John Hirzel

Portfolio-Based Fees (Tiered)

Fees are negotiable. If any portion of the client’s assets are managed by Sub-Adviser(s), fees will be paid to the Sub-Adviser in one of two ways unless the third scenario applies: (1) For some Sub-Advisers, a portion of the fee we charge will be paid to the Sub-Adviser. Investment advisory fees incurred by a client will not increase when a client elects to use Sub-Adviser(s); however, we do not adjust our fee schedule based on Sub-Adviser’s fee. Therefore, we have a conflict of interest to recommend Sub-Advisers that agree to charge lower fees because we will in turn retain a higher portion of the overall management fee. For example, some firms may want to receive 50% of our management fee while other firms agree to receive only 40% of the management fee. In an effort to control for this conflict of interest, we attempt to negotiate the same fee paid to all Sub-Advisers. Moreover, our decision to recommend a Sub-Adviser is based on objective criteria such as prior investment performance, investment strategies offered and the totality of investment advisory services available. (2) For other Sub-Advisers, the Sub-Adviser will charge and collect the fee separate from our fee. In these situations, the Sub-Adviser is responsible for calculating its management fee and debiting it from the client’s account and we are responsible for calculating our management fee and debiting from the client’s account. (3) There are some Sub-Advisers who do not assess an investment management fee. In these cases, the Sub-Adviser does not receive a portion of the fee we charge, nor do they charge a fee directly to clients. Instead, the Sub-Adviser is compensated by investment product sponsors for utilizing their mutual fund and ETF investments in model portfolios. In these situations, the Sub-Advisers model portfolios are limited in that they only include investment options from the product sponsors. This is a conflict of interest that the Sub-Adviser has because the Sub-Adviser is limited to only using the investment options from those product sponsors.