RICHARD A. KULA

We generally charge an asset-based fee (a percentage of the assets in your accounts) on quarterly or monthly basis. The more assets you have under our management, the more you will pay to us in fees; we therefore have an incentive to encourage you to increase the assets in your account to increase our fees. Other ways we may calculate and charge fees include hourly fees, flat fees, a retainer, and/or service fees. We charge our fee whether your account is profitable or not and even if we did not buy or sell assets in your account. Fees vary depending on the type of services provided and the amount of assets we manage for you, and are negotiable.

Fees paid to us for an account within our wrap program include our advisory fees in addition to one or more of: (i) brokerage commissions, (ii) custodial fees, (iii) certain periodic reporting or (iv) management fees paid to affiliated or third-party managers. As a result, wrap fees for these accounts are typically higher than the non-wrap advisory fees.

In addition to fees paid to us, you will incur costs related to the investments in your account such as the fees and expenses charged to investors by mutual funds, variable annuities, exchange traded funds, alternative investments, and other types of securities; depending on your account setup and activities occurring in your account, you may also incur investment platform administration fees, management fees for services provided by an affiliated or third-party manager, custodian fees, account maintenance fees, transaction costs, and other related fees and expenses.

You will pay fees and 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.

For additional information about our fees and other costs associated with investing, please see Items 5, 10, and 14 of our Brochure and Items 4 and 9 of our Wrap Fee Program Brochure.

When we act as your investment adviser, we have to 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 investment advice we provide. Here are some examples to help you understand what this means.

• Some of our affiliates serve as investment managers for certain investment products and earn a management fee for those services. We therefore have a financial incentive to recommend these proprietary products over third-party products.

• We may invest or recommend investing your assets with affiliated managers that provide asset management services for an additional fee. The ability to earn additional fees for an affiliated manager creates an incentive for us to invest or recommend investing client assets with these affiliated managers and thus presents a conflict of interest.

• Certain of our financial advisors are (i) licensed to sell insurance, and (ii) registered to offer you brokerage services with Hightower Securities, LLC, an affiliated broker dealer. In both instances, you would pay a commission for these services and your financial advisor could receive a portion of that commission, which presents a conflict of interest.

Our financial professionals’ compensation generally varies based on the revenue HTA earns from their advisory services or recommendations, the amount of client assets they service, the time and complexity required to meet a client’s needs, and the cost structure of their advisor practice. The compensation that your financial professional receives will typically increase as revenue earned from their client accounts increases. Therefore, they are incentivized to increase revenues on your and other clients’ accounts.