Southwest Investment Advisors Inc

ITEM 5: FEES AND COMPENSATION
Advisory Fees & Billing Practices

Fees for investment management services are calculated as a percentage of assets under management.
These fees are billed quarterly in advance, based on the assets under management as of the last day of the
previous calendar quarter. Our fee schedule is:

 Under $500,000                                       1.25% of assets under management (AUM)

 Assets from $500,001 to $1,000,000                   1.00% of assets under management (AUM)

 Assets from $1,000,001 to $3,000,000                 0.85% of assets under management (AUM)

 Assets over $3,000,001                               0.75% of assets under management (AUM)

All fees are to be considered negotiable based on total assets under management. The fees will revert back
to a higher amount if assets fall into prior category.

In order to deduct our fees directly from your investment account, we are required to receive
authorization from you. Please note the following important information about the deduction of
management fees:

       We have entered into an agreement with LPL to calculate the fees according to our agreement
        with you, then direct debit the fee from your account on Southwest’s behalf. You must provide
        authorization for this in Southwest’s agreement, as well as in your paperwork with LPL.

       You will receive a statement from your custodian which shows your holdings and the amount of
        fees deducted from your account.

       You are responsible for reviewing the accuracy of the fees being billed, as the custodian will not
        do so.

In certain circumstances, we may allow you to pay by check rather than having payment deducted directly
from your account.

If you would like to end our advisory relationship, you may do so by providing 5 days written notice. We
will prorate the advisory fees received through the termination date and send you a refund of the prepaid,
unearned portion of your fee. We process refund payments within 30 days of the termination date and
will refund your investment account. Upon entering into the advisory relationship, your advisory fee will
be prorated for the remaining portion of the quarter and debited from your account.

Other Costs Involved

In addition to our advisory fee shown above, you are responsible for paying fees associated with investing
for your account. These fees include:

        mutual fund loads (if applicable). These charges are paid to brokers as a form of commission.

       management fees for ETFs and mutual funds. These are fees charged by the managers of the ETF
        or mutual fund and are a portion of the expenses of the ETF or mutual fund.

        loads and fees for UITs, REITs and variable annuities.

Additional information about brokerage costs and services is provided in “Item 12: Brokerage Practices.”

We believe the fees mentioned above are competitive; however you may be able to obtain similar services
from other sources at a lower price.

Flat/Hourly fees

We will review a client’s portfolio that we do not manage for a flat or hourly fee. Generally, our hourly
rate is $200 per hour. Our flat fees range from $300-$1,000, depending on the complexity of the review.
An invoice will be presented upon completion of services and is due upon receipt. Payment for these
services must be made by check.

Financial Planning Fees

Fixed Fees

The rate for creating client financial plans is $1,500. The fees are negotiable, and the final fee schedule
will be attached as Exhibit II of the Financial Planning Agreement.

Hourly Fees

The hourly fee for these services is $150. The fees are negotiable, and the final fee schedule will be
attached as Exhibit II of the Financial Planning Agreement. Fees are Invoiced and payable via cash,
check, or wire in Advance. Clients may terminate the agreement without penalty, for a full refund of our
fees, within five business days of signing the Financial Planning Agreement. Thereafter, clients may
terminate the Financial Planning Agreement with written notice.

Conflicts of Interest

Our officers and some employees are also registered representatives of LPL Financial LLC (“LPL”), an
unaffiliated broker/dealer and FINRA and SIPC member firm. As registered representatives, these
individuals receive commissions for executing trades for their clients at LPL. For mutual fund
investments, registered representatives also receive trailing commissions in unmanaged (brokerage)
accounts. Trailing commissions are fees the mutual fund pays to the registered representative each year
that you own that mutual fund. If you decide to use LPL to implement any recommendations we make in
our capacity as registered representatives, our officers and employees will receive commissions for those
trades. Under no circumstances do our officers and employees earn trailing commissions on positions

held in managed accounts. Whether we act as an investment adviser or as a registered representative, we
are fiduciaries to our clients.

Most of our officers and investment personnel are also insurance agents registered with various insurance
agencies, and as such sell insurance products. They may recommend insurance products to clients and
may receive commissions for such sales if a client elects to purchase such products through these
individuals in their capacity as insurance agent. The insurance products sold are transacted with a variety
of insurance companies on a commission basis.

In these situations, a conflict of interest exists between your interests and those of SIA.

You are under no obligation to implement investment, financial planning or insurance recommendations
through LPL. If you do elect to use LPL, you are under no obligation to choose one of our officers or
employees as your registered representative. Commissions paid to LPL may be higher or lower than
other broker/dealers who provide similar services.
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ITEM 7: TYPES OF CLIENTS
The majority of our services are with individuals, which includes the living trusts of individuals. We also
provide investment advice to pension plans.