Signature Financial Management Inc

ITEM 5 FEES AND COMPENSATION

A.      Advisory Fees. Brown Advisory enters into a written investment advisory agreement
with its clients, the terms of which are negotiable. The advisory agreement contains the fee
arrangement. Brown Advisory charges investment advisory fees as a percentage of assets under
management or as a flat fee. Fees are generally billed quarterly in arrears. If the fee is asset
based, the fee generally is calculated on the value of the portfolio as of the last day of the
quarter. Brown Advisory’s standard fee is 1.00% per year on the first $1,000,000; 0.75% on the
next $2,000,000; 0.65% on the next $2,000,000; and 0.50% on assets greater than $5,000,000.
Brown Advisory negotiates fees for accounts depending on the size and type of account, the
investments in the account, and the services required.

B.      Payment of Fees.       Clients generally authorize Brown Advisory to take payment of
fees as they become due out of the client’s account. Brown Advisory has the discretion to
redeem at the then-current price or current net asset value a sufficient number of account
securities in order to pay these fees. Fees are deducted quarterly. Some clients choose to pay by
check. Brown Advisory provides a quarterly billing statement so that the client can confirm the
accuracy of the fee calculation. Fees may be payable in advance or arrears, depending on each
client’s agreement.

C.      Other Fees and Expenses. Investment advisory fees payable to Brown Advisory do not
include all the fees the client will pay when we purchase or sell securities for the client’s
account(s). Investment advisory fees cover investment management. Clients also are
responsible for paying custody fees, fees and expenses associated with collateral loans, any
third party administration expenses, brokerage charges, fund expenses, taxes or other costs
related to the purchase and sale of securities for a client’s account, including available cash
sweep options. Custody fees will vary depending on the custodian. All brokerage charges and
related transaction costs are charged to the account(s) as they occur. See Item 12 for additional
information about our brokerage practices.

Mutual funds, ETFs, money managers, and private placement vehicles also charge investment
management fees in addition to Brown Advisory’s fees. The fund prospectus, the private
placement documents, or the separate agreement between the money manager and the client
explain these fees.

All investment advisory fees paid to us for portfolio management services are separate from the
fees and expenses incurred in respect of any mutual funds, ETF, collective investment trusts
(“CITs”), limited partnerships or private funds in which client assets may be invested, including
funds or partnerships advised by us or our affiliates. The vehicle’s prospectus or offering
document provides details of such fees and expenses, as well as differences across share classes.
When clients hold BALLC-sponsored mutual funds and/or ETFs in an account that is charged
an investment advisory fee by Brown Advisory or any of its affiliates, Brown Advisory has
policies and procedures in place designed to ensure that a client is credited its approximate pro-
rata share of the management fee paid to Brown Advisory by the affiliated mutual fund or ETF
as an offset against, and to the extent of, the client’s investment advisory fee for the applicable
billing period, unless otherwise noted in the fund’s prospectus or offering document or
otherwise negotiated. Typically, these fees are calculated on a daily basis, while any such fee
offsetting occurs on a quarterly basis. Exceptions to this fee-offsetting practice apply if a fund
is operating over its expense cap or to the extent that the allocable share of the management fee
to be deducted exceeds the client’s investment advisory fee for the applicable billing period. In
cases where any such mutual fund has exceeded its expense cap, the firm will cover the excess
expenses and reduce the quarterly rebate to clients to the extent of the expenses incurred by the
affiliated mutual fund. If the firm subsequently is able to recoup any such expenses allocable to
an affiliated mutual fund in excess of an expense cap, the firm will not increase the rebate
amount over the investment advisory fee; these recouped expenses will be borne by the client.

Clients are not rebated any fees in respect of investments made in privately offered funds
offered by us or any of our affiliates. As such, investors in such affiliated funds will pay three
levels of fees and expenses as discussed in Item 6 – Performance-Based Fees and Side-By-Side
Management: (1) to the underlying fund managers or private equity entities; (2) to Brown
Advisory or one of its affiliates as general partner; and (3) to Brown Advisory as investment
adviser.

Within mutual funds, other fees, including business management or shareholder servicing fees
(i.e., administrative services fees) are charged as described in the relevant prospectus and
Statement of Additional Information. A Brown Advisory affiliate will receive fees for services

provided to proprietary registered funds. Shareholder servicing fees are utilized to cover
expenses related to ongoing servicing of existing shareholders. The administrative fees cover
business and operational expenses incurred by the funds; some examples of these expenses
include but are not limited to Board of Trustee relations, technology expenses, and overhead.

For mutual funds launched before 2013, Brown Advisory generally provides fee offsets against
shareholder servicing fees to ensure the client’s net expense ratio is aligned with the lowest
available share‑class (i.e., Institutional share class). For funds launched in 2013 or after, clients
are typically invested in the share class that offers the lowest available net expense. Certain
custodians do not offer the lowest cost share classes offered in Brown advised- and sub-advised
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ITEM 7 TYPES OF CLIENTS

Brown Advisory generally has two categories of clients:

Family Office clients generally are families with $20 million or more in net worth who have
complex financial issues and require financial services beyond investment management, such as
strategic planning and family governance, cash management, tax organization and analysis, risk
management, trust and estate planning and administration, philanthropic consulting, bill-paying
and household employee administration, and concierge service analysis.

Family Wealth clients generally are families with $5 to $20 million in net worth whose services
include some of the above but without the same level of complexity. Brown Advisory generally
requires that accounts must hold at least $5 million in investment assets in order to be accepted for
management. We will waive the account minimum depending on the client relationship, client
service requirements and other circumstances.

Although Brown Advisory clients are predominantly individuals, their families and family
entities, Brown Advisory also advises charitable organizations. Brown Advisory does not
directly advise outside pension or profit-sharing plans but provides investment advice to
individual clients with respect to the self-directed portion of their retirement plans.