Stites Financial Consulting

Item 5: Fees and Compensation
Method of Compensation and Fee Schedule
ASSET MANAGEMENT
SFC offers discretionary direct asset management services to advisory Clients. Pursuant to CCR
Section 260.238(j), lower fees for comparable services may be available from other sources. Total
fees to Client will never exceed the safe harbor threshold of three percent of assets under
management per year. SFC charges an annual investment advisory fee based on the total assets under
management as follows:
             Assets Under Management                            Annual Fee
                     $0 - Infinity                                0.90%
The annual fee is broken down into 12 monthly payments charged in arrears. The advisory fee is
calculated using the value of the assets in the Account on the last business day of the billing period.
These fees are generally negotiable, and the final fee schedule will be memorialized in the “Accounts”
table under the column entitled “Advisory Management Fee” located in Exhibit 1 of the SFC
Investment Advisory Agreement. SFC is authorized to withdraw management fees directly from the
Account on a monthly basis. Because client fees will be withdrawn directly from client accounts,
in states that require it, SFC will:
   (A) Possess written authorization from the client to deduct advisory fees from an account held by
       a qualified custodian.
   (B) Send the qualified custodian written monthly notice of the amount of the fee to be deducted
       from the client’s account.

   (C) Send the client a monthly written invoice itemizing the fee, including the formula used to
       calculate the fee, the time period covered by the fee and the amount of assets under
       management on which the fee was based.
   (D) The Client will receive quarterly statements directly from the custodian which disclose the
       fees deducted.
Client Payment of Fees
Investment management fees are billed monthly in arrears, meaning that we invoice you after the
billing period. Fees are usually deducted from a designated Client account to facilitate billing. The
Client must consent in advance to direct debiting of their investment account.
SFC, in its sole discretion, may waive its fee and/or charge a lesser investment advisory fee based upon
certain criteria (e.g., historical relationship, type of assets, anticipated future earning capacity,
anticipated future additional assets, dollar amounts of assets to be managed, related accounts, account
composition, negotiations with Clients, etc.).
Additional Client Fees Charged
Custodians may charge transaction fees on purchases or sales of certain mutual funds, equities,
and exchange-traded funds. These charges may include mutual fund transaction fees, postage and
handling and miscellaneous fees. For more details on the brokerage practices, see Item 12 of this
brochure.
Prepayment of Client Fees
SFC does not require any prepayment of fees.

External Compensation for the Sale of Securities to Clients
Investment Adviser Representatives of SFC are also licensed insurance agents and receive external
compensation from the sale of commission-based products like, but not limited to, life, health,
disability and Long-Term Care insurance. From time to time, they may offer clients services from
those activities. Approximately 1-5% of Shawn Stites’ and Kevin Stites’ compensation is from external
compensation.
This represents a conflict of interest because it gives an incentive to recommend products based on
the commission received. This conflict is mitigated by disclosures, procedures, and SFC’s fiduciary
obligation to place the best interest of the Client first. Clients are not required to purchase any
products or services. Clients have the option to purchase these products through another insurance
agent of their choosing.

Item 7: Types of Clients
Description
SFC generally provides investment advice to individual, high net worth individuals, and corporations.
Client relationships vary in scope and length of service.
Account Minimums
SFC does not require a minimum to open an account.