Item 5 - Fees and Compensation
Overview
We are a fee-based registered investment advisor. We receive compensation
based on a pre-determined, mutually agreed upon fees. We believe this helps
to eliminate undue influence from a broker-dealer or other financial entity and
ultimately may reduce many types of conflicts of interest that are sometimes
associated with the financial services industry. We attempt to align our interest
with yours.
We base our fees on a percentage of your assets under management, hourly
charges, fixed fees or courtesy fees. We may only receive commissions
generated from the sales of fixed life, annuity, or health insurance policies. We
may price our fixed fees and financial planning fees based on the perceived
complexity of work in your particular situation. When you engage us to do
financial planning work and you make it clear that asset management is not
likely to be a subsequent or significant part of our relationship, we are likely to
price the work based strictly on your use of our professional time.
You may negotiate our fees and we may consolidate, reduce or waive your fees
at our sole discretion and based upon certain criteria that may include our
historical relationship, type of assets, your anticipated future earning capacity,
your anticipated future additional assets, dollar amounts of assets you allow us
to manage, your related accounts, or your overall account composition.
Generally, we price our services to induce you into as long of a relationship as
possible.
Fees for Financial Plans
Your fee for a financial plan is based upon the facts known at the start of the
engagement. The fee range may be $500 to $3,500 and is negotiable. Since
financial planning is a discovery process, situations occur wherein you may be
unaware of certain financial exposures or predicaments. In the event that your
situation is substantially different than disclosed initially, a revised fee may be
provided for mutual agreement. You must approve the change of scope in
advance of the additional work being performed when a fee increase may be
necessary. Fees for financial plans may be billed in advance with the balance
due upon signing of the planning agreement. You have the right to cancel the
planning agreement within five business days after signing without obligation
or penalty. After five business days, you may cancel the planning agreement
at any time prior to delivery of the financial plan but may be required to pay fees
for work already performed.
Typical Fees for Investment Management
Your fees for investment supervisory management are based on the total
amount of your assets we have under management and are determined by
your account market value at the end of your quarterly cycle. We bill your
account in advance or in arrears; fees are typically deducted directly from your
Your Source Financial
account. You may consent to direct debiting of your investment account
through the custodian. If we begin managing your account during the quarter,
then we may bill your account on a pro-rata basis calculated on the account
value at the end of your quarterly cycle. In this case, we may also add this pro-
rated amount to the standard amount for the billing quarter. Our standard fees
are:
Fee Value of Assets
1.50% First $2,000,000
1.00% $2,000,000 to $3,000,000
0.75% $3,000,000 to $5,000,000
0.65% $5,000,000 to $10,000,000
0 50% Over $10,000,000
You may negotiate fixed or flat fee arrangements. We may charge a minimum
quarterly fee regardless of asset value and may impose a minimum fee for
courtesy accounts. You understand that other client relationships may exist
where the fees are higher or lower than what you may pay, or the fee schedules
listed above. If used, fees payable to a sub-advisor (see Item 4 Sub-Advisory
Services) are included so you will not be charged additional fees for use of this
service.
Other Fees
You understand that custodians may charge fees that are sole and separate
from us. Examples of these costs may be transaction fees on the purchase or
sale of securities, custodial commissions, wire transfers, custodial fees,
electronic fund fees or miscellaneous fees for brokerage accounts. These
transaction charges are incidental to the purchase or sale of a security or your
use of your account. While we are aware of miscellaneous fees and we review
them regularly, it is not the sole criteria for continued use of the custodian or a
limiting factor when choosing to take appropriate action in your account.
Expense Ratios
You understand that mutual funds and exchange traded funds may also charge
a fee for their services. Their fee is often called an expense ratio which is
disclosed in a fund’s Prospectus. You understand that these fees may be in
addition to the fees you pay us. These fees may seem hidden because the
expense ratio is deducted before the value of the fund is calculated. You
understand that the share price you see quoted already has the fees deducted
from the value of the fund.
Past Due Accounts and Termination of Agreements
We reserve the right to stop work on an account if your fee is more than 90
days overdue. In addition, we may terminate your agreements if we discover
that you have concealed or refused to provide pertinent information about your
Your Source Financial
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