Participants in the Dunham Asset Allocation Program will pay to Dunham either a monthly performance-based advisory fee or an asset based fee. Per an agreement, Stifel and Dunham each receive a portion of this fee.
The performance-based fee option charges a performance-based advisory fee equal to 10% of the net increase in account value (adjusted for additional investments, redemptions, and other non-performance-related changes) for the preceding month (or portion thereof, if less than a month) using “highwater marks”. The fee is calculated monthly and charged quarterly in arrears using the daily average account balance. Clients who choose the performance-based fee option must be “qualified clients” (e.g., a natural person having a net worth together with assets held jointly with the person’s spouse in excess of $1.5 million).
The asset-based fee option allows the client to choose a flat fee of no more than 2.25% annually on assets under management. The fee accrues daily and is charged quarterly in arrears.
In addition, separate fees will be charged by Dunham for mutual fund expenses, custody charges and other related expenses outlined in the mutual fund’s prospectus.
Potential Conflicts of Interest. Each mutual fund in which a Client’s assets may be invested will charge internal expenses which are described in the fund’s prospectus. Client acknowledges that Stifel will charge separate fees and expenses as set forth above. All wrap fees will be reflected in the quarterly fee statements sent to Client.
Stifel and/or its Financial Advisors may, from time to time, receive incentive awards for the recommendation or introduction of investment products. The receipt of this compensation may affect Stifel’s judgment in
recommending products to its Clients.
Financial Advisors may, from time to time, receive 12b-1 distribution fees from investment companies in connection with the placement of Client funds into investment companies. Any 12b-1 compensation received by Stifel is in addition to and separate from the wrap fees paid by the Client. These 12b-1 fees may be in excess of the amount that would qualify the funds as “no-load.”
The client should understand that a performance-based fee may create an incentive for Dunham & Associates, and Stifel Nicolaus, the Adviser, to increase the level of risk that the Client may incur. The client should understand that a performance-based fee may result in higher advisory fees than an asset-based fee, and Dunham & Associates, and Stifel Nicolaus, may receive increased compensation.
General Fee Information for Stifel Select Managed Account Program
As a participant in the Stifel Select Managed Account Program, Client will pay an annualized asset-based fee (“Fee”) in accordance with the schedule appearing in the section entitled Advisory Fee Schedules for All Programs.
For all-inclusive-fee Accounts, the Fee includes all fees and charges for the services of the Portfolio Manager, Broker or Adviser, and Pershing, and all brokerage charges, except for early closing fees, as set forth below, and IRA and Qualified Retirement Plan account termination fees. Stifel’s fee does not include commissions for transactions executed through other brokerage firms beyond Stifel and Pershing for SSMAP accounts.
The Fee will be payable quarterly in advance. The first payment is due upon Portfolio Manager’s acceptance of the Account or Account funding, whichever is later, and will be assessed pro rata in the event this Agreement is executed at any time other than the first day of the calendar quarter. Subsequent payments are due and will be assessed on the first business day of each calendar quarter based on the value of the Account assets under management as of the close of business on the last business day of the preceding quarter as valued by an independent pricing service, where available, or otherwise by Pershing in good faith based on Pershing’s books and records. There is no adjustment to the Fee if assets are deposited or withdrawn after the inception of a quarter.
The Account Fee does not cover, and, if warranted, Client will be responsible and charged for: (i) brokerage commission, mark-ups, and mark-downs on transactions effected by an investment manager through or with brokers and dealers other than Stifel; (ii) interest on debit account balance; (iii) the entire public offering price (including underwriting commissions or discounts) on securities purchased from an underwriter or dealer involved in a distribution of securities; and (iv) exchange fees, SEC fees, transfer taxes, and other fees required by law. Prices at which securities are purchased in principal transactions from other dealers executed by Stifel acting as agent will be computed by Stifel or the other dealer in the customary manner based on the prevailing inter-dealer market price.
• Under NYSE Rules, Stifel Financial Advisors are prohibited from buying or selling Stifel Financial Corp.
(SF) securities except on an unsolicited basis. Therefore, the Account Fee will not be calculated based on the value of any SF securities in the Client’s account.
• Generally, no underwritings may be sold to a wrap fee participant if Stifel is a member of the underwriting syndicate or selling group.
• Cross agency trades generally are not permitted. Financial Advisors are forbidden to execute principal and agency cross-transactions when dealing with Clients unless the manager: (1) discloses in writing that Stifel will act as principal in the trade, and (2) obtains Client’s written consent to Stifel’s acting as a principal in the trade.
• Trades may be executed from time to time in the secondary or third markets. In this event, Stifel may receive other compensation and will furnish the source and amount upon written request.
Potential Conflicts of Interest. Depending on the Account Fee charged and the trading activity in Client’s account, the total charges may be more than what the Client would pay if the client paid separately for investment advice, brokerage, and other services. Further, depending on the Account Fee charged and the trading activity in Client’s account, the amount of compensation from fees charged may be more than what the Financial Advisor would receive if Client paid separately for investment advice, brokerage, and other services. The Financial Advisor may therefore have a financial incentive to recommend a wrap fee program over other services. Also, as a result of the different program fee structures, certain programs may give more incentives than others. Financial Advisors may invest in any of these programs for their own and related accounts.
Each mutual fund in which a Client’s assets may be invested charges internal expenses which are described in the fund’s prospectus. Client acknowledges that Stifel will charge separate fees and expenses as set forth above. All wrap fees will be reflected in the quarterly fee statements sent to Client.
Stifel and/or its Financial Advisors may, from time to time, receive incentive awards for the recommendation or introduction of investment products. The receipt of this compensation may affect Stifel’s judgment in
recommending products to its Clients.
Financial Advisors may, from time to time, receive 12b-1 distribution fees from investment companies in connection with the placement of Client funds into investment companies. Any 12b-1 compensation received by
Stifel is in addition to and separate from the wrap fees paid by the Client. These 12b-1 fees may be in excess of the amount that would qualify the funds as “no-load.”
Stifel is a member of the New York Stock Exchange, the American Stock Exchange, and the Chicago and
Philadelphia Stock Exchanges. Stifel also transacts business with a variety of dealers in securities, including listed and over-the-counter stocks and bonds, government and agency issues, and municipal securities. With regard to equity securities, Stifel monitors the performance of competing market centers and routes orders to those that consistently complete transactions timely and at a reasonable cost and that guarantee executions at the national best bid or offer. Whenever possible, Stifel routes orders to market centers that offer an opportunity for price
improvement through automated systems. Stifel receives from certain market centers cash payments in return for the routing of orders.
If, prior to the completion of four full calendar quarters, Client closes the Account or withdrawals bring the Account value below the Portfolio Manager’s required minimum, Client agrees to pay to Pershing an early closing fee of the lesser of one additional quarterly Fee equal to the Client’s previous quarterly Fee or $2,000.00, in addition to any pre-paid quarterly Fee, in order to cover the administrative cost of establishing the Account. Pershing will deliver securities held in the Account as instructed by Client unless Client requests that the Account be liquidated. After the completion of four full calendar quarters, no early closing fee will apply and Client will be entitled to a pro rata refund of any pre-paid quarterly fee based upon the number of days remaining in the quarter of termination.
Client authorizes Pershing to deduct all applicable fees from Client’s Account, and all such fees will be clearly noted on Client’s statements.
Client understands that the Portfolio Manager, Broker or Adviser, and Pershing and their agents, in connection with the performance of their respective services, shall be entitled to and will share in the Fee payable hereunder.