Wealth Management Services Under Buttonwood’s Wrap Fee Program
As mentioned in the firm’s Part 2A Brochure, Buttonwood provides comprehensive Family CFO
Services in order to assist our clients with organizing, formalizing, implementing and monitoring
financial strategies in a manner consistent with their life goals. Since each client’s individual
situation and needs can vary, we tailor each engagement to meet the needs of the individual client.
Additionally, the firm may provide discounting for family members, related parties, etc.
The areas we can provide assistance include wealth management, business strategy, lifestyle
enhancements, family continuity, tax strategy, insurance planning, lifecycle roadmaps, and
estate/legacy consulting. The first of these areas, wealth management, can be provided under a
Wrap Fee Program structure where Buttonwood covers certain trading costs if any (described in this
Part 2A Appendix - Wrap Fee Program Brochure), or can be provided under a standard
arrangement where the client is responsible for all trading costs (described in the firm’s Part 2A
Brochure).
Whether within or separate from the firm’s Wrap Fee Program, our wealth management related
services can be discretionary (where we make investment decisions and implement those decisions
on your behalf) or non-discretionary (where we make investment recommendations and implement
those decisions upon your approval).
For more information regarding the various services the firm provides, including Family CFO
Services and standard Investment Advisory Services, see Item 4 of the firm’s Part 2A Brochure.
Wealth Management Fees Under Buttonwood’s Wrap Fee Program
As detailed in Item 5 of the firm’s Part 2A Brochure, fees generally consist of a Family CFO
Services Fee and or an Investment Advisory Fee. The Family CFO Services Fee is negotiable and
based on the scope and complexity of the engagement. The Investment Advisory Fee is negotiable
and quoted as an annual percentage fee based on assets under management with the annual
percentage rate determined by the scope and complexity of the engagement and the custodial
platform which will be holding the assets.
For investment accounts managed by us at our primary custodian, Charles Schwab & Co., Inc.,
transaction fees (if any) are included in the fees we contractually charge to clients, so such accounts
are considered to be under Buttonwoods’ Wrap Fee Arrangement.
Our standard AUM (Assets Under Management) fee schedule for investment advisory services
under the Buttonwood Wrap Fee Program is as follows:
Assets Under Management Annual Fee
$0 - $500,000 0.65%
$500,001 - $5,000,000 0.50%
Over $5,000,000 0.40%
Part 2A Appendix - Page 2
The fee schedule is graduated, which means that the first $500,000 in assets are billed at 0.65%, the
next $4,500,000 are billed at 0.50%, and so on.
Our prior AUM (Assets Under Management) fee schedule which included both Family CFO and
investment advisory services was as follows:
Assets Under Management Annual Fee
$0 - $500,000 1.25%
$500,001 - $1,000,000 1.10%
$1,000,001 - $2,500,000 0.95%
$2,500,001 - $5,000,000 0.80%
$5,000,001 - $10,000,000 0.65%
Over $10,000,000 Priced on a case by case basis
The fee schedule is graduated, which means that the first $500,000 in assets are billed at 1.25%, the
next $500,000 are billed at 1.10%, and so on.
Investment Advisory Fees are generally charged quarterly in advance based upon the market value of
a client’s accounts at the end of the prior quarter. Market value means the value of all assets in the
accounts as reported by the applicable custodian(s) including cash (not adjusted by any margin debit,
outstanding checks, etc). Assets not reported by the custodian, if any, are valued at fair value by us
on a best efforts basis.
Where we manage portfolios of one or more immediate family members of the same household, we
will generally aggregate the portfolio as a single account for fee breakpoint calculations. If an
account moves upward or downward during a quarter to a different tier, the account will be billed at
the new tier level at the start of the next quarter of service.
Accounts terminated during a quarter are pro-rated up to the date we discontinue servicing the
account (subject to the termination notice provisions of the client agreement), and any unearned fees
paid in advance will be promptly refunded.
Our client agreements generally allow us to modify the terms of the fee agreement by giving a client
notice in advance of the change.
Fees are generally deducted directly from the client’s account and paid to us by the custodian upon
our submission of an invoice to custodian. Payment of fees may result in the liquidation of a client's
securities if there is insufficient cash in the account. In some cases and at our discretion however,
fees may be billed to and paid directly to us by the client or deducted from a different account
owned by the client at the client’s direction. Late payments may be subject to late payment fees.
Part 2A Appendix - Page 3
Brokerage and Custody of Wrap Fee Program Accounts
When recommending or selecting a broker or custodian, we seek “best execution” for Client
accounts, which is a combination of a number of judgmental
factors including price, execution
quality and Client needs. Recognizing the value of these judgmental factors, brokers selected or
recommended may charge commissions that are higher than the lowest commissions that might
otherwise be available.
Buttonwood currently has a relationship with the Schwab Advisor Services division of Charles
Schwab & Co., a registered broker-dealer, Member SIPC, to maintain custody of Clients’ assets and
to effect trades for their accounts, and Buttonwood uses Charles Schwab & Co as the custodian of
the Wrap Fee Program. Buttonwood is independently owned and operated and not affiliated with
Schwab. Schwab will provide custody and execution services in accordance with the terms set forth
in their custodial agreement. We reasonably believe that in the case of managed accounts, Schwab’s
blend of execution services, commission and transaction costs as well as professionalism allows us
to seek best execution and competitive prices. Item 12 of the Part 2A Brochure describes the
factors we consider in recommending broker dealers for client transactions and determining the
reasonableness of their compensation, as well as the fact that other custodians may be used.
Expenses Related to Buttonwood’s Wrap Fee Program
Although custodial pricing structures are subject to change, under the firm’s current pricing
structure with Charles Schwab & Co., Inc., most equity, ETF and mutual fund transaction fees are
waived for our clients, although some nominal costs are not waived, nor are costs related to fixed
income transactions or other trades made outside of Schwab. Any transaction fees from our
primary custodian that would apply would be paid by us. Under this pricing structure, the firm is
able to use “TF” (transaction fee) mutual fund share classes which normally charge transaction fees
but have a lower expense ratio than NTF (no transaction fee) share classes. Both classes represent
the same underlying investments However, we still have a financial interest in the choice of whether
or not to trade that conflicts with the interest of clients when trading costs do apply.
Our clients, regardless of whether or not their account is managed under our Wrap Fee Program,
may incur other charges imposed by custodians, brokers, and other third parties (such as fees
charged by managers, custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire
transfer and electronic fund fees, and other fees and taxes). Mutual funds and exchange traded
funds also charge internal management fees, which are disclosed in a fund’s prospectus. Item 12 of
the Part 2A Brochure describes the factors that we consider in recommending broker-dealers for
client transactions and determining the reasonableness of their compensation.
While the cost of our Family CFO Services include our time and activities necessary for the firm to
coordinate and communicate with third party advisors (such as lawyers, accountants, insurance
specialist and similar professionals), we may charge administrative fees in addition to the third party
advisor’s fees which are separate from our fees.
Part 2A Appendix - Page 4
Conflicts of Interest Related to Wrap Fee Programs
Current Wrap Fee Program
Because our clients have little or no trading costs under our current custodial arrangement at Charles
Schwab & Co., we generally have very little if any incentive to forgo trading a client account in order
to lower our own trading costs. This is still however considered a conflict of interest in that we have
an incentive to not trade your account in order to lower our own trading costs where such trading
costs do exist. With respect to those transaction fees that are not currently waived, we believe that
such costs are nominal and would have no effect on our decisions related to trading client accounts.
We feel that the importance of providing unbiased advice and the importance of maintaining our
firm’s reputation outweighs these nominal costs.
Under this pricing structure, the firm is able to use TF mutual fund share classes which normally
charge transaction fees but have a lower expense ratio than NTF share classes. Both classes
represent the same underlying investments. However, we still have a financial interest in the choice
of whether or not to trade that conflicts with the interest of clients when trading costs do apply.
All accounts, whether we pay trading fees or do not, are managed by us in a similar manner. The
firm does not favor or prioritize accounts based on whether or not we would incur trading costs.
The firm conducts periodic trading reviews and custodial platform assessments to help ensure that
no such favoritism exists.
Choosing a Wrap Fee Programs
Services purchased through a wrap fee program may cost clients more or less than purchasing
similar services from a firm on a stand-alone basis depending on a program’s fee structure and
depending on the volume of activity since various costs are paid on behalf of the client through the
wrap fee program. Since Buttonwood uses a similar fee schedule for investment advisory
engagements under the Buttonwood Wrap Fee Program as standard engagements, the primary
difference between the two options are the costs charged by the applicable outside custodian which
would be borne by the Client.
Part 2A Appendix - Page 5