Item 5 – Fees and Compensation
Compensation for Advisory Services:
All fees are subject to negotiation.
The specific manner in which fees are charged by REACT is established in a client’s written
agreement. REACT will generally collect its fees directly from the investor’s account at the
custodian. The investor provides authorization for this at the time the account is established. Fees
are calculated by Orion Advisor Services, calculated based on the average daily value of the account,
and are pulled from the accounts in arrears on a quarterly basis. The standard fee schedule is as
follows:
Assets from $0 - $1,000,000 charged at 2.0%
Assets from $1,000,001 - $4,000,000 charged at 1.5%
Assets $4,000,001 - $7,000,000 charged at 1%
Assets greater than $7,000,000 charged at .9%
Accounts falling under this agreement but not managed via an SMA by a third-party money manager
may have a different fee schedule which will be disclosed at the time the recommendation is made to
the Client. Potential fee schedules are noted here. While this is a comprehensive list of fee schedules
that fall outside the standard, a situation may arise in which a different fee is the best for a one-off
situation. If that is the case, it will be disclosed in writing prior to the time any investments are made.
Please note if an investment falls outside the standard fee schedule, it will not be included as part of the
household totals for purposes of calculating the standard tiered fee schedule.
• Active Income Strategies: .75%
• Axcelus Private Placement Annuity accounts: flat 1.25% except active income, which is .75%
• Axcelus Private Placement Life accounts: flat 1.45% except active income, which is .75%
• Recommended Mutual Fund flat .25%
• Buffered Funds: .5%
• Custom passive allocation: 1%
• Treasuries: no fees collected
The fee collection frequency and manner will be detailed in each investment agreement and can be
different between investments/third party advisors. Typically, however, the fees are, as stated above,
calculated in arrears and deducted on a quarterly basis directly from the investor’s brokerage
account. As part of this process, Clients understand the following:
a) The client’s independent custodian sends statements at least quarterly showing the market
values for each security included in the Assets and all account disbursements, including the
amount of the advisory fees paid to our firm;
b) Clients will provide authorization permitting our firm to be directly paid by these terms. Our
firm will send an invoice directly to the custodian; and
c) If our firm sends a copy of our invoice to the client, a legend urging the comparison of
information provided in our statement with those from the qualified custodian will be
included.
REACT bills on cash and cash equivalents unless indicated otherwise in writing.
The fees charged by the money manager/investment could include performance fees. Performance
fees will only be collected by the fund manager in the case of an alternative investment such as a
hedge fund. The alternative investment fund manager may share a portion of the performance fee
with REACT if performance fees are utilized by the Advisor and all performance stipulations are
met.
REACT may also receive a portion of the fees the money manager or investment collects from the
investor or investor’s account. REACT’s primary compensation comes from fees it retains after
paying all third party money manager fees and RIA fees from the fees it collects. Fees are collected
from accounts; from the amount collected, the third-party money managers or investments are paid.
Sixty-five percent of the collected fees that remain are paid to the Advisor/solicitor and REACT
retains the remaining amount. No additional fees are collected by REACT for unmanaged accounts.
Other Types of Fees & Expenses:
REACT fees are exclusive of brokerage commissions, transaction fees, asset-based pricing fees, and
other related costs and expenses which shall be incurred by the client. Clients will incur certain
charges imposed by custodians, brokers, third party investment and other third parties such as fees
charged by managers, 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 funds 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 REACT’s fees. In some
circumstances, in place of the fee schedule noted above, REACT receives a portion of the fees that
a third-party money manager and/or Investment vehicle directly collects from the investor or
investor’s account.
Terminations & Refunds:
Either party can terminate the advisory agreement signed with our firm at any time. Upon notice of
termination, pro-rata advisory fees for services rendered to the point of termination will be charged.
If advisory fees cannot be deducted, our firm will send an invoice for advisory fees still outstanding
to the client.
Commissionable Securities Sales:
REACT’s representatives receive commissions from any insurance product for which they act as
agent. The commissions that they receive do not have any impact on the price you pay for
insurance premiums. The commissions are paid to them directly by the insurance company and do
not increase your fees or premiums. Nonetheless, these commissions create an incentive for them
to recommend these products over other products, which could be cheaper. The commission
received are typically between .5% and 10% of the face value of the insurance coverage. Depending
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