USAA Managed Portfolios UMP Investment Advisory Agreement

Transcription

1 USAA Managed Portfolios UMP Investment Advisory Agreement This Investment Advisory Agreement (Agreement) confirms the understanding between the undersigned (Client or you) and USAA Investment Management Company (IMCO, we, our, or us), an indirect wholly owned subsidiary of United Services Automobile Association (USAA) regarding the terms and conditions applicable to your participation in the USAA Managed Portfolios program (UMP or the Program). The Program has three offerings: (1) Digital Investment Adviser (DIA) a digital investment advisory platform offered through and the USAA mobile application (collectively, the Site) that offers model portfolios comprised primarily of exchange-traded funds (ETFs) and money market mutual funds; (2) Wrap a traditional managed account platform that offers model portfolios that may be comprised of mutual funds, money market funds, and/or ETFs, depending on the account selected; and (3) Custom a managed account platform that offers model portfolios with a wide range of underlying assets, including stocks and bonds. Please keep a copy of this Agreement for your records. 1. General Appointment of IMCO for the Management of Your Program Account. You must appoint IMCO as Portfolio Manager of your Program Account by either: (i) accessing our website and electronically completing and signing the new investment account application (Account Application); or (ii) by returning a signed paper copy of the investment Account Application by mail to USAA Investment Management Company, Attn: USAA Managed Portfolios, P.O. Box , San Antonio, Texas 78265; or by facsimile to (800) Clients enrolling in the DIA offering must complete and sign the Account Application electronically on the Site and are not permitted to complete a paper copy of the Account Application. By signing the new Account Application, you agree to the terms of this Agreement, appoint us as your agent for the purpose of performing our discretionary management services in accordance with this Agreement, authorize us to open and maintain a brokerage account in your name with us or a third party (your Program Account), and you understand and agree that you assume all risks associated with the purchase and sale of securities. 2. Investment Advisory and Other Services to be Rendered UMP offers investment management programs designed to help you invest your money in an appropriate portfolio of investments based on your risk tolerance and asset allocation principles. Model Portfolios available through the DIA offering include ETFs and money market mutual funds. Without limitation, Model Portfolios available in the Wrap and Custom offerings may include one or more of the following securities: ETFs and mutual funds (including funds of the USAA Mutual Funds Trust, a series of mutual funds referred to as the USAA Mutual Funds and of the USAA ETF Trust, a series of ETFs referred to as the USAA ETFs, both of which are sponsored and managed by USAA Asset Management Company (AMCO), an investment adviser registered with the Securities and Exchange Commission (SEC) and an 1

2 affiliate of IMCO; collectively the USAA Mutual Funds and USAA ETFs are referred to as the USAA Funds), certificates of deposit (CDs, including CDs offered by USAA Federal Savings Bank and USAA Savings Bank, each an affiliate of IMCO), individual stocks, bonds, American Depositary Receipts (ADRs), and/or other mutual funds or ETFs, including USAA Funds, that may concentrate exposure to real estate investment trusts (REITs), commodities, or hedging strategies. Certain USAA Mutual Funds may only be available in the Program and are not offered to the public. For Program Accounts owned by natural persons, IMCO will allocate the cash portion of an account to a USAA money market mutual fund; for Program Accounts owned by non-natural persons such as institutions, IMCO will allocate the cash portion of an account to the USAA Treasury Money Market Trust. We will determine the cash allocation of a Program Account in our sole discretion. We may restrict or expand the types of securities in which the Program invests in our sole discretion, and without prior notice to you. The UMP Brochure (UMP s Form ADV Part 2A, Appendix 1, or the Program Brochure ) provides a description of the Program investment strategies, asset allocations, and Program investments (the Model Portfolios), DIA Program Accounts, Wrap Program Accounts (including the four Wrap Program Account options available in the Wrap Program, the USAA Fund Wrap Program Account, the Marketplace Fund Wrap Program Account, Blend Wrap Program Account and the ETF Wrap Program Account), Custom Program Accounts, and describes UMP in greater detail. Definitions for any undefined capitalized terms used in this Agreement may be found in the Program Brochure. (a) You may place reasonable restrictions or make reasonable modifications of existing restrictions regarding the management of your Program Account by submitting a written request to us. Any reasonable restriction you may wish to impose must be in writing and is subject to our review and approval. We will not accept any restrictions that are inconsistent with the Program s stated investment strategy or philosophy or are inconsistent with the nature or operation of the Program. Further, restrictions on the underlying holdings of a mutual fund or ETF will not be considered reasonable under the Program neither will requests to purchase certain securities. If you choose to request or eliminate a restriction placed on your Program Account, please contact a USAA-affiliated financial advisor at: for DIA clients, and for Wrap and Custom clients. Any requests to impose or change a restriction made via telephone will be confirmed in writing. All Program Account clients may submit written requests for restrictions to us: (i) by mail at USAA Investment Management Company, Attn: USAA Managed Portfolios, P.O. Box , San Antonio, Texas 78265; or (ii) by facsimile to (800) Any requests for restrictions, if accepted by us, will become effective as soon as practicable following their delivery in writing to us. If we determine that a restriction request is reasonable and therefore, accept a restriction on your Program Account, you acknowledge and understand that the performance of Program Accounts with restrictions imposed will differ from, and may be lower than, the performance of similar unrestricted Program Accounts. We may, in our discretion, hold the amount that would have been invested in the restricted security in cash, invest it in substitute securities, or invest it across other securities in the strategy that are not restricted. We and our affiliates, employees, and agents shall not be liable to you or any other person for any investment made in violation of any restriction or guideline that was not submitted or confirmed in writing and accepted by us. 2

3 (b) You acknowledge and understand that the integrity and quality of the investment advisory services to be rendered by us under this Agreement are highly dependent upon the accuracy of the data and information supplied by you. We are under no affirmative duty to independently verify or audit any such data or information. You acknowledge and agree that it is your responsibility to promptly notify us of any change in your investment objectives or financial condition that may affect the manner in which your assets should be invested. (c) We shall manage the assets that you deposit with us in accordance with your selected Model Portfolio and subject to any accepted restrictions or guidelines. We shall have full discretionary authority and power to buy, exchange, redeem, hold, and otherwise trade securities and other property on your behalf and in your name. A detailed description of the Program investments is included in the Program Brochure. We will not buy assets on margin directly in your Program Account, but for Wrap and Custom clients, certain USAA Funds, third-party mutual funds and/or third-party ETFs held in your account may employ leverage as described in the underlying fund prospectuses. In no event will we be obligated to effect any transaction on your behalf which we, in our sole discretion, believe would be in violation of any applicable federal or state law, rule or regulation, or of the rules or regulations of any regulatory or self-regulatory body. (d) We will recommend for you a Model Portfolio based primarily on an evaluation of your Account Application and for DIA clients, the information you provide through the Site. Although IMCO is the Portfolio Manager and designs the Model Portfolios and also may serve as a portfolio manager for portions of certain Model Portfolios, portions of Custom Program Accounts may be managed by IMCO based on non-discretionary investment recommendations provided by either third-party investment advisers or our affiliates (Style Managers). Model Portfolios offered in UMP may include (or be limited to) specific asset classes or types, such as mutual funds or ETFs. IMCO, in its sole discretion, will determine the manner and extent to which Model Portfolios, Style Managers, asset classes or types and investment products will be made available to you through UMP, including when a Model Portfolio or Style Manager will no longer be offered or will be restricted or restructured in its offering under UMP. You agree that the Model Portfolio recommended for your Program Account reasonably matches the investment goals and other information you provided in your Account Application and/or information you provided on the Site. You further acknowledge and agree that the decision to either accept or reject our recommended Model Portfolio is solely your decision. (e) Clients may fund their Program Accounts by depositing cash or with a transfer of securities from another brokerage or mutual fund account. In all cases, if securities are transferred or contributed to a Program Account, we will liquidate any securities that you deposit, transfer, or contribute into your Program Account that do not comprise a portion of your recommended Program Account. There may be tax consequences associated with such liquidations. Mutual fund shares transferred into and sold in your Program Account may be subject to sales loads, redemption fees, or other applicable charges imposed by the funds. We will not charge a separate brokerage commission or transaction fee in connection with sales related to funding your Wrap or Custom account. However, as noted above, DIA Program Account clients will be charged a fixed $25 fee in connection with sales related to funding their Program Account if their Program Account balance, after funding, will be less than $25,000. This fee will be charged every time you fund your DIA Program Account, so long as the overall Program Account balance, after funding, remains below $25,000. In addition, certain securities transactions may be subject to fees imposed by self-regulatory organizations, such as Financial Industry Regulatory Authority (FINRA) and the national securities exchanges based on the volume of securities we trade on their 3

4 markets for your Program Account. Except for SEC fees, electronic fund and wire transfer fees, the fee for funding a DIA Program Account described above, and any other charges otherwise agreed to with regard to your Program Account or described in the Program Brochure, once we begin the active management of your Program Account, you will not be charged a commission, transaction fee, or sales load on any transactions executed in your Program Account. (f) We shall vote on any proposals presented to shareholders of securities, mutual funds or ETFs held in your Program Account unless you notify us otherwise in writing. (g) With respect to Custom Program Accounts, we may appoint one or more Style Managers in our sole discretion. Such Style Manager shall have such authority as is consistent with, and shall be subject to the limitations contained in, this Agreement. 3. Provision of Account Statements and Other Reports (a) DIA DIA clients will have access to information regarding their Program Account, including performance information, via the Site. In addition, DIA clients will receive the following periodic communications: (i) Periodic Custodial Statement. Either monthly or quarterly, depending upon activity in your DIA Program Account, you will receive a custodial account statement from the account custodian showing Program Account holdings, cost basis, transactions, trades, and share transfers. (ii) DIA Quarterly Communication. At the end of each calendar quarter, you will receive an electronic communication from IMCO that includes, but is not limited to, instructions on how to contact IMCO if there have been any changes in your financial situation or investment objectives or if you wish to impose or modify any reasonable restrictions on the management of your DIA Program Account, and information on how to obtain information regarding your DIA Program Account holdings on the Site. (iii) Annual Review Communication. At least once a year, you will be contacted electronically with a request that you review your current financial information and investment objectives, and whether you wish to impose or modify any reasonable restrictions on the management of your DIA Program Account. 4

5 (b) Wrap and Custom Wrap and Custom clients will receive the following communications and reports, which may also be viewed through our digital channels on the Site: (i) Monthly Electronic Performance Statement. You will receive electronically a monthly Wrap or Custom Program Account performance statement on your usaa.com account. Your monthly electronic performance statement from us will show your Wrap or Custom Program Account performance, asset allocation, additions and withdrawals, and fees charged to your Wrap or Custom Program Account. (ii) Periodic Custodial Statement. Either monthly or quarterly, depending upon activity in your Wrap or Custom Program Account, you will receive a custodial account statement from the account custodian showing Program Account holdings, cost basis, transactions, trades and share transfers. We request that you compare the monthly performance statement to the custodial account statement. (iii) Quarterly Performance Statement. At the end of each calendar quarter, you will receive a statement showing monthly performance as described above that may also include market commentary and information regarding your Program Account holdings. We request that you compare the monthly performance statement to the periodic custodial account statement provided separately by the account custodian. (iv) Annual Review. At least once a year, you will be contacted with a request that you review your current financial information and investment objectives, and whether you wish to impose or modify any reasonable restrictions on the management of your Wrap or Custom Program Account. (c) Trade Confirmations. We, or a third party we designate, shall provide you with confirmations of transactions effected in your Program Account as directed by you in your Account Application, and in accordance with applicable law. To the extent permitted by applicable law, we shall not be responsible for correcting any errors made in the execution of transactions on your behalf unless we are notified of such errors within ten (10) days after transmitting an account statement to you which reflects the transactions. 4. Risks, Conflicts of Interest and Taxes You understand, acknowledge, and agree that: (a) No assurance has been, or can be, given that you will achieve your investment objectives by granting discretionary investment management authority to us, or by accepting or implementing, in whole or in part, any allocation strategy or any specific recommendation by us to purchase or sell any security or other investment. 5

6 (b) Investing in securities and other property involves risk of loss that you should understand and be prepared to bear. Investment performance of any kind can never be predicted or guaranteed and the value of your Program Account will fluctuate due to market conditions and other factors. Past performance does not guarantee future results. (c) The services provided under this Agreement, including Model Portfolio recommendations, are highly reliant on the accuracy of the information you provide us through the Account Application, and for DIA, the Site. If you provide us with inaccurate information, this could materially impact the quality and applicability of our advice. Further, you understand that Model Portfolio recommendations generated in the DIA offering currently focus on limited information, including your risk tolerance and your understanding of a minimum time horizon of five years. There are many other components of client information that are not currently considered in generating recommendations for DIA Program Accounts. If you believe that there is additional information relating to your investment objectives and financial circumstances that should be considered by IMCO to inform the investment advice and recommendations provided through the DIA offering, DIA may not be the appropriate Program for you. (d) The offerings within the Program are dependent upon various computer and telecommunication technologies, many of which are provided by or are dependent on third parties. The successful operation of the Program and DIA in particular, could be severely compromised by system or component failure, telecommunication failure, power loss, a software-related system crash, unauthorized system access or use, computer viruses and similar programs, fire or water damage, human errors in using or accessing relevant systems, or various other events or circumstances. Any event that interrupts such computer and/or telecommunication systems or operations could have a material adverse effect on Program Accounts. Such a material adverse effect may have a heightened impact on DIA Program Accounts given the automated nature of the advice provided under DIA. (e) The methodologies underlying the DIA platform rely on a number of assumptions based upon a limited amount of client information provided through the Site and a number of variables that may be extracted from complex financial markets or instruments that they intend to replicate. Any one or all of these assumptions, whether or not supported by past experience, could prove over time to be incorrect, which could result in significant losses. (f) IMCO may cause your Program Account to purchase investment products for which IMCO or its affiliates may receive certain additional economic benefits. These and other conflicts of interest are described in detail in the Program Brochure. (g) You are responsible for all tax liabilities arising from transactions in your Program Account. You understand that we do not, and will not, offer tax advice to you on any tax-related issues and you are strongly encouraged to seek the advice of a qualified tax professional. 6

7 5. Risk Acknowledgment; Limitation of Liability and Indemnification (a) Risk Acknowledgment You understand and agree that IMCO has not made, and is not making, any warranty or guarantee as to the performance or profitability of your Program Account or any part thereof, nor any guarantee that the investment objectives, expectations or targets of a particular Model Portfolio will be achieved. IMCO does not guarantee a specific level of performance, the success of any given investment decision or strategy that IMCO may recommend or undertake, or the success of IMCO s overall management of the Program Account. Investment recommendations or decisions are subject to various market, currency, economic and business risks as well as the risk that those investment decisions will not always be profitable or prove to have been wise. The Program Account may suffer loss of principal, and income, if any, may fluctuate. (b) Limitation of Liability and Indemnification It is understood that we shall act in good faith and shall not be liable for any loss incurred in connection with recommendations or investments made or other action taken on your behalf due to errors of judgment or by reason of our advice, including action taken or omitted prior to a notice of termination. We and our affiliates, employees, and agents (collectively, Indemnified Persons ) shall not be liable to you for any act or omission under this Agreement as long as we and our Indemnified Persons have not been negligent or violated applicable law. The federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended (ERISA), as applicable, impose liabilities under certain circumstances on persons who act in good faith. Thus, no provision contained in this document will waive or limit any rights that you may have under these laws. You understand that we shall not be liable for losses caused directly or indirectly by government restrictions, exchange or market rulings, suspension of trading, war, terrorism, strikes or other conditions, commonly known as acts of God, which are beyond our control. Without limiting any other indemnity provision of this Agreement, you shall, to the fullest extent allowed by applicable law, indemnify and hold harmless IMCO and its Indemnified Persons from any loss, damage, or liability arising out of or relating to: (i) any transaction in which IMCO acts directly or indirectly as your investment adviser, absent any willful or grossly negligent conduct by IMCO or its Indemnified Persons; (ii) your failure to provide true, accurate, complete, and current information to IMCO or to update client information; (iii) decisions and/or actions that you take or authorize third parties to take on your behalf; or (iv) any direction or communication you provide with respect to this Agreement or your Program Account. Without limiting the generality of the foregoing, IMCO and its Indemnified Persons will not be liable for any indirect, special, incidental or consequential damages or other losses (regardless of whether such damages or other losses were reasonably foreseeable). 7

8 6. Provisions Relevant to Retirement Plan Assets The following provisions apply to any assets we manage for you that are assets of a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended (a Retirement Plan Account). If your Retirement Plan Account includes assets of an employee benefit plan as defined in ERISA, these terms and conditions refer to the Program Account as an ERISA Plan Account. (a) We may invest Retirement Plan and ERISA Plan Account assets in the USAA Mutual Funds Trust, a series of mutual funds referred to as the USAA Mutual Funds which are sponsored and managed by our affiliate AMCO (USAA Funds). The Account Fee (as discussed below) does not include, and is in addition to, internal fees and expenses that are charged by the USAA Funds and described in the relevant fund prospectuses. These fees and expenses are paid by the Funds, but are ultimately borne by your Program Account as a shareholder in each Fund. These fees and expenses include management, administration, distribution, transfer agent, custodial, legal, audit and other customary fees and expenses related to investments in mutual funds, including payments to us, and our affiliates. In computing market value for purposes of calculating the Account Fee, USAA Fund shares will be valued at net asset value, as described in the applicable fund prospectus. The USAA Funds have certain characteristics that may make them advisable investments for your Program Account, including: diversification, liquidity, portability of shares, cost effective access to particular asset classes and market segments and readily available fund prices. You acknowledge that your Retirement Plan or ERISA Plan may invest in the USAA Funds outside the Program Account without incurring the Account Fee. (b) Except as otherwise provided, we, with respect to investments in each USAA Fund for Retirement Plan and ERISA Plan Accounts, will credit your Program Account an amount not less than equal the pro-rated portion of the management/advisory fee we (or our affiliates) receives from the USAA Fund as discussed more fully in Section 10. (c) You acknowledge and agree that you have received (i) a current prospectus for the USAA Funds, (ii) a separate Schedule A and, (iii) if your Program Account is opened online, web link as containing the list of all USAA Funds available to your Program Account and all investment management, investment advisory and similar fees and other fees paid by each USAA Fund to us and our affiliates, as well as information concerning the nature and extent of any differential between the rate of such fees and the investment advisory fees hereunder. The differential between the Account Fee and the investment management, investment advisory and other similar fees paid by the USAA Funds to us and our affiliates with respect to the services provided to the USAA Fund is the difference between any such fee disclosed and charged under this Agreement and the applicable investment management, investment advisory and other similar fees detailed in the relevant USAA Fund prospectus. A copy of each USAA Fund prospectus is available at You acknowledge and agree that you have access to such website and you have accessed and received these prospectuses to the extent you believe necessary to provide this acknowledgement. 8

9 (d) On the basis of the prospectuses and the disclosures set out herein, you authorize and consent to the investment of your Program Account(s) in the USAA Funds and redemptions therefrom, and the fees payable by the USAA Funds to us and our affiliates as described in the fund prospectuses. Our ability to invest in the USAA Funds is limited only to your chosen investment strategy for the Program Account. You may terminate this consent at any time by delivery of written notice to us. (e) If you choose to fund your Retirement Plan Account with mutual fund shares that are subject to fees under Rule 12b-1, we will either sell your shares of that fund before we begin active management of your Retirement Plan Account, or if we hold that fund in your Retirement Plan Account for a period of time before selling it, we will rebate your Retirement Plan Account with any 12b-1 fees that IMCO received from that mutual fund during that period after active management begins. (f) In addition, if your Program Account is an ERISA Plan Account: The fiduciary signing this Agreement represents that: (A) the plan s governing instruments provide that an investment manager as defined in ERISA may be appointed; and (B) the fiduciary is a named fiduciary as defined in ERISA, or designated as a named fiduciary pursuant to the procedure described in ERISA, who has the power under the plan to appoint an investment manager. (i) You agree to provide us copies of any changes to the Plan and related trust documents. Changes to these documents that affect our rights or obligations under this Agreement only bind us if we agree to them in writing. (ii) You represent that the services to be provided by us, and the investments and related transactions contemplated under the Program, are consistent with and permissible under the plan documents. (iii) We acknowledge that we are a fiduciary (as defined in ERISA) with respect to your Program Account. (iv) You agree to obtain and maintain during the period of this Agreement any bond required pursuant to ERISA or other applicable law and to include within the coverage of such bond us, our affiliates and their respective officers, directors, and employees whose inclusion is required by law. You also agree to provide us with appropriate documents evidencing such coverage promptly upon request. (v) The Plan is not a participant-directed plan (i.e., a plan under which participants direct the investment of their individual plan accounts). Based on the disclosures in this Agreement, the Program Brochure, and the ERISA Section 408(b)(2) disclosure document delivered to you with your Account Application, you: (1) have determined that the services provided for the plan s benefit under this Agreement are appropriate and helpful to the plan and its participants; 9

10 (2) have determined that the Account Fees and other compensation that we (and our affiliates) receive for providing these services are reasonable; and (3) have received the disclosures about these services, fees and compensation required by regulations issued under Section 408(b)(2) of ERISA. (vi) You understand and agree that Retirement Plan and ERISA Plan Accounts that are invested in CDs or other deposits of USAA Federal Savings Bank, USAA Savings Bank or another affiliated bank will bear a reasonable rate of interest as required by 29 C.F.R. Section b- 4(b)(2).So that we can comply with Prohibited Transaction Class Exemption 84-14, you have provided us a written list of the persons (except persons who are only affiliated with the plan sponsor) authorized to appoint us as a qualified professional asset manager, and to terminate or negotiate this Agreement for the Plan. You will tell us in writing of changes to this information. (vii) You have given us a written list of any restrictions or limitations on the securities and other investments in which the Program Account may invest or transact, directly or indirectly, including for the purpose of complying with Section 407 of ERISA. You must tell us in writing of changes to this information. affiliates). (viii) You represent that you are independent of, and unrelated, to us (or any of our 7. Service to Other Clients You acknowledge and understand that we perform investment advisory and other services for various clients, including services similar to those rendered under this Agreement. You agree that we may give advice and take action with respect to any of our other clients which may differ from advice given or the timing or nature of action taken with respect to you under this Agreement. 8. Termination; Amendments (a) We may, at any time and from time to time, amend this Agreement upon written notice to you, provided that such amendments shall comply with all applicable laws and regulations. Any such amendments shall be effective as of the date specified in our written notice of amendment. (b) We may close your Program Account and cease providing advisory services under this Agreement after we have given you written notice of our intent to terminate the Agreement. We also may terminate the Agreement immediately, with no written or other notice, if we believe that the rendering of our advisory services through the Program is no longer appropriate for you. With respect to clients participating in the DIA offering, we reserve the right to terminate your DIA Program Account immediately if you do not maintain a valid address. You may close your Program Account at any time by providing notice to us. Your request to close your account will be processed promptly after our receipt of your notice of termination. If you close your Program Account within five (5) business days after we open your Program Account, we will not charge you any Account Fees. Any termination will not, however, affect the liabilities or obligations of the parties under this Agreement arising from transactions initiated prior to such termination. 10

11 (c) On termination of Program services, we will discontinue the active management of your Program Account and will calculate and deduct from your Program Account any fees due, which will be prorated based on the number of days your Program Account was open during the applicable billing period. Upon any termination, IMCO reserves the right to liquidate any of your account positions in funds which are not made available to the general public except through UMP or similar wrap-fee programs. Such liquidation may have tax consequences. Upon notice of your or our intent to terminate this Agreement, we may request instructions from you as to where assets should be transferred, but we reserve the right, and you hereby authorize us, to modify the account number associated with your Program Account, to place trading restrictions on your Program Account, and to charge reasonable custody fees until such time as we receive instructions from you. If transfer instructions are not received from you within the time period, we reserve the right, and you hereby authorize us, to transfer securities or other assets to an identically registered brokerage account you may have already established with USAA Financial Advisors, Inc. or any of its affiliates. If no such account exists by the time of transfer, we reserve the right, and you hereby authorize us, to redeem the securities in your Program Account and either hold proceeds from such redemptions in your Program Account in a money market fund or other interest bearing instrument or close your Program Account and transfer the proceeds of your account directly to you via check or money order. In the case of any such redemption, you accept sole liability for any redemption fee, investment loss, and tax consequences. 9. Access to Your Assets (a) Withdrawals. You have the right to withdraw amounts from your Program Account upon proper notice to us. Your request to withdraw amounts from your account will be effective upon our receipt. Redemptions in kind of the securities in your account or liquidation of those securities generally will occur as soon as practicable. (b) Joint Authority. With regard to a Program Account registered in joint names, except as otherwise limited by paragraph 8(e) below, you agree that each registered owner acting individually shall have authority on behalf of your Program Account(s). You authorize us to follow the instructions of any of the registered owners in every aspect concerning this Program Account including, without limitation, instructions to: effect withdrawals and take delivery of any or all securities in the Program Account; receive demands, notices, reports, statements, and communications of every kind; receive money, securities, and property of every kind; make agreements relating to any of the foregoing matters and terminate or modify those agreements or waive any of the provisions of those agreements; and generally deal with us as fully and completely as if he/she alone were interested in the Program Account, all without notice to the other registered owner(s). This authority will continue unless you tell us otherwise in writing. We reserve the right, at our discretion, to require consent, written or otherwise, from all joint account holders before acting on any instructions from a joint account owner. (c) Inconsistent Instructions. In the event we receive inconsistent instructions from two or more registered owners or receive a court order with respect to any jointly owned Program Account(s), we may, but are not obligated to: (i) restrict activity in such Program Account(s); (ii) require that all instructions be in writing signed by all registered owners; or (iii) liquidate the Program Account(s) and/or file an action in an appropriate court at the expense of the registered owners to obtain instructions. 11

12 (d) Liability of Account. Your liability with respect to any jointly owned Program Account shall be joint and several. You further agree that all property we may be holding or carrying for any one or more of the registered owners shall be subject to a lien in our favor for the discharge of such Program Account to us. That lien would be in addition to, and not in substitution of, the rights and remedies we otherwise would have. You also agree that all property which you own or in which you have an ownership interest, whether owned individually, jointly, or in the name of another person or entity, which at any time may be in our possession or control for any purpose, including safekeeping, shall be subject to a continuing security interest, lien, and right of set-off for the discharge and satisfaction of any debts or obligations, however arising, that you may owe to us at any time and for any reason, except that any such security interest lien or right of set-off with respect to a Retirement Plan Account shall apply only as to debts or obligations owed by such Retirement Plan Account. We may, at our discretion, hold such property until your debts or obligations to us are fully satisfied or we may apply such property and the proceeds of the liquidation of such property toward the satisfaction of your debts and obligations, and you will remain liable to us for any deficiency. In enforcing this security interest, we shall have the discretion to determine which property is to be sold and the order in which it is to be sold and shall have all the rights and remedies available to a secured party under the Texas Uniform Commercial Code. (e) Death of Owner. The agency created by this Agreement terminates with the death of a sole Program Account owner. Upon notice of the death of a sole Program Account owner, we will cease to manage the assets in the Program Account until instructed otherwise, in writing, by a duly authorized representative of the Program Account owner s estate or, in the case of a Retirement Plan Account, the named beneficiary of the Program Account. For a jointly owned Program Account held as tenants in common, the agency created by this Agreement terminates upon the death of a joint owner of the Program Account. Upon receipt of notice of the death of a Program Account owner, we will cease to manage the assets in the Program Account until instructed otherwise, in writing, by each surviving registered joint owner of the Program Account and by a duly authorized representative of the deceased joint owner s estate. However, for a jointly owned Program Account with right of survivorship, we will continue to manage the Program Account after the death of one of the joint owners until we are instructed otherwise in writing by all of the surviving joint Program Account owners. You agree that in the event of the death of either or any of the registered owners of such Program Account, the survivor or survivors shall immediately give us written notice thereof. We may, before or after receiving such notice, initiate such proceedings, require such papers and inheritance or estate tax waivers, retain such portion of and/or restrict transactions in such Program Account as we may deem appropriate under any present or future laws or otherwise. The estate or beneficiary of any registered owner who shall have died shall be responsible and each survivor shall continue to be responsible for losses to this Program Account in any way resulting from the processing of transactions initiated prior to the receipt by us of such notice of death or incurred in the liquidation of the Program Account or the adjustment of the interests of the respective parties. (f) Type of Registration. We make no representation regarding the tax aspects or the legal results of opening a joint account or any other type of account registration. You are responsible solely for selecting the type of account registration. We recommend that you consult with your own attorney or other advisor to determine the advisability of establishing joint account registration. 12

13 (g) Restrictions on Disbursements. We may place trading, disbursement, or other restrictions on your account, or close your account, as we reasonably deem necessary, including, but not limited to, in situations where we reasonably believe that financial exploitation or violation of any law is occurring, has been attempted, or will be attempted in connection with the account or with any of your products and services with USAA; where we reasonably suspect diminished capacity on the part of any account holder; where there is a notice of dispute between account holders; or in response to a request from a governmental agency or law enforcement authority. You agree to abide by any such restrictions and not to initiate trades or transactions that would violate the restrictions. You further agree to hold USAA harmless for any such restrictions, holds, or account closures. 10. Minimums; Fees (a) To open a Program Account, you must contribute at least the minimum investment amount in cash or other securities. A minimum amount may be required for subsequent investments to existing accounts as may be indicated in the Program Brochure. If your Program Account balance falls below the Program minimum investment amount, we reserve the right to terminate your Program Account as described in Section 8. If your Program Account falls below the minimum investment amount, we also reserve the right to calculate your Account Fee based on the minimum investment amount rather than your actual Program Account assets (Minimum Account Fee). The imposition of the Minimum Account Fee may cause Account Fee rates (expressed as a percentage) to be greater than the fees stated in the attached Schedule B. The minimum initial investment and balance requirements are not negotiable; however, we may waive the minimum initial investment and Minimum Account Fee in our sole discretion. (b) If you have a Custom Program Account and the balance in your account falls below a certain threshold amount, we may convert your relationship from a Custom Program Account to a Wrap Program Account in our sole discretion. Before we convert an account from a Custom Program Account to a Wrap Program Account we will notify you that we intend to convert your Program Account and provide you an opportunity to either add additional assets to your Program Account or terminate your Program Account. In the event we convert your Custom Program Account to a Wrap Program Account, we will liquidate some or all of your current holdings to convert your account to a Wrap Program Account and an appropriate model portfolio, and such liquidation may result in a taxable event to you. (c) We will charge you an asset-based program fee (Account Fee) for Account services we provide to you. We will deduct automatically Account Fees directly from your Program Account on a monthly basis in arrears. Should you close your Program Account, we will cease management and assess the applicable Account Fee due for the period your Program Account assets were under active management in the Program. (d) For all Program Accounts, we will provide discretionary investment management, brokerage and custodial services (through us or a third party), ongoing management of your Program Account assets, client services, and communications to keep you informed about your Program Account. These services are covered by the Program Fee. We will provide additional services to Custom Program Accounts, as described in the Program Brochure; these additional services are covered by the Investment Management Fee. DIA and Wrap Program Accounts are not charged an Investment Management Fee. 13

14 (e) The Program Fee is calculated on the average daily balance based upon the market value of the applicable assets in your account, including cash balances, money market fund shares and other positions and, when applicable, is prorated based on days the account is open and actively managed. (f) The gross Program Fee is calculated on the average daily balance (based upon the market value) of the total assets in your Program Account, including without limitation, cash balances, money market fund shares and other fund positions. Please see Schedule B for Program Fee rates, which are divided between the DIA Program Fee Schedule and the Wrap and Custom Program Fee Schedule. The Program Fee will be calculated by deducting a credit amount (the Credit Amount) from the applicable annual gross Program Fee. For DIA and Wrap Program Accounts, the Account Fee is the Program Fee. (i) For Wrap and Custom Program Accounts, the Credit Amount for USAA Funds in UMP is calculated as the greater of: (i) an amount equal to 0.092% (monthly) of the value of your account (1.10% on an annual basis) or (ii) the sum of (a) the actual investment management/advisory fees including any performance adjustment (but not other fund expenses such as transfer agency fees) paid to AMCO or other of our affiliates during the month by USAA Funds that are attributable to the shares of such funds held in your Program Account, plus (b) Rule 12b-1 fees paid to IMCO or an affiliate during that month that are attributable to the shares of non-usaa mutual funds held in your Program Account. (ii) For DIA Program Accounts, the Credit Amount for USAA Funds in UMP is calculated as the greater of: (i) an amount equal to 0.004% (monthly) of the value of your account (0.05% on an annual basis) or (ii) the sum of (a) the actual investment management/advisory fees including any performance adjustment (but not other fund expenses such as transfer agency fees) paid to AMCO or other of our affiliates during the month by USAA Funds that are attributable to the shares of such funds held in your Program Account, plus (b) Rule 12b-1 fees paid to IMCO or an affiliate during that month that are attributable to the shares of non-usaa mutual funds held in your DIA Program Account. (g) For Custom Program Accounts, the Account Fee is the sum of the Program Fee plus the Investment Management Fee. The Investment Management Fee is calculated by multiplying the average daily balance of equity holdings (including, e.g., individual securities, REITs and equity ETFs) and fixedincome holdings (including, e.g., individual bonds, CDs, and fixed-income ETFs) in a Custom Program Account by the appropriate marginal Investment Management Fee rate for that asset class. Mutual fund holdings are excluded from Investment Management Fee calculations. Please see Schedule B for Investment Management Fee rates. (h) You may pay a lower Account Fee based on the application of the breakpoints. The breakpoints available in UMP are reflected in the Fee schedules on the attached Schedule B. You receive lower Account Fees only on the assets contributed above each of the breakpoint levels on Schedule B. (i) You agree to pay fees calculated as described in this Section 10 using the rates set forth on the attached Schedule B and the Program Brochure. We will provide you with prior written notice of any fee changes applicable to your account. 14

15 (j) On October 27, 2012, the Private Investment Management, Strategic Fund Adviser, and Global Opportunities Portfolios investment advisory programs (Legacy Programs) were terminated and all Legacy Program accounts were converted to UMP accounts. At IMCO s sole discretion, these converted Legacy Program accounts may be offered different Account Fees than those described in the UMP wrap fee program brochure. (k) Householding of Account Fees. You may qualify for more favorable Account Fees based on the cumulative assets that you maintain in Wrap and Custom Program Accounts in your household. DIA Program Accounts are not eligible for householding. For the purposes of this Agreement, householding shall mean aggregating eligible accounts in order to qualify for more favorable Account Fees. In order to household Program Accounts, you must provide IMCO with authorization to do so. We are not responsible for identifying accounts eligible for householding consolidation. We may at our sole discretion household Wrap and Custom Program Accounts owned by a single individual. Upon your request we will make a reasonable effort to determine the eligibility of the Wrap and/or Custom Program Accounts in your household. Certain Program Accounts may not be eligible for householding consolidation. The ability to household Program Accounts is described in further detail in the Program Brochure. Special rules and limitations on the ability to household accounts apply where Retirement Plan Accounts are included. You agree to indemnify us and hold us harmless from any loss, claim, expense, or other liability in connection with account household groups. (l) As noted in Section 2 above, beginning May 1, 2017, clients will be able to fund their DIA Program Accounts by contributing or transferring securities to their DIA Program Account. However, if securities are transferred or contributed to fund a DIA Program Account, we will liquidate any of those securities that do not comprise a portion of the recommended DIA Program Account. A fixed fee of $25 will be charged in connection with sales related to liquidating those securities if the DIA Program Account balance, after funding, will be less than $25,000. This fee will be charged every time the DIA Program Account is funded with securities and we have to liquidate some or all of those securities, so long as the overall DIA Program Account balance, after funding, remains below $25, Representations and Acknowledgements by Client (a) You represent that the terms hereof do not violate any obligation by which you are bound, whether arising by contract, operation of law, or otherwise, and that, if required, (i) your concurrence with the terms and conditions of this Agreement has been duly authorized by appropriate action and is binding upon you in accordance with its terms, and (ii) you will deliver to us such evidence of such authority as we may reasonably require, whether by way of a certified resolution, trust agreement, or otherwise. 15

16 (b) You represent that you have full legal capacity and authority, and that you are of the age of majority to enter into this Agreement. Unless you advise us to the contrary in writing, and provide us with a letter of approval from your employer where required, you represent that you are not an employee of any exchange, or of any corporation of which any exchange owns a majority of the capital stock, or of a member of any exchange, or of a member firm or member corporation registered on any exchange, or of any corporation, firm or individual engaged in the business of dealing, either as a broker or a principal, in securities, bills of exchange, acceptances or other forms of commercial paper. You further represent that no one except the person(s) signing the Account Application and any named beneficiary has an interest in the assets which we will hold and manage on your behalf. (c) You represent that you are a United States resident and that you currently have, and will maintain for the life of this Agreement, a legal United States mailing and physical address. (d) You represent that the information furnished by you in the Account Application, through the Site or otherwise, is accurate in all material respects and that you will promptly notify us of any material changes in any such information. (e) You understand and acknowledge that IMCO and its affiliates rely on the information you provide in order to provide you a recommended Model Portfolio, as well as in providing ongoing management to your Program Account. You understand and agree that IMCO will not independently verify any information you provide to IMCO or its affiliates on the Account Application, through the Site or otherwise. (f) You hereby acknowledge that you have received, read and understood the Program Brochure that describes UMP (Part 2A, Appendix 1 of our current Form ADV), any applicable Brochure Supplement(s), the Account Application and this Agreement, and that you agree to the terms of this Agreement. Annually, we will provide you an opportunity to receive either an updated Program Brochure free of charge. You agree to the disclosures in the Program Brochure, as may be amended from time to time. [SPACE INTENTIONALLY LEFT BLANK] 16