Steven P. Rotella

What fees will I pay?

It is important for you, the retail investor, to understand the principal fees and costs you will incur for your brokerage or investment advisory services, including how frequently they are assessed and the conflict of interest they create.

• Brokerage accounts: If you elect to open a brokerage account, we charge transaction-based fees to buy and sell securities. This means you are charged more when there are more trades in your account. Therefore, we may have an incentive to encourage you to trade more often.

• Annuities: If you elect to purchase a variable annuity, the insurance company offering the product charges asset-based fees based on a percentage of assets invested in the annuity contract under management and BCGS receives a portion of those charges. The more assets you contribute to an annuity, the more you will pay in fees. Therefore, we have an incentive to encourage you to increase the assets in your account.

• Mutual fund platform accounts: If you elect to open a mutual fund platform account, the provider charges asset-based fees based on a percentage of assets invested in the mutual fund platform product and BCGS receives a portion of those fees. The more assets you contribute to a mutual fund platform account, the more you will pay in fees. Therefore, we have an incentive to encourage you to increase the assets in your account.

• Variable universal life insurance: If you elect to open a variable universal life insurance policy, the insurance company offering the product charges fees on those dollars being allocated to the separate account of the variable universal life insurance policy. The more assets you contribute to the variable universal life insurance policy’s separate account, the more fees you will pay. Therefore, we have an incentive to encourage you to increase contributions to your variable universal life insurance policy.

• Investment advisory and investment management services: If you elect to open an investment advisory or investment management type-account, we charge asset-based fees based on a percentage of assets in the account. The rate and periodic basis for your account billing will be discussed in your account agreement. The more assets invested in an advisory account, the more you will pay in fees. Therefore, we have an incentive to encourage you to increase the assets in your account.

You will also incur other fees and costs related your brokerage or investment advisory / investment management services. These include, but are not limited to, depending on the product: mortality and expense fees and/or market value adjustments associated with variable insurance products, mutual fund distribution fees, account maintenance fees, account termination fees, brokerage account trade ticket fees, or custody fees.

You will pay fees and incur costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying. You can find more detailed information about fees and costs related to our services as a broker-dealer in our Recommendation Disclosure Statement. You can find more detailed information about our fees and costs related to our investment advisory and investment management services in our Form ADV, Part 2A.

When we provide you with a recommendation as your broker-dealer or act as your investment advisor, we must act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations and investment advice, we provide you. Here are some examples to help you understand what this means.

• Investment Management Services: Investment management fees cover a wider range of services, including transaction costs, custody of your securities, and ongoing account monitoring. The periodic fees for these high touch services create incentives for IARs to recommend investment management services to you, rather than brokerage services.

• Revenue sharing: Mutual funds and variable insurance products charge account holders distribution fees and expenses on a periodic and ongoing basis. Some of these fees are shared with us and passed through to your RR and create an incentive for us to recommend these types of securities.

Our RRs receive cash compensation when making recommendations involving sales of securities products. RRs may, depending on the product recommended, also receive a portion of the ongoing 12b-1 or other distribution fees we receive, which are charged from assets held in your portfolio. These products have different sales charges and compensation levels. This means the RR receives more compensation when there are more trades in your account, or when the RR makes a recommendation for a securities product with higher sales charges with higher ongoing distribution fees. The RR has an incentive to encourage you to trade more often or to recommend products with higher sales or distribution charges because it increases their compensation.

Our IARs receive cash compensation when making a recommendation for a managed account subject to an asset-based fee. The more assets there are in an advisory account, the more the IAR receive in cash compensation. The financial professional has an incentive to encourage you to increase the assets in your account.

By being registered to act as a BCGS RR or BCGS IAR, individuals are eligible to attend an educational business conference hosted by BCGS. The value of the trip is paid by BCGS and depends on the hotel, travel, dining and entertainment expenses associated with the applicable trip. Eligibility for the trip is not tied to any financial incentives, such as specific product recommendations or sales quotas.