Item 5: Fees and Compensation
Advisory Fees
Fees are computed as an annualized percentage of assets under management including cash balances and
accrued interest. The fees are non-negotiable and are payable quarterly in arrears. Fees begin accruing
when accounts become linked to us or when funded. To allow for additional account setups, transfers,
final strategy discussions, etc., at our discretion, SIP can delay or waive the first quarter fee. The first
payment is assessed and due at the end of the first calendar quarter 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.
Subsequent payments are due and will be assessed on the first day after the end of each calendar quarter
based on the value of the account assets under supervision as of the close of business on the last business
day of that quarter. Fees may be waived at our discretion, on the value of deposits made shortly before
the end of the quarter. The client, by contacting SIP, must submit the request to the SIP billing department
to have the fee waived which will be reviewed on a case-by-case basis.
Clients do not pay fees to Schwab Performance Technologies (“SPT”) or brokerage commissions or other
fees to Charles Schwab & Co., Inc. (“CS&Co”) as part of the automated investment program (the
“Program”) so long as we maintain client assets in accounts at Schwab. Schwab does receive other
revenues, including (i) the profit earned by Charles Schwab Bank, SSB, a Schwab affiliate, on the allocation
to the Schwab Intelligent Portfolios Sweep Program described in the Schwab Intelligent Portfolios Sweep
Program Disclosure Statement; (ii) investment advisory and/or administrative service fees (or unitary fees)
received by Charles Schwab Investment Management, Inc., a Schwab affiliate, from Schwab ETFs™ Schwab
Funds® and Laudus Funds® that we select to buy and hold in the client’s brokerage account; (iii) fees
received by Schwab from mutual funds in the Schwab Mutual Fund Marketplace® (including certain
Schwab Funds and Laudus Funds) in the client’s brokerage account for services Schwab provides; and (iv)
remuneration Schwab receives from the market centers where it routes ETF trade orders for execution.
With respect to AMP platform fee, 15 basis points (bps) of the client fee is allocated to Fidelity. In exchange
for this 15 bps fee, the client receives access to eMoney. Pursuant to a contractual long-term marketing
arrangement between Fidelity and BlackRock, Fidelity receives compensation from BlackRock in
connection with the purchase of BlackRock ETFs in certain Fidelity investment programs, including AMP.
However, any such amounts received by Fidelity as a result of the investment of Account assets in
BlackRock ETFs pursuant to this arrangement will be per the GCM ADV part 2A for Fidelity AMP. This
arrangement allows the Service to offer BlackRock ETFs to Adviser Clients at a lower overall cost.
The below table shows the annualized advisory fee which is charged for all accounts over $5,000.
Platform Name Fee
Schwab Intelligent Portfolios® 50 bps
Fidelity Automated Managed Platform 65 bps*
* Client will receive access to eMoney.
Clients will authorize the custodian holding client funds and securities to deduct SIP advisory fees direct
from the client account in accordance with statements prepared and submitted to the custodian by SIP.
The custodian will provide periodic account statements to the client. Such statements will reflect all fee
withdrawals by SIP. It is the client’s responsibility to verify the accuracy of the fee calculation. The
custodian will not determine whether the fee is properly calculated. In no case are fees collected in
advance for services to be performed.
The fees are for advisory services only and do not include any expenses related to investments in mutual
funds and ETFs. With investments in mutual funds or ETFs: clients pay the ongoing expenses of the mutual
fund or ETF, known as the expense ratio. The expense ratio is the annual fee that all funds or ETFs charge
their shareholders. It expresses the percentage of assets deducted each fiscal year for fund expenses,
including 12b-1 fees, management fees, administrative fees, operating costs, and all other asset-based
costs incurred by the fund. Details regarding the expense ratio associated with any particular mutual fund
can be found in the prospectus. The SIP program seeks out low-cost funds however, they may not be the
lowest cost funds available.
Further, the advisor fee does not include any fees related to custodial fees, brokerage fees, transaction
costs or commissions which may be charged separately by the broker/dealer custodial firm. See Brokerage
Practices (below) for further information.
SIP does not accept compensation for the sale of securities or other investment products, including asset-
based sales charges or service fees from the sale of mutual funds.
Termination
Services will continue until either party terminates the Engagement Agreement on immediate written
notice. If termination occurs prior to the end of a calendar quarter, SIP maintains the right to charge fees
due on a pro-rata basis. As of the date of termination SIP will no longer be the investment advisor of
record. All assets will remain at the custodian and it will be Client's responsibility to monitor the account
and instruct the custodian as to the final disposition of assets. SIP will not take any other action, unless
specifically notified by the Client.
The Engagement Agreement contains a pre-dispute arbitration clause. Client understands that the
...