Investment Advisory Agreement. Advantage Portfolio Management Program

Transcription

1 Investment Advisory Agreement Advantage Portfolio Management Program Dear Sirs/Madams: This Investment Advisory Agreement confirms our agreement as to the following: CLIENT NAME(s): ( Client ) ACCOUNT NUMBER: PROVIDER NAME: FundQuest Incorporated ( Provider ); and ADVISORY REPRESENTATIVE: ( Advisory Representative ) BROKERAGE FIRM: Hennion & Walsh, Inc. ( Introducing Broker ) CUSTODIAN: ADP Clearing & Outsourcing Services, Inc. ( Custodian ) Choice Of Program Options (Please Select One Option Per Account See Exhibit A): Option 1 - Mutual Fund Advantage Program Option 2 - Separate Account Advantage Program - 1 -

2 I (We) hereby agree to the following terms and conditions: INVESTMENT OBJECTIVE AND TRADING AUTHORIZATION: It is understood that the Program is based upon a review of my financial situation and investment objectives as described in the responses to the Investor Profiling Questionnaire ( Profile ) and an Investment Strategy Report completed and signed by me, discussed with my Advisory Representative, and forwarded to the Provider. I understand it is my responsibility to notify my Advisory Representative and the Provider of any material changes to these responses when they occur. I represent that my responses to the Profile and Investment Strategy Report represent an accurate summary of my financial circumstances and I agree that my Advisory Representative, the Provider, and any Sub-Account Managers engaged by the Provider may rely on such information. I hereby confirm my selection of the Program Option checked on page one of this Agreement, as more fully described in Exhibit A attached, including my appointment of the appropriate Account Manager (the manager designated in Exhibit A to manage my account, the Program Account ). Subject to the limitations described in my responses to the Profile and Investment Strategy Report (including any reasonable restrictions I may place on Program investments) the manager appointed by me through my choice of Program Option shall have full authority to supervise and direct the investment of the monies contributed by me to the Program Account without prior consultation with me. Types of investments and fees for each particular Option are more fully described in Exhibit A. The manager appointed by me may, in its discretion and within the terms of this Agreement, establish sub-accounts and hire and fire subaccount managers ( Sub-Account Managers ), invest in mutual funds available on the Custodian s platform, exchange-traded-index-funds ( ETFs ), and individual securities (stocks and bonds) to achieve the objectives of the Program. Program Accounts shall be established with the Introducing Broker. The Custodian shall execute purchase and sale orders directed to it by the Account Manager and any Sub-Account Managers engaged by the Provider and Client. The Custodian shall perform clearance and custody for my Program Account. The Program Account Manager and any Sub-Account Managers shall have the ability to select brokers and dealers other than as specified for a Program when necessary to fulfill their duty to seek best execution of transactions in Program Accounts and Sub-Accounts for designated Program Assets. In doing so, the Program Account or Sub-Account Manager's primary responsibility shall be to seek to obtain the best price and execution for each transaction. However, this shall not obligate the Program Account or Sub-Account Manager to solicit competitive bids for each transaction or to seek the lowest commission cost available to such Program Account or Sub- Account, so long as the Program Account or Sub-Account Manager reasonably believes that the broker or dealer selected by it can be expected to obtain a "best execution" market price on the particular transaction and determines in good faith that the commission cost is reasonable in relation to the value of the brokerage and research services (as defined in Section 28(e)(3) of the Securities Exchange Act of 1934, as amended ) provided by such broker or dealer to the Program Account or Sub-Account Manager

3 TRANSACTIONS WITH ACCOUNTS: Principal and Other Transactions. In accordance with Section 206 of the Investment Advisers Act of 1940 (the Investment Advisers Act ) and SEC Rule 206(3), neither the Provider or any Sub-Account Manager will directly, or through any affiliate (a) as principal buy any security from or sell any security to a Program Account or (b) as broker for any person other than the Program Account Owner effect any transaction in a Program Account without prior to the completion (settlement) of the transaction making a full disclosure to the Program Account Owner of the capacity in which it is acting and obtaining the written consent of the Program Account Owner. As a minimum the disclosure shall include (a) the capacity in which the principal or broker is acting, (b) the cost of any security proposed to be sold to the Account or proposed resale price of any security to be bought from the Account, (c) the best price at which the transaction could be effected for the Account elsewhere if more advantageous for the Account and (d) a genuine opportunity for the Account Owner to consent. Agency Cross Transactions. Where the Provider or Sub-Account manager, or any person controlling, controlled by or under common control with any of them acts as broker (as defined below) both for a Program Account Owner and for another person on the other side in any transaction in a Program Account ( an Agency Cross ) the following shall be observed: (a) the broker may not recommend the Agency Cross to both seller and buyer, (b) the Program Account Owner has executed not more than a year in advance a written consent to Agency Cross transactions by the broker meeting the requirements of Rule 206(3)-2, (c) the Program Account Owner receives a written confirmation of the Agency Cross meeting the requirements of Rule 206(3)-2 and (d) at least annually within thirty (30) days prior to the expiration of the written consent the Program Account Owner receives a written disclosure statement identifying all Agency Cross transactions and all commissions or other remuneration received or to be received by the adviser or broker in connection with such transactions during the period. Acting as broker shall not include activity in a transaction where the party effecting the transaction receives no compensation directly or indirectly for effecting the transaction, other than fees for advisory services. ERISA ACCOUNTS: If this Agreement is entered into by me as a trustee or other fiduciary including but not limited to a person meeting the definition of fiduciary under the Employee Retirement Income Security Act of 1974 ( ERISA ) of an employee retirement income plan subject to ERISA, I (as such trustee or other fiduciary) represent and warrant that the relevant governing instruments of such plan permit my participation in the Program and that I am duly authorized to enter into this Agreement. I agree to furnish the parties with such documents and related materials, as they shall reasonably request with respect to the foregoing. I further agree to advise them of any events that might affect this authority or the validity of this Agreement. I additionally represent and warrant (i) that the governing instruments provide that an investment manager as defined in ERISA may be appointed and (ii) that the person executing and delivering this Agreement is a named fiduciary (as defined in ERISA) who has the power under the plan to appoint an investment manager

4 REPORTS, STATEMENTS AND TAX CONSIDERATIONS: I understand that primary trade confirmations, account statements, annual reports, and prospectuses will be mailed directly to me from the Custodian of my Program Account(s). I will also receive a statement at the end of each calendar year providing me with the necessary forms required for tax reporting relative to my Program Account(s). In addition, I will also receive a quarterly statement from the Provider. I recognize that dividends, capital gains, transfers and sales of securities may create taxable events for me unless the Program Account is a qualified retirement account(s). The Advisory Representative and the Provider do not offer legal or tax advice and it is my responsibility to consult with my legal and tax Providers as I see fit. I acknowledge that the Custodian does not provide any advisory services to me, does not undertake to determine or monitor the suitability of any investment advice, strategy, or recommendations provided to me and that the Custodian shall have no liability to me arising out of investment advisory services provided to me by the Provider. Requests for shareholder proxies, reorganization or other action to be taken with respect to my investments will be forwarded to me directly unless I provide you with prior written authorization to take that action on my behalf. TERMINATION AND ACCESS: I or the Provider may terminate this Agreement and my participation in the Program at any time for any reason upon written notice delivered to the other parties. It is also understood that no one, including the Provider will have access to the monies in my Program Account(s). Only I (we in the case of joint Account(s)) can withdraw funds from the Program Account(s). I may withdraw any amount from the Account in cash or in property at any time. I understand that such termination could result in a taxable event to me. CONFIDENTIALITY: All information and advice communicated to any party shall he treated confidentially and not disclosed to unrelated parties unless required by law. ASSIGNABILITY: This Agreement shall not be assignable by any party without the prior written consent of the other parties. Transfers in the event of my death will not be considered an assignment hereunder. NON-EXCLUSIVE AGREEMENT: I understand that the Provider and the Advisory Representative perform for other clients services similar to those that will be provided to me, as well as other types of investment related services. I recognize that the Provider and the Advisory Representative may take actions and give advice that may differ from the advice given, or in the timing and nature of the action taken with respect to my Program Account. Neither the Provider or Advisory Representative, nor anyone associated with any of them shall have any obligation to make or refrain from making for the Account recommendations, purchases, sales, or transfers of any investment which may be - 4 -

5 purchased or sold for any other account or for the benefit of anyone associated with them. I understand that transactions in any specific investment may be executed at different times and prices for different client account(s). I understand that the Provider and Advisory Representatives may utilize different schedules as they relate to Program Account fees; therefore, the costs of obtaining services similar to those included herein may be more or less than those charged to other Provider clients or by other Advisory Representatives. LIMITATION OF LIABILITY AND SETTLEMENT OF DISPUTES: Neither the Provider, the Advisory Representative, nor any of their officers, directors, employees, affiliates, or others associated with the Program shall be liable for any loss incurred with respect to my Program Account, except where such loss directly results from such party s gross negligence or willful misconduct. I also acknowledge and understand that there is no guarantee of performance or investment results. I further agree that any disputes arising from this agreement shall be settled under arbitration in the Commonwealth of Massachusetts with the results (being) final and binding on the parties, though rights pursuant to federal and state securities laws are not forfeited. FEE SCHEDULE: Fees for each Program Option are set generally, are not negotiable and are billed and collected quarterly at the rates set forth in Exhibit A, based on the value of my Program Account. Accounts that begin or terminate for any reason within a calendar quarter are billed on a pro rata basis. I hereby authorize that all fees be automatically deducted from the Program Account. The fee schedules and billing processes set forth in Exhibit A for each Program Option will be in effect unless otherwise agreed to by all parties. The Provider may in its sole discretion pay all or a portion of the above stated fees to other parties involved in providing service with respect to the Program Account and as permitted by law. All such shared payments will be fully disclosed to me. I may terminate my Program Account at any time. The Provider may, in its sole discretion, terminate my Program Account. No party shall be compensated based on a share of capital gains upon or capital appreciation of funds or any portion of funds or other investments in my Program Account. I may also incur certain charges imposed by other third-parties in connection with investments made through the Account, including among others the following types of charges: mutual fund 12b-1 fees, mutual fund management fees and administrative servicing fees, fees charged by Sub-Account Managers, certain deferred sales charges on previously purchased mutual funds, clearing, custody and other transaction charges and service fees, and IRA and Qualified Retirement Plan fees. Other parties may receive a portion of these third-party fees. Further information regarding charges and fees assessed by a mutual fund or other securities sponsor or Portfolio Manager is available in the appropriate prospectus or disclosure statement

6 ENTIRE AGREEMENT; GOVERNING LAW: This agreement represents the entire agreement between the parties with respect to the subject matter hereof and may not be modified or amended except in writing and signed by all the parties. It shall be governed by, construed, and enforced under the laws of the Commonwealth of Massachusetts. Date Client Signature Second Client Signature (if required) I confirm that I have received and read Part II of the Form ADV for the Provider (FundQuest, Incorporated), and all applicable Sub-Account Manager(s). I also confirm that I have received and read a copy of this Investment Advisory Agreement. Date Client Signature Second Client Signature (if required) AGREED TO AND ACCEPTED: ADVISORY REPRESENTATIVE: DATE: FUNDQUEST, INCORPORATED By: DATE: - 6 -

7 EXHIBIT A Investment Advisory Agreement & Disclosure Document Option 1 Mutual Fund Advantage Program 1. This Program shall include mutual funds selected by FundQuest (the Program Account Manager and Provider ) based on the information submitted by the Client, and purchased on a no load or a load waived basis through the Custodian of Program Accounts ( Sub-Accounts ) managed by registered investment advisers ( Sub-Advisers ). 2. The Provider shall act as adviser for all Program Accounts. Advisory Representatives shall act on a non-discretionary basis only. 3. The Provider shall provide all required compliance functions for Program Account Owners. 4. The Provider shall select mutual funds and Sub-Advisers to be recommended to Program Account Owners for each portfolio model offered. 5. Advisory Representatives shall recommend to Program Account Owners mutual funds and Sub-Advisers selected by the Provider. 6. Advisory Representatives shall provide the Provider with the necessary Program Account Owner authorization to perform the trades required to manage Program Accounts, to establish Sub-Accounts and to designate Sub-Advisers to manage Sub-Accounts. 7. All transactions in the Program Accounts shall be effected by the Provider and/or the designated Sub-Adviser(s). 8. There shall be no capability to execute forms online. 9. The Provider shall have unlimited investment discretion with respect to any changes to investments in the Program Accounts, as permitted within the allocations of the selected portfolio model. This discretion shall include the modification of asset allocations and replacement or reduction of mutual funds or Sub-Advisers in the Program Accounts. Option 2 Separate Account Advantage Program 1. The Separate Account Advantage Program is a discretionary investment management program involving a selected group of investment managers ( Sub-Account Managers ) meeting certain qualification standards set and approved by FundQuest (the Program Account Manager and Provider ). All Sub-Account Managers shall enter into appropriate, standard-form subadvisory contracts with the Provider obligating each Sub-Account Manager to perform its respective duties in accordance with the requirements of the Program and this Agreement. 2. Upon the recommendations of the Advisory Representative, the Program Account Owner shall select one or more Sub-Account Managers to be responsible, on a discretionary - 7 -

8 basis, for the investment and reinvestment of all or a portion of the Program Account assets, placed in Sub-Accounts. The Provider shall have discretion as to management of the Program Account including the appointment of Sub-Account Managers. Advisory Representatives will act on a non-discretionary basis. Subject to the limitations described in the Program Account Owner s responses to the Client Questionnaire or other appropriate suitability analysis obtained by the Provider from the Program Account Owner (which may include reasonable restrictions on the investment and reinvestment of Program Account assets) the Sub-Account Manager(s) selected shall have discretion to manage the investments of each Program Account under the oversight of the Provider without prior consultation with the Program Account Owner, except as set forth below. 3. The Provider may, in its own discretion or at the request of the Program Account Owner, replace and/or terminate a Sub-Account Manager in connection with any Program Account. The Provider may establish Sub-Accounts in the event multiple Sub-Account Managers are selected for a single Program Account. Unless otherwise specified or permitted by this Agreement all securities will be held by, and all Program Account transactions shall be effected through, the Custodian. 4. The Sub-Account Manager s investment discretion over the Program Account shall be subject to the terms and conditions set forth in the Client Questionnaire, the Program Account Owner s advisory contract entered into with Provider and the Investment Strategy Report, including any reasonable restrictions on investments requested by the Program Account Owner. The Program Account Owner shall retain the ability to modify the Client Questionnaire or the Investment Strategy Report at any time. 5. Each party shall be responsible for, and the Provider shall require each Sub-Account Manager to be responsible for, compliance with all laws and regulations applicable to its own respective activities under the Program, and shall not engage in any activity that may cause any other party to be in violation of any law or regulation. 6. The Program Account Owner s advisory agreement entered into with the Provider shall provide the Provider and the selected Sub-Account Manager(s) with the necessary authorization to perform their respective obligations under the Program as provided herein. FEES: The fee schedules set forth below will be in effect for the Account unless otherwise agreed to by all parties. Fees are calculated in arrears based on the average daily balance of my Program Account and are debited from the Account at the end of the quarter

9 Advantage Program Fees Fee Schedule - Mutual Fund Advantage Program (Option 1) Client Fee Asset Level 1.50% $50, , , , ,001-1,000, ,000,001-2,000, ,000,001-5,000, ,000,000 and over Fee Schedule Separate Account Advantage Program (Option 2) Equity & Balanced Portfolios (Blended Rate Schedule) Client Fee Asset Level % $100, , , , ,001-1,000, ,000,001-2,000, ,000,001-5,000, ,000,001 and over 1. Some equity and fixed income managers have higher minimum asset level requirements than $100, Includes an average Money Manager Fee of 50Bp

10 Fixed Income Portfolios (Blended Rate Schedule) Client Fee Asset Level % $250, , , , ,001-1,000, ,000,001-2,000, ,000,001-5,000, ,000,001 and over 3. Some equity and fixed income managers have higher minimum asset level requirements than $250, Includes a scaled Money Manager Fee. Any number of Accounts for the benefit of one Client and family members may be linked together to meet a Program Fee breakpoint, all as based on Client directives. The Provider may rebate or return a portion of its fees from time to time to benefit third party advisers or their representatives as part of its efforts to expand its business