Item 5 Fees and Compensation
A. INVESTMENT ADVISORY SERVICES
Clients can engage the Registrant on a fee-only basis to provide discretionary investment
advisory services including general financial planning and consulting services upon
specific client request. Registrant’s negotiable annual investment advisory fee is generally
based upon a percentage (%) of the market value and type of assets placed under
Registrant’s management according to the following tiered fee schedule:
Market Value of Portfolio Annual Fee %
Up to $2,000,000 0.90%
Next $3,000,000 0.75%
Next $5,000,000 0.65%
Amount Over $10,000,000 0.55%
The investment advisory fee is fixed annually, based generally upon the above fee schedule
and potentially adjusted based upon the complexity of the client’s financial situation and
the level and scope of anticipated services to be provided by Registrant. If a client
materially increases or decreases the amount of assets managed by the Registrant during a
billing period, the Registrant reserves the right to, but is not obligated to, revisit the fee
with the client. Each year, at the contract anniversary date, Registrant will recalculate and
confirm the annual investment advisory fee with the client. Additionally, the Registrant’s
policy is to treat intra-quarter account additions and withdrawals equally and will adjust
billing when there is a deposit or withdrawal to an account greater than $250,000 or an
10% increase or decrease to an account’s total assets under management unless indicated
to the contrary on the Registrant’s Investment Advisory Agreement executed by the client.
In addition to the additional custodian fees described below, Schwab charges a $250 annual
fee for alternative investments held on the Schwab platform.
The Registrant reserves the right to negotiate fees with any client or prospective client but
is not required to do so. As a result, the Registrant may agree to a fee arrangement that
differs from the schedule referenced above. The Registrant generally imposes a $10,000
minimum annual investment advisory fee for its services.
Fee Dispersion. Registrant, in its discretion, may charge a lesser or higher investment
advisory fee, charge a flat fee, waive appliable minimum asset or minimum fee levels,
waive its fee entirely, or charge fee on a different interval, based upon certain criteria (i.e.
anticipated future earning capacity, anticipated future additional assets, dollar amount of
assets to be managed, related accounts, account composition, complexity of the
engagement, anticipated services to be rendered, grandfathered fee schedules, employees
and family members, courtesy accounts, competition, negotiations with client, etc.). As
result of the above, similarly situated clients could pay different fees. In addition, similar
advisory services may be available from other investment advisers for similar or lower
fees.
Please Also Note: In the event that the client is subject to an annual minimum fee, the
client could pay a higher percentage fee than referenced above.
BUSINESS ADVISORY SERVICES
Registrant charges an annual fixed fee for business advisory services, generally ranging
between $15,000 and $50,000 per year, payable quarterly in advance. Prior to engaging
Registrant to provide planning or consulting services, clients are generally required to enter
into an Investment Advisory Agreement with Registrant setting forth the terms and
conditions of the engagement (including termination), describing the scope of the services
to be provided, and the portion of the fee that is due from the client.
Margin Accounts: Risks/Conflict of Interest. Registrant does not recommend the use of
margin for investment purposes. A margin account is a brokerage account that allows
investors to borrow money to buy securities and/or for other non-investment borrowing
purposes. The broker/custodian charges the investor interest for the right to borrow money
and uses the securities as collateral. By using borrowed funds, the customer is employing
leverage that will magnify both account gains and losses. Should a client determine to use
margin, Registrant will include the entire market value of the margined assets when
computing its advisory fee. Accordingly, Registrant’s fee shall be based upon a higher
margined account value, resulting in Registrant earning a correspondingly higher advisory
fee. As a result, the potential of conflict of interest arises since Registrant may have an
economic disincentive to recommend that the client terminate the use of margin. The use
of margin can cause significant adverse financial consequences in the event of a market
correction. ANY QUESTIONS: Our Chief Compliance Officer, Geoffrey Biehn,
remains available to address any questions that a client or prospective client may have
regarding the use of margin.
B. Clients may elect to have the Registrant’s advisory fees deducted from their custodial
account. Both Registrant’s Investment Advisory Agreement and the custodial/clearing
agreement may authorize the custodian to debit the account for the amount of the
Registrant’s investment advisory fee and to directly remit that advisory fee to the Registrant
in compliance with regulatory procedures. In the limited event that the Registrant bills the
client directly, payment is due upon receipt of the Registrant’s invoice. The Registrant shall
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