Item 5. Fees and Compensation
Financial Planning
SAM generally charges a fixed fee for its financial planning services (“FP Fee”). SAM’s fees vary and are
dependent upon the scope and complexity of the requested services and are specified as part of the client’s
agreement. These rates can be negotiated based on the sole discretion of SAM.
Clients receiving “one-time” services are generally assessed a fixed fee. Generally, rates range from
$1,000 to $10,000 on a fixed fee basis. Fifty percent (50%) of such fee shall be paid in advance; and the
remaining 50% shall be paid at the time of delivery of the plan. Client understands that the “one-time”
Planning relationship will terminate upon delivery of a written financial plan to Client.
Payment methods for FP Fees may include direct debiting of the client’s custodial accounts or automated
clearing house (“ACH”), or credit card payments. SAM will recommend which payment method is most
advisable for the client based upon the client’s circumstances. For ACH and credit card payment, SAM
utilizes the services of an unaffiliated third-party vendor for the collection of financial planning fees. At
SAM’s sole discretion, a client’s financial planning agreement may be amended to increase or lower
SAM’s FP fees.
Asset Management Services
For the performance of its Asset Management Services, SAM shall receive an annualized percentage of
assets under management (“AUM Fee”). The AUM Fee is assessed at a flat rate of seventy-five basis
points (0.75%) of the Client’s assets under management (“AUM”) held in the Client’s Account(s),
including cash and cash equivalents. Such AUM Fee assessed will be subject to a three-thousand-dollar
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($3,000) annual minimum.
For clients who have elected to engage SAM for both Financial Planning Services and Asset
Management Services, SAM shall receive an AUM Fee of 0.75% of the Client’s AUM held in the
Client’s Account(s), including cash and cash equivalents. The client is still charged a one-time financial
planning fee at the beginning of the relationship, whether or not they choose to engage SAM for Asset
Management Services. At SAM’s sole discretion, a client’s agreement may be amended to increase or
lower the AUM Fee.
Certain “legacy clients” will have a fee schedule and/or billing practices that differ from those disclosed
herein. Legacy clients are those clients that had a pre-existing arrangement with an investment adviser
representative before the investment adviser representative became registered with SAM.
AUM Fee is payable quarterly, in arrears. The first AUM Fee payment is assessed and due at the end of
the first calendar quarter following the Effective Date and will be assessed pro rata in the event the
Agreement is executed at any time other than the first day of the current calendar quarter. If the
minimum fee applies during the first quarter then the minimum fee will also be calculated on a pro rata
basis. For example (if there are 62 business days in a calendar quarter and the account was managed for
31 business days then the minimum fee would be $375 (One-quarter of the minimum annual fee of
($750) multiplied by 31 divided by 62). Subsequent AUM Fee payments are due and will be assessed on
the first day after the end of each calendar quarter based on the average daily value of the Account(s)’
AUM during that quarter.
The average daily balance for each account is determined by calculating the total dollar value for every
business day during the previous quarter. All account balances for the previous quarter are then added
together and divided by the number of business days in the quarter. The fee is then calculated by
multiplying the average daily balance of the account by 18.75 basis points (e.g., one-fourth of the annual
rate of 0.75%). Market value is determined by looking at the quarter-end Net Asset Value (“NAV”) of the
Client’s accounts. In determining the NAV, SAM typically utilizes the “trade date” (i.e., the day securities
are bought) as opposed to the settlement date (i.e., the date securities settle within the Client’s Account)
for valuation purposes. The NAV is provided to the Company by “Black Diamond” a management
software program which pulls its data from the Client’s custodian. Should the NAV provided by Black
Diamond differ from the NAV specified by the Client’s custodian, the Company will utilize the NAV
provided by Black Diamond for billing purposes. In limited circumstances, when required by the record
keeper or custodian, the market value of the Client’s account on the last day of the billing period shall be
used to calculate the AUM Fee.
In the event SAM’s services are terminated mid-quarter, any owed fees are immediately due, and any
paid, unearned fees will be promptly refunded to the Client. The number of days the Account was
managed during the quarter until termination is used to determine the percentage of the management fee
earned (based on the total number of business days in the quarter). These fees are still subject to the
account minimum multiplied by the number of days in the quarter prior to termination.
The AUM Fee will be deducted from the client’s account by the custodian as soon as practicable
following the end of each applicable period. At times, if requested by the client and in SAM’s sole
discretion, SAM will invoice the client directly for fees as opposed to debiting the client’s account. The
custodian will provide quarterly account statements to the client that will show all disbursements for the
custodian account, including the amount of the advisory fees. If advisory fees are deducted from client
accounts SAM will deliver a separate statement to the client and custodian indicating the amount of the
deduction attributable to advisory fees. It is the client’s responsibility to verify the accuracy of the fee
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