debited from client accounts. Accounts initiated or terminated during
a calendar quarter will be charged a pro-rated fee based on the amount of time remaining in the
billing period. An account may be terminated with written notice at least 15 days in advance.
Upon termination of any account, any unearned fee will be rebated to the client.
Performance-Based Fee
In some instances, clients may pay our standard advisory fee as described above as well as an
annual fee based on a percentage of realized and unrealized profits (“performance fee”). Our
performance-based fees are based on a “High Water Mark”. This type of fee arrangement and
the associated strategy is only available to qualified clients and may be negotiable in certain
cases.
High Water Mark Calculation: Performance fees are based on a new high watermark for any
month that is charged. For example, a client may deposit $1,000,000 and the profit commission
is 20%. At the end of the first month the account balance is $1,020,000. First months profit for
the Adviser is $4,000.00 (20% of $20,000=$$4,000.00). $1,000,000 is the high watermark. $4,000
plus the Standard Advisory Fee is debited from the clients account in favor of the Adviser. The
next month the beginning balance becomes $1,020,000 and this becomes the new high
watermark. At the end of the second month the ending balance on the account is $1,015,000 .No
performance fee is debited from the account as the high watermark remains $1,020,000. This
example is assuming that the client made no new deposits which would increase the high
watermark or any withdrawals which would lower the high watermark.
Other Types of Fees and Expenses
Our fees are exclusive of brokerage commissions, transaction fees, and other related costs and
expenses which shall 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).