Item 4 - Services, Fees and Compensation

  • Description of our services, including the types of portfolio management services, provided under each program. We must indicate the wrap fee charged for each program, or, if fees vary according to a schedule, provide such schedule. Further, we are required to indicate whether fees are negotiable and identify the portion of the total fees, or range of fees, paid to portfolio managers.

    Total Asset Market (TAM®) offers a disciplined, discretionary, and non-discretionary fee based mutual fund of funds program. It attempts to establish long-term Strategic Asset Allocation portfolios that are made out of a few select, best in class, on and off shore underlying mutual funds that are purchased at Net Asset Value (NAV). These funds are selected out of a total universe of approximately 200 mutual fund families that include unaffiliated load-waived and no-load funds (Although there are no upfront sales charges, other fees and expenses do apply).

    (i)TAM® Wrap Fee Program:

    The program endorses a top-down value discipline that seeks to identify globally undervalued Markets, Economic Sectors, Industries, Fixed Income, and Specific Securities in “Super Cycles” that sell at deep discounts to both their respective and historical intrinsic values. “Super Cycles” are defined as undervalued Economic Sectors, and Industries in the Global Economy that our firm believes are best positioned for “Long-Term Growth”. The select list due diligence process that aims to identify some of the world’s best underlying mutual funds begins with a rigorous screening process of the entire global universe of about 200 mutual fund families.


    Next, qualitative and quantitative assessments are applied for deciding on the best in class underlying mutual funds that will end up making the Total Asset Market (TAM®) portfolio. This extensive due diligence process of filtering out a global universe of approximately 200 mutual fund families includes but is not limited to the followings: 1) Researching organizational ownership, 2) Finding out portfolio management tenure, 3) Understanding the investment process and its implementation, and 4) Studying long and short-term performance results. This process also attempts to evaluate risk/reward parameters assumed by the mutual fund managers as measured by their quantitative and/or Mathematical Calculations of Risk. The followings are some of the criteria studied when quantitative risk parameters are evaluated: Beta, Alpha, Standard Deviation, Sharpe Ratio, and R-Squared. In addition, the followings are some of the risk parameters researched when qualitative data is included: Market Risk, Economic Sector Risk, Industry Risk, Significant Sector and Position Concentration Risk, Liquidity Risk, and Management Fee Risk of expense ratios, 12b-1 charges, and early withdrawals.

    Throughout the tenure of the Total Asset Market (TAM®) program, Global Asset Allocation models are either rebalanced quarterly, semi-annually or annually in order to achieve an optimal strategic asset allocation on the Efficient Frontier. This process of rebalancing a diversified global portfolio across a strategic combination of asset classes, in turn can potentially increase the overall investment returns while decreasing its volatility.

    Last, periodic Ongoing Reviews are scheduled with all clients. This process includes the followings: 1) Review of the entire portfolio as well as its underlying mutual funds benchmarked each quarter against their respective Equity and Fixed Income indexes, 2) Recalibrate each client’s asset allocation models as his or her life circumstances change, and 3) Present consolidated reporting that incorporates the Total Asset Market (TAM®) portfolio with the entire holdings of the clients’ other investments disciplines.

    (a)TAM® Wrap Program Fee Schedule:

    All Equity discretionary money managed programs which includes Total Asset Market (TAM®) will adhere to the following pricing schedule:

      Assets Under Management   Annual Net Fee Assessed *
      First $500,000   2.50%
      Next $500,000   2.00%
      Over $1,000,000   1.50%

    *Our firm’s fees are generally not negotiable. Further, our firm’s fees are billed on a pro-rata annualized basis quarterly in advance based on the value of your account on the last day of the previous quarter.

  • Explanation that a wrap fee program may cost you more or less than purchasing such services separately and description of the factors that bear upon the relative cost of the program, such as the cost of the services if provided separately and the trading activity in your account(s).

    A wrap fee program allows our clients to pay a specified fee for investment advisory services and for the execution of transactions. The advisory services may include portfolio management and/or advice concerning selection of other advisers, and the fee is not based directly upon transactions in your account. Your fee is bundled with our costs for executing transactions in your account(s). This results in a higher advisory fee to you. We do not charge our clients higher advisory fees based on their trading activity, but you should be aware that we may have an incentive to limit our trading activities in your account(s) because we are charged for executed trades. In order to overcome this potential conflict of interest, clients may choose to pay all transactions’ costs associated with the ongoing management of their accounts. By participating in a wrap fee program, you may end up paying more or less than you would through a non-wrap fee program where a lower advisory fee is charged, but trade execution costs are normally passed directly through to you by the executing broker.
  • Description of any fees that you may pay in addition to a wrap fee, and description of the circumstances under which you may pay these fees, including, if applicable, mutual fund expenses and mark-ups, mark-downs, or spreads paid to market makers.

    You may pay custodial fees, charges imposed directly by a mutual fund, index fund, or an exchange traded fund which shall be disclosed in the fund’s prospectus (i.e., fund management fees and other fund expenses), mark-ups and mark-downs, spreads paid to market makers, wire transfer fees and other fees and taxes on brokerage accounts and securities transactions. These fees are not included within the wrap-fee you are charged by our firm.
  • If someone recommending a wrap fee program to you receives compensation as a result of your participation in the program, we must disclose this fact. Further, we are required to explain, if applicable, that the amount of the compensation may be more than what the person would receive if you participated in our other wrap fee programs or paid separately for investment advice, brokerage and other services. Finally, we must explain that someone recommending a wrap fee program may have a financial incentive to recommend the wrap fee program over other programs or services.

    We do not recommend or offer the wrap program services of other providers. Our investment advisory representatives receive a portion of the advisory fee that you pay us, either directly as a percentage of your overall fee or as their salary from our firm. In cases where our investment advisory representatives are paid a percentage of your overall advisory fee, this may create an incentive to recommend that you participate in a wrap fee program rather than a non-wrap fee program (where you would pay for trade execution costs) or brokerage account where commissions are charged. This is because, in some cases, we may stand to earn more compensation from advisory fees paid to us through a wrap fee program arrangement if your account is not actively traded.