Retirement Management Systems Inc

Fees and Compensation – Item 5
Savings Plan Management Fees                                 renewal of the Agreement, at which time client will
To introduce the Savings Plan Management                     have the opportunity to renew at the new fee or
program, Investment Adviser Representatives may              terminate the Agreement.
be required to pay an Enrollment Fee of $1,000 to
RMS. RMS is currently waiving the Investment                 Program Fees are negotiable and will differ from
Adviser Representative Enrollment Fee but may                client to client based upon a number of factors,
reinstitute it at any time at its discretion.                including, but not limited to, the application of prior
                                                             fee schedules, participation in other programs of
Each client will pay an annual Program Fee, the exact        Investment Adviser Representative or RMS, or
terms of which are negotiated with the Investment            participation of family members in such programs.
Adviser Representative. RMS retains a portion of the
client Program Fee for its services. The Investment          Certain states require that all investment advisers
Adviser Representative receives the remaining                disclose to their advisory clients that (1) lower fees
portion as a Solicitors fee.                                 for comparable services may be available from other
                                                             sources and (2) that all material conflicts of interest
RMS’s portion of the annual Program Fee will be a            have been disclosed to the client in writing (via the
flat fee ranging from $100 to $2,500 or an asset-            disclosure provided in this Brochure), which relate to
based fee ranging from 0.10% to 0.85% per year.              the Registered Investment Adviser or any of its
RMS will calculate the asset-based fee at the time of        employees which could cause the Registered
enrollment in the Program (the Anniversary Date).            Investment Adviser to not render unbiased and
                                                             objective advice.
The annual Program Fee may be paid annually in
advance or in monthly or quarterly installments. In          Fee terms are identical whether client chooses
the event client terminates the Program prior to the         discretionary asset management or non-
final installment payment, client remains obligated to       discretionary advice.
pay the remaining portion of the annual Program Fee.
                                                             Investment Company Fees and Disclosures
RMS will notify the client each year on the                  Client understands that each investment company in
anniversary of the Agreement and begin the process           which the client assets may be invested, including,
for charging the Program Fee for the subsequent              but not limited to, funds and certain other securities
year. Investment Adviser Representative and RMS              (such as ADRs and REITs), will bear its own
reserve the right to adjust the Program Fee upon             investment advisory fees and other expenses, which

are described in the applicable prospectus and will            in the account. The maximum annual fee is 2.50%.
be borne proportionately by shareholders, including            The account management fee will be payable
client. Such fees and expenses are in addition to              quarterly in advance, will be calculated as a
Program Fees paid and will not be reflected on RMS’            percentage of the market value of all assets in the
documents.                                                     account on the last trading day of each calendar
                                                               quarter, and will be deducted from the client’s
                                                               account. Initially, when the portfolio is first
                                                               established, the fee will be based upon the
Other Savings Plan Management Fees                             proportion of the number of days remaining in the
Program Fees cover the services described in the               quarter. After this, the fee will be assessed quarterly
Agreement provided by RMS and Investment Adviser               based on the value of the account on the last trading
Representative, but do not cover execution and                 day of each calendar quarter. RMS, its IARs, or the
custodial services provided by Plan Administrator or           client may terminate this fee-based relationship at
any other Plan expenses or fees. The Program Fee is            any time by providing written notification to the
in addition to any fees the Plan charges its                   other. In such a circumstance, the quarterly fee will
participants, including any fees for similar                   be pro-rated based on the number of days the
investment advisory services that may be available             account was open during the current quarter and
to plan participants.                                          the client will be refunded any pre-paid, unearned
                                                               fees. Schwab, the selected custodian for this service,
While RMS endeavors to avoid any fees associated               charges commission rates, if applicable, that are
with transactions within the account, it cannot                generally considered discounted from customary
guarantee those fees will not be assessed. RMS is              retail commission rates. In addition, the client shall
not responsible for any transaction fees.                      also incur charges imposed at the mutual fund level
                                                               (e.g. management fees and other fund expenses).
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Types of Clients – Item 7
RMS provides investment advisory services to                      option for the client. For example, a defined
individuals, high net worth individuals, corporations,            contribution plan may contain proprietary
and pension/profit sharing plans.                                 investment options for which we cannot complete
                                                                  the appropriate due diligence process. Furthermore,
Generally speaking, there are no conditions a client              certain defined contribution plans, being regulated
must meet in order for RMS to accept them as a                    by the Employee Retirement Income Security Act of
client. However, certain defined contribution plans               1974 (ERISA), may expressly prohibit services such as
contain provisions and/or investment options that                 Savings Plan Management for its participants.
make Savings Plan Management an unrealistic

Methods of Analysis, Investment Strategies and Risk of Loss – Item 8
Investing in securities involves risk of loss that clients        evaluating the volatility of various investment
should be prepared to bear.                                       options and how they behave when combined.
                                                                  While there are usually some risk-reducing
In addition to annual reports, prospectuses, filings              advantages to combining different asset types, the
with the SEC, financial newspapers, magazines, and                real goal of diversification is to combine assets in
websites, RMS also receives a variety of information              such a way as to achieve the least amount of risk for
and research from mutual fund companies. Some of                  a given level of expected return. Therefore, we
these companies may have a mutual fund included                   construct portfolios that have efficient risk and
as an investment option within clients’ defined                   reward characteristics.
contribution plans. The information and research we
receive from those companies is commingled with                   Researchers have shown how an investor can reduce
our other sources of information so that we strive to             the standard deviation (risk as measured by
devise the most prudent solution for the clients’                 volatility) of portfolio returns by choosing assets that
investment strategies.                                            do not move exactly together. When graphing
                                                                  standard deviation against expected return, we can
RMS is an independent adviser with no affiliations to             view the efficiency of a portfolio.
mutual funds, banks, or insurance companies.
                                                                  Risk of Loss
General Investment Allocation Process                             All investment programs have certain risks that are
RMS uses the generally accepted principles of asset               borne by the investor. Our investment approach keeps
allocation to construct diversified portfolios that have          the risk of loss in mind. Investors face the following
efficient characteristics of risk and return.                     investment risks:

Although performance is the first thing on most                   •   Interest-rate Risk: Fluctuations in interest rates
investors' minds, we spend significant time                           may cause investment prices to fluctuate. For

    example, when interest rates rise, yields on existing         Specifically for our Savings Plan Management clients,
    bonds become less attractive, causing their market            RMS endeavors to work with any investment option
    values to decline.                                            available to clients within their defined contribution
•   Market Risk: The price of a security, bond, or                plan. Normally, these options include equity and fixed
    mutual fund may drop in reaction to tangible and              income mutual funds. However, an occasional defined
    intangible events and conditions. This type of risk is        contribution plan may include a trust that invests
    caused by external factors independent of a                   solely in the sponsoring company’s individual stock.
    security’s particular underlying circumstances. For           As a policy, RMS does not recommend investing in
    example, political, economic and social conditions            company stock through a defined contribution plan.
    may trigger market events.                                    However, if a client chooses to invest a portion of
•   Inflation Risk: When any type of inflation is                 their account assets in company stock, RMS will
    present, a dollar today will not buy as much as a             facilitate that request, but will not be responsible for
    dollar next year, because purchasing power is                 monitoring the company stock allocation or providing
    eroding at the rate of inflation.                             advice on the stock.
•   Currency Risk: Overseas investments are subject
    to fluctuations in the value of the dollar against the        RMS consults with the Investment Portfolio
    currency of the investment’s originating country.             Committee at LSA Portfolio Analytics, Inc. These
    This is also referred to as exchange rate risk.               consultations help to generate our seven model
•   Reinvestment Risk: This is the risk that future               portfolio allocations ranging from Conservative to
    proceeds from investments may have to be                      Aggressive. We refer to these as our Profiles Strategy
    reinvested at a potentially lower rate of return (i.e.        Models. RMS and LSA Portfolio Analytics are
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