Sigma Planning Corporation

Item 5. Fees and Compensation
Compensation for Advisory Business

Portfolio Management Services

Clients who elect to receive asset management services through our SIGMA Managed Account program will first
enter into a client services agreement with their IAR and SPC. In return for these services, clients agree to pay an
ongoing annual account management fee (the “advisory fee”) that is set forth in the investment management
fee schedule in the client services agreement.

As explained in the client services agreement, a small portion of the advisory fee consists of a program fee, with
the remaining portion of the advisory fee constituting the IAR’s gross compensation (before application of SPC’s
payout grid as described below). The advisory fee (and consequently the program fee) is based on a
percentage of the client’s account assets under management (“account AUM”).

For purposes of this section describing fees for portfolio management services, “account AUM” means the current
value (i.e., account balance) of all assets in the client’s account, including cash. Additionally, for purposes of
calculating the advisory fee for accounts that hold short positions, “account AUM” includes the absolute value
of all positions (i.e., short positions are not excluded from billing).

However, account positions that have been expressly excluded by the client from the IAR’s management
through the submission of a Position Exclusion Form, along with account positions that SPC’s compliance
personnel have deemed to be excluded from account management, will only be assessed the program fee.
Please note that the Position Exclusion Form is primarily intended for limited circumstances and reasonable

                            300 Parkland Plaza | Ann Arbor, Michigan 48103 | (734) 663-1611 | Fax: (877) 655-4772

restrictions. For example, a reasonable restriction may indicate your desire that we do not sell a legacy position
or a highly appreciated position to avoid triggering a substantial taxable gain. Your IAR will also proactively
reaffirm with you any modifications you may have to these restrictions at least on an annual basis during your
client review meeting. However, we and your IAR reserve the right, in our sole discretion, to refuse to accept such
restrictions or manage your account if we determine that such restrictions are unreasonable or impractical. SPC
also reserves the right, in its sole discretion, not to honor a submitted Position Exclusion Form that does not align
with the form’s intended purpose, and in the event that we or your IAR are unable to accept your restrictions,
you will be given the opportunity to modify or withdraw the restrictions. The effect of assessing the program fee
on such excluded account positions will be to reduce your IAR’s overall compensation relative to the account.
Consequently, a conflict of interest arises as a result of your IAR’s incentive not to exclude any of your account
positions from management in order to maximize his or her compensation.

There may be times where the advisory fee cannot be assessed based on account AUM for a particular billing
period, such as when the account contains insufficient cash to cover the advisory fee. If this were to occur, the
program fee will still be calculated as described in this brochure, however SPC will instead pass along the full
amount of the program fee to the IAR.

Please see the “Review of Accounts” section of this brochure for information regarding asset valuation. Also,
please see the “Methods of Analysis, Investment Strategies and Risk of Loss” section of this brochure for more
information about the ways in which the use of margin, including margin debit balances, can impact the
calculation of the advisory fee.

SPC’s current practice is to bill client accounts in advance based upon the prior month-end accrued account
AUM. SPC utilizes a blended advisory fee schedule (explained in further detail below) to calculate the monthly
advisory fee. This blended advisory fee schedule is the investment management fee schedule selected in your
client services agreement which identifies the specific segments of your account AUM to be charged at different
advisory fee rates. Your prior month-end accrued account AUM at the beginning of the billing period is applied
to this fee schedule to determine the advisory fee to be assessed against your account. Unlike the advisory fee,
the program fee is not blended, and the same program fee rate applies to all of your account AUM in this advisory
program.

The program fee is designed to compensate Fidelity and SPC for the administrative services provided in
connection with your account. Under SPC’s pricing arrangement with Fidelity, clients are responsible for certain
transaction charges and other ancillary fees. These charges and fees are summarized in the Fidelity Ticket Charge
Schedule that is available on the SPC website (www.spc4clients.com) or upon request by contacting SPC using
the information provided on the cover page of this brochure. Short-term trading fees are discussed later in this
brochure (under “Brokerage Practices”) and on Fidelity’s website. 3

Under the Fidelity pricing arrangement, the fee schedule is as follows:

           Account AUM                           Program Fee**                                 Annual Account Management Feeǂ
         $500,000 or below                   0.15% (15 basis points)                                   Maximum of 2.5%
         $500,001-$750,000                   0.15% (15 basis points)                                   Maximum of 2.5%
        $750,001-$1,000,000                  0.15% (15 basis points)                                   Maximum of 2.5%
      Greater than $1,000,000                0.15% (15 basis points)                                   Maximum of 2.5%

** The minimum annual program fee is $30. In the event the 0.15% fee is insufficient to generate this $30 minimum, your IAR will be responsible
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Item 7. Types of Clients
We offer investment advisory services to individuals, banks and thrift institutions, retirement plans, pension and
profit-sharing plans, trusts, estates, charitable organizations, corporations, and other business entities.

SPC’s retirement plan services are available to clients who are sponsors or other fiduciaries to retirement plans,
including, but not limited to, 401(k), 457(b), 403(b), and 401(a) plans. “Plans” include participant-directed defined
contribution plans and defined benefit plans. Plans may or may not be subject to ERISA. SPC does not require a
minimum asset amount for retirement plan consulting services.

For individual portfolio management services, we require a minimum account size of $5,500 for SIGMA Managed
Accounts maintained at Fidelity. In our discretion, we may waive this minimum. We may, at our discretion,
combine account values for you and your minor children, joint accounts with your spouse, and other types of
related accounts to meet the stated minimum. In addition, TPIAs may impose their own account minimums.

                             300 Parkland Plaza | Ann Arbor, Michigan 48103 | (734) 663-1611 | Fax: (877) 655-4772