Fee Disclosure

Regulatory status current as of June 2026 — verify effective dates, dollar thresholds, and pending rulemakings against current SEC/FINRA/FinCEN sources before advising.

Core Concepts

Form ADV Part 2A — Item 5 (Fees and Compensation)

RIAs must disclose in their firm brochure:

• Fee schedule — how fees are calculated (asset-based, fixed, hourly, performance-based), fee rates and tiers, minimum account sizes
• Billing method — frequency (monthly, quarterly), in advance or arrears, pro-ration for partial periods
• Other fees and expenses — custodian fees, fund expense ratios, transaction costs, wire fees, and any other costs the client will bear in addition to the advisory fee
• Compensation for sales of securities — if the adviser or its supervised persons receive commissions, 12b-1 fees, or other sales-based compensation, this must be disclosed with a description of the conflict
• Refund policy — how prepaid fees are refunded if the relationship terminates mid-period

The disclosure must be "full and fair" and not misleading. The SEC has brought enforcement actions for advisers who disclosed fee schedules but obscured the total cost to clients by omitting indirect compensation or failing to describe how fund-level fees compound on top of advisory fees.