A. Services, Fees, and Compensation
VEC offers ongoing portfolio management services through this wrap fee program
based on the individual goals, objectives, time horizon, and risk tolerance of each client.
VEC creates a financial profile for each client, which outlines the client’s current
situation (income, tax levels, and risk tolerance levels). Portfolio management services
include, but are not limited to, the following:
• Investment strategy • Personal investment policy
• Asset allocation • Asset selection
• Risk tolerance • Regular portfolio monitoring
VEC evaluates the current investments of each client with respect to their risk tolerance
levels and time horizon. VEC will request discretionary authority from clients to select
securities and execute transactions without permission from the client prior to each
transaction.
VEC seeks to provide that investment decisions are made in accordance with the
fiduciary duties owed to its accounts and without consideration of VEC’s economic,
investment or other financial interests. To meet its fiduciary obligations, VEC attempts
to avoid, among other things, investment or trading practices that systematically
advantage or disadvantage certain client portfolios, and accordingly, VEC’s policy is to
seek fair and equitable allocation of investment opportunities/transactions among its
clients to avoid favoring one client over another over time. It is VEC’s policy to allocate
investment opportunities and transactions it identifies as being appropriate and prudent
among its clients on a fair and equitable basis over time.
VEC charges the following annual portfolio management fee to clients under this wrap
fee program as sponsor and portfolio manager:
Total Assets Under Management Annual Fee
$0 - $1,000,000 1.00%
$1,000,001 to $2,500,000 0.90%
$2,500,001 to $5,000,000 0.80%
$5,000,001 and up Custom pricing
This fee is generally negotiable, and the final fee schedule will be memorialized in the
client’s advisory agreement.
Portfolio management fees are withdrawn directly from the client’s accounts with client’s
written authorization on a quarterly basis.
Fees are paid in arrears. VEC uses an average of the daily balance in the client’s account
throughout the billing period, after taking into account
deposits and withdrawals, for
purposes of determining the market value of the assets upon which the advisory fee is
based.
Clients may terminate the agreement without penalty, for full refund of VEC’s fees, within
five business days of signing the Investment Advisory Contract. Thereafter, clients may
terminate the Investment Advisory Contract immediately upon written notice.
B. Contribution Cost Factors
The program may cost the client more or less than purchasing such services separately.
There are several factors that bear upon the relative cost of the program, including the
trading activity in the client’s account, the adviser’s ability to aggregate trades, and the
cost of the services if provided separately (which in turn depends on the prices and
specific services offered by different providers).
C. Additional Fees
VEC will wrap transaction fees in its annual fee for wrap fee portfolio management
accounts meaning VEC will charge clients one fee and pay all transaction fees using the
fee collected from the client. Accounts participating in the wrap fee program are not
charged higher advisory fees based on trading activity, but clients should be aware that
VEC has an incentive to limit trading activities since the firm absorbs those transaction
costs.
Certain other fees are not included in the wrap fee and are paid for separately by the client.
These include, but are not limited to, margin costs, charges imposed directly by a mutual
fund or exchange traded fund, fees associated with “step out” transactions if the account
uses different custodians or broker-dealers, deferred sales charges, odd-lot differentials,
transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on
brokerage accounts and securities transactions.
D. Compensation from Client Participation
Neither VEC, nor any representatives of VEC receive any additional compensation
beyond advisory fees for the participation of clients in the wrap fee program. However,
compensation received may be more than what would have been received if client paid
separately for investment advice and brokerage transactions. Therefore, VEC may have
a financial incentive to recommend the wrap fee program to clients.