Item 5: Fees & Compensation
The fees and compensation payable to Red Crane are negotiable and vary among the Clients.
However, the range of compensation is generally as follows:
1. Management Fee
Wrap Comprehensive Portfolio Management:
Please see our Wrap Fee Program Brochure for Wrap Account fees.
Private Fund:
With respect to the Fund, Red Crane typically receives a quarterly management fee, calculated at an
annual rate of 2.0%.
2. Performance-based Fee
Wrap Comprehensive Portfolio Management:
With respect to the Wrap Accounts, Red Crane does not charge or receive performance-based fees.
Private Fund:
With respect to the Fund, Red Crane generally receives an incentive allocation equal to a percentage
of the net income allocated to each Investor for the year, but only to the extent net income allocated
to that Investor exceeds any cumulative losses that were allocated to that Investor for earlier periods
and that have not been recovered (a “high water mark”). This incentive allocation is generally 20%
and is typically made at the end of each calendar year.
3. Financial Planning & Consulting:
Our firm charges on an hourly or flat fee basis for financial planning and consulting services. The total
estimated fee, as well as the ultimate fee charged, is based on the scope and complexity of our
engagement with the client. The maximum hourly fee to be charged will not exceed $400. Flat fees
range from $3,000 to $10,000. The fee-paying arrangements will be determined on a case-by-case
basis and will be detailed in the signed consulting agreement. Our firm will not require a retainer
exceeding $1,200 when services cannot be rendered within 6 months.
Other Types of Fees & Expenses
Clients will incur transaction fees for trades executed by their chosen custodian, via individual
transaction charges. These transaction fees are separate from our firm’s advisory fees and will be
disclosed by the chosen custodian. Charles Schwab & Co., Inc. (“Schwab”) does not charge transaction
fees for U.S. listed equities and exchange traded funds.
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Clients may also pay holdings charges imposed by the chosen custodian for certain investments,
charges imposed directly by a mutual fund, index fund, or exchange traded fund, which shall be
disclosed in the fund’s prospectus (e.g., fund management fees, distribution fees, surrender charges,
variable annuity fees, IRA and qualified retirement plan fees, mark-ups and mark-downs, spreads
paid to market makers, fees for trades executed away from custodian, wire transfer fees and other
fees and taxes on brokerage accounts and securities transactions). Our firm does not receive a
portion of these fees.
Wrap Comprehensive Portfolio Management:
Wrap Account clients will not incur transaction costs for trades. More information about this can be
found in our separate Wrap Fee Program Brochure.
Private Fund:
The Fund pays such costs and expenses as Red Crane shall reasonably determine to be necessary,
appropriate, advisable or convenient to carry on its business and realize its objective, including but
not limited to: (i) all general investment expenses (i.e., expenses which Red Crane reasonably
determines to be directly related to the investment of the Fund’s assets); (ii) all administrative, legal,
accounting, auditing, record-keeping, tax form preparation, compliance and consulting costs and
expenses; (iii) fees, costs and expenses of third-party service providers that provide such services;
and, (iv) any extraordinary expenses, among other expenses.
The Fund’s fees are exclusive of brokerage commissions, transaction fees, and other related costs and
expenses which shall be incurred by the Fund. Such charges, fees and commissions are exclusive of
and in addition to the management fee, and Red Crane shall not receive any portion of these
commissions, fees, and costs.
Please see Item 12 of this Brochure regarding brokerage.
Termination & Refunds
Wrap Comprehensive Portfolio Management:
Either party may terminate the Agreement signed with our firm for our Wrap Fee Program in writing
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
due advisory fees to the client.
Private Fund:
Capital Accounts of Limited Partners may be withdrawn as of the end of the calendar quarter that
ends on or after the one-year anniversary of the initial Capital Contribution (the “Lock-Up Period”).
After satisfying the Lock-Up Period, Capital Accounts may be withdrawn by a Limited Partner on the
last day of each calendar quarter. All withdrawals will require 90 days’ prior written notice. Please
refer to Red Crane Capital Fund, LP Private Placement Memorandum (PPM) & Limited Partnership
Agreement (LPA) for details.
Financial Planning & Consulting:
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Financial Planning & Consulting clients may terminate their agreement at any time before the
delivery of a financial plan by providing written notice. For purposes of calculating refunds, all work
performed by us up to the point of termination shall be calculated at the hourly fee currently in effect.
Clients will receive a pro-rata refund of unearned fees based on the time and effort expended by our
firm.
Commissionable Securities Sales
Our firm and representatives do not sell securities for a commission in Client accounts.