OMB APPORVAL OMB Number: FORM ADV Expires: February 28, 2011

Transcription

1 OMB APPORVAL OMB Number: FORM ADV Expires: February 28, 2011 Uniform Application for Investment Adviser Registration Estimated average burden Part II - Page 1 hours per response.4.07 Name of Investment Adviser: LTD. Address: (Number and Street) (City) (State) (Zip Code) Area Code: Telephone number: 11 Raymond Avenue, Poughkeepsie, NY (845) This part of gives information about the investment adviser and its business for the use of clients. The information has not been approved or verified by any governmental authority. Table of contents Item Number Item Page 1 Advisory Services and Fees 2 2 Types of Clients 2 3 Types of Investments 3 4 Methods of Analysis, Sources of Information and Investment Strategies 3 5 Education and Business Standards 4 6 Education and Business Background 4 7 Other Business Activities 4 8 Other Financial Industry Activities or Affiliations 4 9 Participation or Interest in Client Transactions 5 10 Conditions for Managing Accounts 5 11 Review of Accounts 5 12 Investment or Brokerage Discretion 6 13 Additional Compensation 6 14 Balance Sheet 6 Continuation Sheet Schedule F Balance Sheet, if required Schedule G (Schedules A, B, C, D, and E are included in Part I of this Form, for the use of the regulatory bodies, and are not distributed to clients.) Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. SEC 1707 (4-7-06) File 3 of 4

2 FORM ADV Applicant: SEC File Number: Date: Part II - Page 2 LTD September 24, A. Advisory Services and Fees. (check the applicable boxes) For each type of service provided, state the approximate % of total advisory billings from that service. (See instruction below.) Applicant: (1) Provides investment supervisory services 15 % (2) Manages investment advisory accounts not involving investment supervisory services 10 % (3) Furnishes investment advice through consultations not included in either service described above 1 % (4) Issues periodicals about securities by subscription % (5) Issues special reports about securities not included in any service described above % (6) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which clients may use to evaluate securities % (7) On more than an occasional basis, furnishes advice to clients on matters not involving securities 2 % (8) Provides a timing service 62 % (9) Furnishes advice about securities in any manner not described above 10 % (Percentage should be based on applicant s last fiscal year. If applicant has not completed its first fiscal year, provide estimates of advisory billings for that year and state that the percentages are estimates.) B. Does applicant call any of the services it checked above financial planning or some similar term? Yes No C. Applicant offers investment advisory services for: (check all that apply) (1) A percentage of assets under management (4) Subscription fees (2) Hourly charges (5) Commissions (3) Fixed fees (not including subscription fees) (6) Other D. For each checked box in A above, describe on Schedule F: the services provided, including the name of any publication or report issued by the adviser on a subscription basis or for a fee applicant s basic fee schedule, how fees are charged and whether its fees are negotiable when compensation is payable, and if compensation is payable before service is provided, how a client may get a refund or may terminate an investment advisory contract before its expiration date 2. Types of clients - Applicant generally provides investment advice to: (check those that apply) A. Individuals E. Trusts, estates, or charitable organizations B. Banks or thrift institutions F. Corporations or business entities other than those listed above C. Investment companies G. Other (describe on Schedule F) D. Pension and profit sharing plans all items.

3 FORM ADV Applicant: SEC File Number: Date: Part II - Page 3 LTD September 25, Types of Investments. Applicant offers advice on the following: (check those that apply) A. Equity securities H. United States government securities (1) exchange-listed securities I. Options contracts on: (2) securities traded over-the-counter (1) securities (3) foreign issuers (2) commodities B. Warrants J. Futures contracts on: C. Corporate debt securities (other than commercial paper) (1) tangibles (2) intangibles D. Commercial paper E. Certificates of deposit K. Interests in partnerships investing in: F. Municipal securities (1) real estate (2) oil and gas interests G. Investment company securities: (3) other (explain on Schedule F) (1) variable life insurance (2) variable annuities L. Other (explain on Schedule F) (3) mutual fund shares 4. Methods of Analysis, Sources of Information, and Investment Strategies. A. Applicant s security analysis methods include: (check those that apply) (1) Charting (4) Cyclical (2) Fundamental (5) Other (explain on Schedule F) (3) Technical B. The main sources of information applicant uses include: (check those that apply) (1) Financial newspaper and magazines (5) Timing services (2) Inspections of corporate activities (6) Annual reports, prospectuses, filings with the Securities and Exchange Commission (3) Research materials prepared by others (7) Company press releases (4) Corporate rating services (8) Other (explain on Schedule F) C. The investment strategies used to implement any investment advice given to clients include: (check those that apply) (1) Long term purchases (5) Margin transactions (securities held at least a year) (2) Short term purchases (6) Option writing, including covered options, (securities sold within a year) uncovered options or spreading strategies (3) Trading (securities sold within 30 days) (7) Other (explain on Schedule F) (4) Short sales all items.

4 FORM ADV Applicant: SEC File Number: Date: Part II - Page 4 LTD September 24, Education and Business Standards. Are there any general standards of education or business experience that applicant requires of those involved in Yes No determining or giving investment advice to clients? (If yes, describe these standards on Schedule F.) 6. Education and Business Background. For: each member of the investment committee or group that determines general investment advice to be given to clients, or if the applicant has no investment committee or group, each individual who determines general investment advice given to clients (if more than five, respond only for their supervisors) each principal executive officer of applicant or each person with similar status or performing similar functions. On Schedule F, give the: name formal education after high school year of birth business background for the preceding five years 7. Other Business Activities. (check those that apply) A. Applicant is actively engaged in a business other than giving investment advice. B. Applicant sells products or services other than investment advice to clients. C. The principal business of applicant or its principal executive officers involves something other than providing investment advice. (For each checked box describe the other activities, including the time spent on them, on Schedule F.) 8. Other Financial Industry Activities or Affiliations. (check those that apply) A. Applicant is registered (or has an application pending) as a securities broker-dealer. B. Applicant is registered (or has an application pending) as a futures commission merchant, commodity pool operator or commodity trading adviser. C. Applicant has arrangements that are material to its advisory business or its clients with a related person who is a: (1) broker-dealer (7) accounting firm (2) investment company (8) law firm (3) other investment adviser (9) insurance company or agency (4) financial planning firm (10) pension consultant (5) commodity pool operator, commodity trading adviser or futures commission merchant (11) real estate broker or dealer (6) banking or thrift institution (12) entity that creates or packages limited partnerships (For each checked box in C, on Schedule F identify the related person and describe the relationship and the arrangements.) Yes No D. Is applicant or a related person a general partner in any partnership in which clients are solicited to invest? (If yes, describe on Schedule F the partnerships and what they invest in.) all items.

5 FORM ADV Applicant: SEC File Number: Date: Part II - Page 5 LTD September 24, Participation or Interest in Client Transactions. Applicant or a related person: (check those that apply) A. As principal, buys securities for itself from or sells securities it owns to any client. B. As broker or agent effects securities transactions for compensation for any client. C. As broker or agent for any person other than a client effects transactions in which client securities are sold to or bought from a brokerage customer. D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related person has some financial interest. E. Buys or sells for itself securities that it also recommends to clients. (For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions.) Describe, on Schedule F, your code of ethics, and state that you will provide a copy of your code of ethics to any client or prospective client upon request. Yes 10. Conditions for Managing Accounts. Does the applicant provide investment supervisory services, manage investment advisory accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of assets or other conditions for starting or maintaining an account? No (If yes, describe on Schedule F) 11. Review of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds itself out as providing financial planning or some similarly termed services: A. Describe below the reviews and reviewers of the accounts. For reviews, include their frequency, different levels, and triggering factors. For reviewers, include the number of reviewers, their titles and functions, instructions they receive from applicant on performing reviews, and number of accounts assigned each. For Item 11A see Schedule F B. Describe below the nature and frequency of regular reports to clients on their accounts. For Item 11B see Schedule F all items.

6 FORM ADV Applicant: SEC File Number: Date: Part II - Page 6 LTD September 25, Investment or Brokerage Discretion. A. Does applicant or any related person have authority to determine, without obtaining specific client consent, the: Yes (1) securities to be bought or sold? Yes (2) amount of the securities to be bought or sold? Yes (3) broker or dealer to be used? Yes (4) commission rates paid? No No No No B. Does applicant or a related person suggest brokers to clients? Yes No For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B, describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commissions. If the value of products, research and services given to the applicant or a related person is a factor, describe: the products, research and services whether clients may pay commissions higher than those obtainable from other brokers in return for those products and services whether research is used to service all of applicant s accounts or just those accounts paying for it; and any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in return for product and research services received. 13. Additional Compensation. Does the applicant or a related person have any arrangements, oral or in writing, where it: A. is paid cash by or receives some economic benefit (including commissions, equipment or non-research Yes No services) from a non-client in connection with giving advice to clients? Yes No B. directly or indirectly compensates any person for client referrals? (For each yes, describe the arrangements on Schedule F.) 14. Balance Sheet. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant: has custody of client funds or securities (unless applicant is registered or registering only with the Securities and Exchange Commission); or requires repayment of more than $500 in fees per client and 6 or more months in advance Has applicant provided a Schedule G balance sheet? Yes No all items.

7 Continuation Sheet for Part II LTD October 20, 2010 Introduction This document is being offered to you on behalf of LTD. (AFP or the Adviser) so as to provide you with information about the services AFP provides and the manner in which those services are made available to its clients. AFP is a New York corporation formed on May The primary business of AFP is to provide advisory services as defined by the Investment Advisers Act of 1940 to new and existing clients of its registered broker-dealer affiliate, Prime Capital Services, Inc. (Prime), whose office is located at 11 Raymond Avenue, Poughkeepsie, New York Prime is a member of both FINRA as well as the Securities Investor Protection Corporation (SIPC). Prime currently has registered branch offices located in New York, New Jersey, Connecticut, Florida, Illinois, Michigan, Maryland, Washington, Colorado, and Pennsylvania. A copy of this disclosure document shall be provided to the client prior to, or contemporaneously with, the execution of any advisory agreement between the client and AFP. Any client who has not received a copy of AFP s written disclosure statement at least 48 hours prior to executing any advisory agreement shall have five business days subsequent to executing the agreement to terminate AFP s services and to receive a full refund of all client monies already paid without penalty. Prior to engaging AFP to provide investment advisory services, the client will be required to enter into an advisory agreement with AFP and a separate custodial/clearing agreement (CCA). The advisory agreement shall set forth the terms and conditions of the engagement, and describes the scope of the services to be provided and the fees for such. Neither AFP, nor the client, may assign the advisory agreement without the prior written consent of the other party. Transactions or other events that do not result in a change of actual control or management of AFP shall not be considered an assignment. In performing its services, AFP shall not be required to verify any information received from the client or from the client s other professionals, and is expressly authorized to rely thereon. If requested by the client, AFP may recommend and/or engage the services of other professionals for implementation purposes. The client is under no obligation to engage the services of any such recommended professional. The client retains absolute discretion over all such implementation decisions and is free to accept or reject any recommendation from AFP. Privacy Policy AFP will collect non-public personal information (NPI) about the client as part of the engagement. This information will be obtained directly from the client and includes details such as the client s date of birth, social security number, financial account numbers and balances, tax returns, sources and amounts of income, home addresses, telephone numbers, and other such personal information. LTD. Page 1 of 20

8 Continuation Sheet for Part II LTD October 20, 2010 Introduction As part of AFP s policy, AFP restricts access to confidential personal information about the client to those AFP employees who need to know that information in order to provide products or services to the client. AFP maintains physical, electronic, and procedural safeguards to comply with federal standards to guard the client s confidential personal information. Should a client agree to accept investment advisory services provided by AFP, AFP may share the client s NPI with non-affiliated third parties. AFP may maintain agreements with various affiliated or non-affiliated entities who may act as the custodian and account holder for the clients of AFP and securities may be offered through such entities if properly engaged by AFP. AFP will share only the appropriate customer NPI necessary to ensure that AFP is able to provide the highest level of service to the client. AFP will provide NPI about former clients only if required to do so by law or regulation or to those parties who need such information in order for AFP to carry out any continued obligation with respect to the services covered by the former adviser/client relationship. Should the client prefer, AFP will not disclose confidential personal information about the client to non-affiliated third parties. The client may opt out of those disclosures; that is, the client may direct AFP not to make those disclosures (other than disclosures required or permitted by law). Should the client wish to opt out of disclosures to non-affiliated third parties, he/she may call the following number: , option 2. Miscellaneous ERISA ACCOUNTS AFP, in those instances where its role as a fiduciary under the Employment Retirement Income Security Act of 1974 (ERISA) is in question, first makes a determination of whether the client qualifies as an ERISA Plan. For purposes of handling transactions of clients whose business is done pursuant to Section 403(b) of the Internal Revenue Code, AFP relies upon the safe harbor provided in Labor Regulation (f), (40 Fed. Reg , August 15, 1975). That is, AFP and its agents seek and maintain written acknowledgement from 403(b) participants that: 1. Participation in any program is voluntary; 2. All rights under the contract or account at issue are enforceable solely by the employee, designee or appropriate beneficiary; and 3. The employer s involvement in the account in any regard is appropriately limited. LTD. Page 2 of 20

9 Continuation Sheet for Part II LTD October 20, 2010 Introduction As to all other clients who may fall under the definition of a Section 406 ERISA Plan, AFP and its broker-dealer affiliate, Prime, jointly verify, prior to the transaction of business, whether a plan is one other than an Individual Retirement Account or a plan that covers no employees, both of which are not Section 406 ERISA Plans. In those cases where accounts are Section 406 plans: 1. Prime and AFP are not trustees of such plans; 2. All securities transactions in such plans are performed on an agency basis; 3. Plan accounts are monitored for compliance with commonly accepted industry standards for unsuitable concentrations and excessive activity; 4. Brokerage arrangements with Prime and advisory service arrangements with AFP are authorized in writing by a plan fiduciary independent of AFP and Prime and are terminable at will; 5. Within 90 days prior to such authorization, the plan s authorizing fiduciary is provided with a copy of AFP s and copy of the text of Prohibited Transaction Class Exemption S (51, Fed, Reg. 416S6, Nov. 18, 1986) ( PTE ); 6. The authorizing fiduciary is provided with (a) confirmations of transactions prepared and presented in accordance with Rule 10n-10 of the Securities Exchange Act of 1934; 7. On an annual basis, the authorizing fiduciary receives a summary which includes (a) a total of the transaction charges incurred by the plan in connection with the brokerage services performed by Prime, (b) charges paid to entities unaffiliated with Prime, (c) a description of brokerage placement practices if such practices have changed materially during the period in question, and (d) the plan s portfolio turnover ratio; 8. A plan will not be permitted to transact business in any security in which Prime is a market maker or underwriter unless permitted in the safe harbor of Prohibited Transaction Class Exemption 75-1 (40 Fed. Reg , Oct. 31, 1975); and 9. The plan s authorizing fiduciary is subject to due diligence by AFP and Prime for purposes of compliance with appropriate know your customer rules of FINRA and state securities laws. Item 1.A(1) and 1.A(2) Prime Financial Advisory Services Prime Financial Advisory Services are designed for traditional brokerage clients who require ongoing advice and monitoring of their investments by their broker or adviser. Clients who employ the Adviser s agent for these services agree to an annual advisory fee in addition to commissions on some types of securities transactions. Commissions will therefore be billed at a discounted rate for such clients. In addition to monitoring individual securities, clients may engage the Adviser s agents for due diligence and also selecting and monitoring services for a portfolio of no-load mutual funds. This service is not provided as a lower cost alternative to front-end load products, but is designed to accommodate the recommendation of products not traditionally available through LTD. Page 3 of 20

10 Continuation Sheet for Part II LTD October 20, 2010 Item 1.A(1) and 1.A(2) broker-dealers as well as to accommodate those clients desiring active trading services (for example, market timing). Also, custodial and record keeping services are provided when transacting no-load mutual funds through the Adviser. Pre-Qualification Consultation The Adviser s agents will conduct an interview or a meeting with clients in order to analyze their present financial situation as well as describe the various advisory services available. If clients choose to proceed, the Adviser s agents will qualify the client by matching their individual investment objectives and financial information along with various personal objectives (education, housing, retirement, etc.). The client interview process may involve a simple verbal conversation with information recorded on appropriate New Account Applications, or it may involve an in-depth financial and disclosure package used for the purpose of designing a comprehensive financial retirement and/or estate plan. The latter of these options is offered as one of the services described below. Upon completion of this review and qualification, the client may then select one or a combination of the following services: Prime Financial Managed Asset Programs If client so chooses, the Adviser s agent will also provide the client with continuous, direct asset management services. These services may or may not involve discretion on the part of the Adviser s agent and may include all types of registered securities. In selecting this service, the client understands that once he is qualified for a particular investment style (growth, growth and income, aggressive growth, etc.), the Adviser s agents will then focus on the performance of the various asset classes. Investment decisions will generally be based on their expected performance, not individual client considerations. The Adviser s agents will utilize individual stocks or bonds or families of load or non-load mutual funds in order to match their investment profile. The Adviser offers a selection of managed programs tailored to meet the needs of its diversified clientele. For complete disclosure of any wrap-fee programs refer to the Adviser s separate wrap fee brochure. Fees for AFP s advisory services described in this section may involve the following fee types: Percentage of Assets Under Management Fixed/Flat Fees Please refer to Item 1.D below for specific details related to the fees AFP may charge for the services described in this section. LTD. Page 4 of 20

11 Continuation Sheet for Part II LTD October 20, 2010 Item 1.A(3) AFP may furnish investment advice through consultations not included in any of the services described above. Prime Financial Counseling Services The Prime Financial Counseling Service provides a program to assist clients with a variety of non-transaction financial planning needs. This service offers assistance in developing investment, retirement, insurance, estate and tax planning on an individualized basis for an hourly or flat fee. Clients will work directly with the Adviser s agent who will organize and analyze all necessary financial and related information concerning the clients situation and then help the client decide what paths to follow to realize their goals. The planning process normally takes place over a three to four month period and includes several one to two hour counseling sessions between the client and the agent. The Prime Financial Counseling Service is generally offered to individuals or couples with incomes over $50, per year and a net worth over $250, While these guidelines are somewhat flexible, they are indicative of those individuals who can best utilize this service. Fees for AFP s advisory services described in this section may involve the following fee types: Percentage of Assets Under Management Fixed/Flat Fees Please refer to Item 1.D below for specific details related to the fees AFP may charge for the services described in this section. Item 1.A.(7) On more than an occasional basis, individuals associated with AFP may furnish advice to the client on matters not involving securities. Such matters may involve issues related to tax planning and/or tax preparation, estate planning, insurance products, mortgage financing, college funding, savings strategies, etc. As part of these services, the client may or may not engage AFP to provide him/her with any written documentation that supports recommendations or conclusions reached in advising the client. If the client wished to engage AFP for some type of service not specifically mentioned or referred to in the services noted above, he/she must then provide AFP with guidance as to the scope of the engagement. Fees for AFP s advisory services described in this section may involve the following fee types: Fixed/Flat Fees Hourly Fees Please refer to Item 1.D below for specific details related to the fees AFP may charge for its services described in this section. LTD. Page 5 of 20

12 Continuation Sheet for Part II LTD October 20, 2010 Item 1.A.(7) AFP may prepare a written financial plan as part of its advisory services. AFP s written financial plan services may involve consultation, analysis, and recommendations in the six areas of financial planning, which include (1) financial situation; (2) income taxes; (3) insurance; (4) investments; (5) retirement planning; and (6) estate planning. In order to determine a suitable course of action for an individual client, AFP shall perform a review of the variables that are presented. Such review may include, but would not necessarily be limited to, investment objectives, consideration of the client s overall financial condition, income and tax status, personal and business assets, risk profile, and other factors unique to the client s particular circumstances. AFP shall review the client s present financial situation and issue a written analysis and report of recommendations in accordance with the client s goals and objectives. This service may include an initial consultation and subsequent follow-up visits. AFP, unless engaged separately to do so, will not be responsible for the implementation of the plan. The client assumes full responsibility for the implementation for the plan. The services provided in this regard may include but would not be limited to the following: Preparation of an annual net worth statement; Create a cash flow statement; Review current investments and make recommendations thereon; Review client s most recent tax returns and provide tax planning advice or tax preparation services; Review client s life insurance and disability insurance and make recommendations thereon; Review client s estate plan and make recommendations thereon; Complete a retirement analysis; and Provide education planning advice. AFP s fees for a written financial plan may be based on a flat fee or an hourly fee and may be affected by several factors such as the complexity of pertinent circumstances, the responsibility assumed by AFP, the potential benefit resulting to the client and the perceived probability of certain anticipated complications that may arise. Although not an all-inclusive list, the following factors may impact the fee(s) charged to a client. Investment objectives; Consideration of the client s overall financial condition, including current financial holdings; Net worth; Income and tax status personal and business assets; Marital status; Number of dependents; Risk profile; Previous investment experience; and LTD. Page 6 of 20

13 Continuation Sheet for Part II LTD October 20, 2010 Item 1.A.(7) Other factors unique to the client s particular circumstances. It should be noted that the above listed factors are NOT intended to represent prospective examples of ALL factors that may contribute to the ultimate fee determination for any given client, however, any of these factors COULD contribute to such. Further, no single one of these factors should be solely relied upon in a client s fee arrangement(s) determination. As previously noted, fees for AFP s advisory services described in this section may involve the following fee types: Fixed/Flat Fees Hourly Fees Please refer to Item 1.D below for specific details related to the fees AFP may charge for its services described in this section. Item 1.A.(8) AFP may provide market-timing services to its clients. From time to time, AFP may prepare and provide at no charge to its clients, publications designed to provide investment advice and other information regarding particular products or investment principles. No fee will be charged for such publications and all such publications may be provided to existing and new clients of AFP. Such publications may provide notification to existing clients (that hold a particular securities product) of expected market turns or conditions, or other issues that may affect that particular securities product, or client s overall portfolio. It is anticipated that such publications may only be provided to existing clients that may be directly or indirectly impacted by such issues. Item 1.A.(9) Third-Party Investment Advisor Services Clients can also engage the Adviser s agents for due diligence and also selection and monitoring of the investment performance of third-party investment advisory services (Advisor Services) for the provision of investment management, allocation and timing services. Such advisory services, in turn, will also provide direct management of client assets through the creation of portfolios designed to meet stated goals and objectives. In connection with its Advisor Services, Adviser may, on a discretionary basis and on a Client s behalf, engage or terminate third-party advisers who may provide various investment advisory or investment advisory-related services to Adviser s clients. Adviser currently offers a variety of third party advisory services through advisers that are unaffiliated with the Adviser and Prime. Such third-party advisers may include, but would not be limited to, Lockwood Financial, Inc., SEI Investments, Clark Lanzen Skalla, Centurion, Neuberger Berman, Curian Capital, GE Private Asset Management, Nationwide, Sovereign Asset Management, Nuveen Asset Management, Mind Share Management, Manulife, Envestnet Asset Management, and Fusion Analytics Investment Partners, LLC. Additional advisers may be LTD. Page 7 of 20

14 Continuation Sheet for Part II LTD October 20, 2010 Item 1.A.(9) added. Investment strategies and decisions will be based upon the expected performance of various asset classes as opposed to individual client considerations. As a result of similar strategies and objectives, clients may appear to have substantially similar portfolios. The Advisor Services may involve little or no direct client contact by the third-party advisers. Such advisers will rely instead on the aforementioned, pre-qualification (personal advisory) services provided by the Adviser s agents to each client. The Adviser s agents will perform such qualification analysis together with certain professional, administrative and clerical duties prior to opening accounts with such advisory services. The Adviser and the Adviser s agent will be compensated on an ongoing fee basis for client qualification and personal advisory services. As each third-party investment adviser has its own disclosure brochure ( Part II, wrap brochure, etc.) that includes their full disclosure of fees, refunds, termination provisions among other important information, the Adviser will provide, at the time of solicitation for the appropriate third-party investment adviser, a copy of such disclosure. In making investment decisions on behalf of the client, AFP shall rely on a client profile document or client questionnaire, which would be completed by the client. Fees for AFP s advisory services described in this section may involve the following fee types: Percentage of Assets Under Management Fixed/Flat Fees Please refer to Item 1.D below for specific details related to the fees AFP may charge for the services described in this section. Item 1.D The following information addresses the fees that AFP may charge for the services described in the previous sections. Information noted below addresses the general fee ranges, calculation methods, billing frequency, and manner of billing. A variety of advisory services are provided by the Adviser to its clients on a percentage of assets under management/supervision compensation basis. The following schedules represent the minimum/maximum asset ranges and fees schedules established by the Adviser. Adviser s agents may negotiate fees with their clients within the range identified by the schedule. Prime Financial Advisory Services Prime Financial Advisory Services offers plans for clients who may invest in commission based or non-commission products on a discretionary basis and who require an agent to continually monitor their account and provide additional investment advice. LTD. Page 8 of 20

15 Continuation Sheet for Part II LTD October 20, 2010 Item 1.D Portfolio Monitoring of Commissionable Products Portfolio monitoring services will be provided to portfolios of commission-based products. This schedule reflects prior receipt of such commissions as well as ongoing 12b1 distribution fees: Account Size ($000 s): *Advisory Fee $25 to less than $500 Not to exceed 2.50% $500 to less than $1,000 Not to exceed 2.25% $1,000 to less than $1,500 Not to exceed 2.00% Greater than $1,500 Negotiable *Shared by the Adviser and its agents. Such fees may be in addition to internal management costs, 12b-1 distribution and transaction fees where applicable. All external advisory fees due the Adviser and its agents are subject to prior negotiation and agreement. No-Load Mutual Funds Due Diligence/Selection Monitoring Compensation due to the Adviser for this service will be paid according to the following fee schedule which in turn, is designed to equalize compensation with the same level of service offered for commission based products which may be placed in the client s advisory program. Account Size ($000 s): *Advisory Fee $25 to less than $500 Not to exceed 2.50% $500 to less than $1,000 Not to exceed 2.25% $1,000 to less than $1,500 Not to exceed 2.00% Greater than $1,500 Negotiable *Shared by the Adviser and its agents. Such fees may be in addition to internal management costs and transaction charges. All external advisory fees are subject to prior negotiation and agreement between the client and his agent. Managed Asset Programs Mutual Fund/Variable Annuity Advisory Program The Mutual Fund/Variable Annuity Advisory Program provides asset allocation and market timing services to investors within a mutual fund family or variable annuity. Account Size ($000 s) *General Model *Select Model Up to $ % 2 ½% $500 to $1,000 1 ¾% 2 ¼% $1,000 to $1,500 1 ½% 2.0% $1,500 to $2,000 1 ¼% 1 ¾% $2,000 and up 1.0% 1 ½% LTD. Page 9 of 20

16 Continuation Sheet for Part II LTD October 20, 2010 Item 1.D *Such fees may be in addition to commissions including 12b-1 distribution fees, transaction costs, and/or internal management fees. Third-Party Advisory Services Clients, in conjunction with the Adviser s agent s recommendations, may elect to engage thirdparty advisory services for the provision of services agreed upon between clients and such advisory services. Additional information about these Third-Party Advisory Services is available in each adviser s disclosure brochure. Compensation to the Adviser s agents, and in turn, the advisory services, will be based on a percentage of assets under management as set forth in the schedule contained in each advisory service agreement, and disclosed to each client prior to engagement. This all-inclusive Wrap-Fee will cover the costs of investment advice, security transactions, trading, custody, performance measurement and such other services as set forth by each advisory service(s) agreement. Also, in certain instances, compensation may be commission-based in the form of directed commissions or executions through the Adviser or its clearing agents, from which the Adviser and its agents will then receive commissions based upon the normal and customary commission schedules in effect. In addition to the aforementioned advisory fees, received by the Adviser and its agents for the provision of selected investment advisory services, recommendations leading to the buy/sell of securities in an advisory account executed by the Adviser, through its clearing agent, may incur additional transaction fees, sales charges and/or commissions. If the client utilizes Prime as the broker-dealer for transactions, the charges that would apply to those transactions are disclosed on the attached schedule. These charges are subject to change. In the event there is a change in the charges, the Adviser will deliver an updated schedule to its clients. Assets Under Management/Supervision: Fees will be payable either monthly or quarterly in advance or in arrears depending upon the service selected by the client. The first payment is due upon execution of a client Disclosure/Engagement Agreement (Agreement) and will be assessed pro rata in the event the Agreement is executed at any time other than the first day of each month/quarter, based on the average daily value of the account assets under management/supervision for the preceding month/quarter as valued by an independent pricing service, where applicable, or otherwise in good faith as reflected on the client monthly account statements or quarterly portfolio evaluation report. If assets are deposited after the inception of a month/quarter and subsequently withdrawn prior to the end of the same month/quarter, the fee chargeable with respect to such assets as of the LTD. Page 10 of 20

17 Continuation Sheet for Part II LTD October 20, 2010 Item 1.D next calculation date will be prorated based upon the number of days during the month/quarter the assets were held in the account. For evaluation purposes, the assets will be treated as if they were held in the account as of the end of the month/quarter. If for any reason the account value falls below the Adviser s required minimum, the Adviser has the right to terminate the account. If during the first full year, the account is closed for any reason by the client, no pro rata refund or pre-paid fees will be made. After the first full year, clients may be entitled to a pro rata refund on any pre-paid monthly/quarterly fee based upon the number of days remaining the month/quarter after termination, upon written request. Annual Fixed Fees: AFP may charge a negotiable fixed fee for its advisory services. AFP s fixed fee of up to $10,000 will be charged on an annual basis, depending upon the level and scope of the services required. The services that may correspond to the designated fixed fee amount may vary. As such, the determination of the fixed-fee amount will vary based upon any number of factors which may be specific to each individual client s set of circumstances. Advisory services that are anticipated to be more complex will generally warrant a higher fixed-fee amount. Less complex services may generally result in a lower fixed-fee amount. The fixed-fees will be based on the complexity of the service that is anticipated to be necessary for the particular client. AFP s fixed fee for providing advisory services is determined based on anticipated work to be done. Since AFP cannot accurately determine the fee amount until learning about the client s financial circumstances, it is AFP s practice to provide an initial, no obligation, no cost meeting in order to become familiar with the client s circumstances. AFP will obtain information from the client verbally and on any current information gathering documents approved for use by AFP. The information gathered during this session will assist AFP in determining the fee amount for the client s advisory services. Assessment of Annual Fees (in advance): AFP shall bill clients on a monthly or quarterly (calendar) basis. The first bill (inception bill) shall be calculated and prorated according to the date (inception date) of execution of the CCA and shall be payable at the end of the calendar quarter in which the initial meeting between the client and AFP takes place. The inception bill shall be based upon a percentage of assets in client s account(s) as of the inception date. This fee portion shall be referred to as the inception fee. At the same time the inception fee is calculated, AFP shall also calculate, in advance, the next quarter s fee based upon a percentage of the assets contained in client s account(s) as of the last business day of that calendar quarter. This fee amount shall be calculated by assessing one quarter of the total annual percentage charged against the assets in client s account(s). Client s first bill shall include the inception fee and the first full quarter s fee (advanced). Thereafter, each subsequent quarterly fee shall be calculated, in advance, based upon the dollar amount of assets in client s account(s) as of the last business day of each calendar quarter. LTD. Page 11 of 20

18 Continuation Sheet for Part II LTD October 20, 2010 Item 1.D In the event of termination, the client will receive a pro rata refund of any pre-paid fees attributable to any period after the date of termination. Hourly Fees: AFP may charge an hourly fee for its advisory services. AFP s hourly fees are negotiable and clients will be charged up to $300 on an hourly basis, depending upon the level and scope of the services required. AFP s hourly rate is determined based on anticipated work to be done. Since AFP cannot accurately determine the hourly fee amount until learning about client s financial circumstances, it is AFP s practice to provide an initial, no obligation, no cost meeting in order to become familiar with the client s circumstances. The services that may correspond to the designated hourly fee amount may vary. As such, the determination of the hourly-fee amount will vary based upon any number of factors that may be specific to each individual client s set of circumstances. Advisory services that are anticipated to be more complex will generally warrant a higher hourly-fee amount. Less complex services may generally result in a lower hourly-fee amount. The hourly-fees will be based on the complexity of the service that is anticipated to be necessary for the particular client(s). AFP will obtain information from the client verbally and on any current information gathering documents approved for use by AFP. The information gathered during this session will assist AFP in determining the most appropriate course of action for the client s financial and investment activity. Assessment of hourly fees: Hourly fee(s) will be billed in arrears, as specific services are performed. Hourly fees shall be calculated by multiplying the number of hours of service performed by the designated hourly rate (i.e. # of hours times designated hourly rate). AFP shall bill in increments of 15 minutes. In most cases, an invoice shall be presented to the client at the point of service and payment shall be due and payable at that time. In cases where the client does not satisfy an outstanding hourly fee amount at the point of service, an invoice shall be generated and submitted to the client. Such invoices shall generally be prepared not later than the fifth business day of the calendar month following the month in which the service(s) was performed that resulted in the fee. The invoice shall be payable by the twentieth business day of the calendar month following the month in which the service(s) was performed that resulted in the fee. Other Fee Considerations: Billing by custodian: AFP s investment advisory fees may be deducted (by the applicable custodian) directly from client accounts unless other methods of payment are agreed upon and documented in the agreement. Automatic payment of fees is subject to the following LTD. Page 12 of 20

19 Continuation Sheet for Part II LTD October 20, 2010 Item 1.D stipulations: The client will authorize in writing the direct debiting of advisory fees from the client s custodian account; Adviser discloses that it is the client s responsibility to verify the accuracy of the fee calculation because the custodian does not determine whether the fee is properly calculated; The Adviser will simultaneously send a bill to clients showing how the fee is calculated; or The clients custodian will send, at least quarterly, a client statement indicating the amount of advisory fees, if any, which have been paid by the clients, Investment Advisory Fixed Fees Consultation engagements or planning fees charged in connection with the Prime Financial Counseling Service will be payable upon completion of the service or as agreed upon by the client and Adviser s agent. Via direct billing: If so desired, the client may choose to be billed directly by AFP for AFP s fees. If so chosen, the client shall be invoiced by the fifth business day of the month subsequent to the most recently ended calendar quarter. Payment shall be due on or by the final business day of the month in which the invoice is generated. AFP, in its sole discretion, may charge a lesser or no advisory fee based upon certain criteria (i.e. anticipated future earnings capacity, anticipated future additional assets, dollar amount of assets to be managed, related accounts, account composition, negotiations with the client, etc.). No increase in AFP s fee(s) shall be effective without prior written notification of at least thirty (30) days to the client. In addition to AFP s investment advisory fee(s), the client may be assessed other fees by parties independent from AFP. The client may also incur, relative to certain investment products (such as mutual funds), charges imposed directly at the investment product level (e.g. advisory fees, administrative fees, and other fund expenses). Brokerage fees/commissions charged to the client for securities trade executions may be billed to the client by the broker-dealer or custodian of record for the client account, not AFP. Any such fees are exclusive of, and in addition to AFP s compensation. The client acknowledges he/she will be solely and directly responsible for fees, including other than AFP s fees billed directly to the client. Item 3.(K)(3) Item 5 From time to time, AFP provides investment advisory services regarding investment-related partnerships or other pooled investment vehicles. Typically, such products shall include products such as Direct Participation Programs or privately placed securities that are typically exempt from registration under the Securities Act of 1933 in reliance on an exemption such as the provisions set forth under Regulation D. Any associated person of AFP providing investment advice to the client is required to meet the specific state registration examination requirements in order to provide such advice. This licensing typically involves a Uniform Investment Adviser Law Examination - Series 65, or a LTD. Page 13 of 20

20 Continuation Sheet for Part II LTD October 20, 2010 Item 5 Uniform Combined State Law Examination - Series 66 and a General Securities Representative Examination - Series 7, administered by FINRA. A waiver of the examination requirements may be granted if an individual currently holds one of the following professional designations: CFP Certified Financial Planner ChFC Chartered Financial Consultant PFS Personal Financial Specialist CFA Chartered Financial Analyst CIC Chartered Investment Counselor Item 6 Education and Business Background: Amy Napolitano, Born 1977 Ltd., President & CEO Director 2010-Present Prime Capital Services, Inc., President & CEO Director 2010-Present Prime Financial Services, Inc., President & CEO Director 2010-Present Ltd., Vice President of Operations Prime Capital Services, Inc., Vice President of Operations Prime Financial Services, Inc., Portfolio Administrator/Registered Rep Gilman & Ciocia, Inc Present Marist B.A. History William J. Burns, Born 1961 Ltd., Chief Compliance Officer 2010 to Present LTD. Page 14 of 20

21 Continuation Sheet for Part II LTD October 20, 2010 Item 6 Prime Capital Services, Inc., Chief Compliance Officer 2010 to Present WJB Consulting, Consultant New York Life Insurance Co., VP of Compliance St. John s University Albany Law School Fordham University, Graduate School of Business Carole Enisman, Born 1959 Ltd., Director 2010-Present Prime Capital Services, Inc., Director 2010-Present Prime Financial Services, Inc., Director 2010-Present Ltd., Chief Operating Officer and Director Prime Financial Services, Inc., Senior VP Prime Capital Services, Inc., Chief Operations Officer Gilman & Ciocia, Inc., Executive VP of Operations Present University of Miami B.S. Economics and Political Science LTD. Page 15 of 20