ITEM 5: FEES AND COMPENSATION
Sprout Advisers operates as a fee-based investment advisory firm.
Sprout Advisers is only compensated for advisory services in the following manner: A percentage of assets
under management, hourly fees, and project-based fees (which are dependent upon the nature and scope of
the engagement, using the Adviser’s hourly rate as a guide). Fee are agreed to at the time of engagement
and documented in the Client Agreement.
5.A Fee Schedules for Advisory Services
5.A.1. Sprout Advisers is compensated for Investment Management Services only in the form of a
percentage of assets under management at an annual rate of 1.25%, billed monthly or quarterly in advance
or arrears, as set forth in the client agreement. The fee is calculated by multiplying the Adviser’s annual rate
by the portfolio’s market value at the end of the billing period (as determined by the client’s custodian) and
dividing the figure by 12 (for monthly billing) or 4 (for quarterly billing). Where services are initiated at any
time other than the beginning of a month or a quarter (depending upon the agreed upon billing cycle), Sprout
Advisers’ fee is pro- rated. The exception to Sprout Adviser’s fee schedule involves clients who have $12,000
or less to initiate services. In such cases, the Adviser imposes a minimum annual advisory fee of $150,
invoiced at engagement (and annually thereafter). ‐
Sprout Advisers reserves the right to negotiate its Investment Management fees, depending upon the nature
and scope of the engagement, complexity of services, additional time to be incurred, for pre-existing
relationships, or other special situations and at the discretion of the Adviser.
If an unaffiliated manager program is utilized, the management fee attributed to the program’s services (as
set forth in the program’s management agreement) is billed separately and is in addition to Sprout Advisers’
fees.
Sprout Advisers does not charge its management fee for the portion of a client’s portfolio that is invested in
the Sprout Residential Fund, in light of the conflict of interest associated with the common beneficial
ownership between the fund and the Adviser.
It is important to note that Sprout Advisers and/or recommended Independent Managers may charge
management fees are higher than what may be charged by other investment advisers for similar services.
This will be the case when the Independent Manager’s strategies (such as options trading) are more
laborious than simply purchasing a group of stocks, mutual funds, or ETFs on an omnibus platform.
‐ Clients
should note that lower fees for similar investment management services may be available from other
sources.
Investment Management fees do not include custodial fees, service fees and/or transaction fees that may be
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levied by various custodians, broker dealers, mutual funds and insurance companies.
5.A2 & A3. Sprout Advisers’ Financial Planning and Consultation Services are invoiced in arrears at the
following rates:
• $250 per hour; or
• When a client selects modular financial planning, Sprout Advisers’ fee is $1200 per module.
The number of hours involved in a Consultation Service or comprehensive Planning project will vary,
depending upon the complexity of the financial situation, the number of client accounts included in the plan,
the type of preparation and research required, and financial areas to be covered by the plan. All fees for
planning services are agreed upon in advance in writing.
Should the client’s condition change during the course of services such that new or reformulated advice,
recommendations or research is required, additional fees may apply. The Adviser will not engage in
additional services that result in added fees without a new or modified client agreement (approved by the
client).
All financial planning services provided will be completed within six (6) months of the acceptance date of the
financial planning agreement. The financial planning fees are not negotiable. Clients should note that lower
fees for similar services may be available from other sources.
At its sole discretion, Sprout Advisers may waive Financial Planning or Consultation Service fees for clients
receiving Investment Management Services from Sprout Advisers and/or a recommended Independent
Manager.
5.B Payment of advisory fees.
5.B.1. Investment Management fees are paid via an authorized debit to the client’s account held at a
qualified custodial. If a client has more than one account, the client may choose to have all fees deducted
from a particular account. Where an Independent Manager has been contracted for services, the Investment
Manager will coordinate the management fee deductions and billings.
Sprout Advisers adheres to the following criteria in accordance with the United States Securities Exchange
Commission’s Investment Advisers Act when payment is made via a qualified custodian: (1) The client
provides written authorization permitting the fees to be paid directly from the client’s account held by the
client’s independent and qualified custodian and the authorization is limited to withdrawing contractually
agreed upon investment advisory fees; (2) The client will directly receive regular (monthly or quarterly)
statements directly from the qualified custodian which reflect the Adviser’s fee deduction; (3) The frequency
of Adviser fee withdrawals shall be specified in the written authorization / agreement; (4) The custodian of
the account shall be advised in writing of the limitation on the Adviser’s access to the account; (5) The
client shall be able to terminate the written billing authorization or agreement at any time.
Since custodians do not verify the accuracy of the Adviser’s fee calculation, clients should review custodial
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