Sterling Investment Advisors LLC

Fees and Compensation
SIA is a fee-based advisor. Thus, the only revenue of the firm is from fees charged to clients directly.
Investment management services fees are as follows:
               If client
              assets are:                     the ANNUAL
                 over       but not over          fee is:          of the amount over

                  $0         250,000         -----       1.25%              $0

               250,000       500,000         $3,125 + 1.00%              250,000

               500,000       1,000,000       $5,625 + 0.75%              500,000

              1,000,000      -------         $9,375 + 0.65%             1,000,000

               If client
              assets are:                   the QUARTERLY
                 over       but not over         fee is:           of the amount over

                  $0          250,000      -------       0.3125%            $0

               250,000        500,000      $ 781.25 + 0.2500%            250,000

               500,000       1,000,000     $1,406.25 + 0.1875%           500,000

              1,000,000      -------       $2,343.75 + 0.1625%          1,000,000

For accounts valued in excess of $10,000, fees are assessed quarterly based on asset values as of the
close of business on the last business day of the quarter. Accounts valued less than $10,000 are as-
sessed an annual fee based on the asset values as of the close of business on the last business day of the
year. Fees are non-negotiable. However, the first two clients of the firm and a large endowment have

contracted for lesser amounts. Fees are waived for pro-bono clients deemed as “in need of assistance”
and certain family members.

A new deposit will have a pro-rated management fee if it is received in the last 45 days of the quarter
and exceeds $25,000 or 10% of the client’s overall portfolio value, whichever is greater.

An account is eligible for family group billing if the account owner is a family member living in the
same household and is under the age of 18. For custodial accounts and trusts, the current beneficiary,
rather than the custodian or trustee, determines whether family group billing is applied.

No fees are payable in advance as all fees are billed in arrears, so there is no refund provision. Clients
may pay their fees directly to SIA or, if available, may request we deduct our fees directly from the in-
vestment account.

Clients, in addition to the fees charged by SIA, may be subject to custodial fees, mutual fund and/or
exchange-traded fund operating expenses, and brokerage commissions or other transaction costs. As
these fees vary depending on the custodian and the investments selected for the portfolio, it is suggest-
ed the client, if they so desire, ask the firm for fee information relevant to their specific investments.
Information regarding the selection of a custodian and brokerage is found on page 9 of this document.

Per-hour financial planning service fees are assessed at a rate of $200 per hour.

Performance-Based Fees and Side-By-Side Management
SIA does not charge performance-based fees or engage in side-by-side management.

Types of Clients
SIA serves a variety of clients including: individuals, estates, trusts, charitable organizations, corpora-
tions, pension/profit sharing plans, and an endowment. The guideline minimum asset size to begin an
advisory relationship is $250,000. This minimum is a guideline and may be modified on a case by case
basis.

Methods of Analysis, Investment Strategies, and Risk of Loss
SIA bases its investment management strategies on certain foundational principles. First, asset alloca-
tion is more important to the long term success of clients than market timing and individual security
selection. Asset allocation is defined as creating a well diversified portfolio with an expected level of
return and risk consistent with the client’s long-term objectives and constraints. Market timing is de-
fined as changing the asset allocation based on one’s expectation of future market movements. Indi-
vidual security selection is defined as not investing in all companies in the asset class, but only those
the investor believes will do the best. It is our firm’s belief that it is very difficult to consistently add
value over the long term by relying on market timing and individual security selection strategies. Giv-
en this, we use lower cost index mutual funds or exchange-traded funds, where available, to implement
the investment allocation. For clients who meet the definition of an “accredited investor” both private
equity and private debt are additional asset classes considered for inclusion in the portfolio.

The second principle is that risk and return estimates should be forward-looking, rather than simply
using historical average rates of return.

   Bonds Forward-looking bond return estimates are best forecasted by the current yield-to-maturity
   of each bond asset class.

   Stocks/Equities Forward-looking equity return estimates are created by blending two different re-
   turn estimates.

   The first equity return estimate is based on the assumption that current market prices are effectively
   reflecting all available information. Using this “efficient market” assumption and current market
   prices, global market weightings, and historical risk-return relationships, estimated “equilibrium”
   returns can be created for each asset class. This “efficient market” equity return estimate forms the
   base of our forward-looking return estimates.

   However, many investors question the validity that current market prices are always rational and
   based on estimated future cash flows of the asset. Those who hold this view point to periods when
   prices of stocks were overpriced (i.e. the late 1990s internet bubble) or underpriced (the depths of
   the 2020 pandemic) and suggest that forward-looking equity returns should be based on the consen-
   sus estimate of the expected future cash flows to be received and the current price of the stock. Us-
   ing this “cash flow valuation” methodology a second equity return estimate can by created in which
   expected returns fall as stock prices rise relative to expected future cash flows, and expected returns
   rise when stock prices fall relative to expected future cash flows.

   The blending of the “efficient market” and “cash flow valuation” future equity return estimates cre-
   ate forward-looking equity asset class return estimates that are grounded in current capitalization
   weightings, but tilted toward those asset classes with more attractive valuations.

   Risk and Correlation It is assumed that historical experience is the best way to estimate future risk
   and correlation estimates of asset classes. A dataset of the most recent fifteen years of risk and cor-
   relation data is used to estimate the risk and correlation statistics.

The third principle concerns stress testing. An investment plan needs to be analyzed under many dif-
ferent economic scenarios; some of which generate above-average returns, while others experience be-
low-average returns. Therefore, Monte Carlo simulation is used to produce thousands of possible re-
turn “paths.” The purpose of this analysis is not to find a specific expected outcome, but to understand
the range of possible outcomes and the relative risk of the potential investment plan under considera-
tion.

Rebalancing is another important principle. Once a portfolio allocation is chosen and implemented, the
subsequent divergence in market returns in the various investments will cause portfolio weights to vary
from the target allocation. Reallocating investments on a regular basis back to the target allocation is
beneficial as it retains the desired risk/return profile of the overall portfolio. In addition, rebalancing
can enhance returns if the various securities go through periods of both out-performance and under-
performance. Rebalancing requires the selling of securities that have out-performed in the most recent
period and the reinvestment of those funds in securities that have under-performed in the most recent
period. Should out-performing securities subsequently under-perform, rebalancing will have reduced

the funds subject to the under-performance and increased the funds which subsequently out-performed.
We conduct rebalancing quarterly or as funds are deposited/withdrawn.

And finally, a client’s investment plan should be updated at least annually. Each client is contacted
annually and encouraged to schedule a meeting to review the plan and consider possible changes or
updates. If a meeting is not possible, then an “internal” annual review is completed and the client is
sent a report when relevant. This process ensures the planning assumptions are current and the result-
ing portfolio is appropriate.

As with any investment strategy there are risks. These include:

•   Investing in securities involves risk of loss. While all securities have a risk of loss, the depth of the
    potential loss varies by security. Clients must be prepared to bear the potential risk of loss.
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