Compensation Disclosure Supplement to Your ERISA 408(b)(2) Notice


This Online Disclosure Notice supplement describes the compensation received by Stifel, Nicolaus & Company, Incorporated (“Stifel”), Century Securities Associates, Inc. (“Century”), or Keefe, Bruyette & Woods, Inc. (“KBW”) (Stifel, Century, or KBW hereafter individually or collectively referred to as the “Firms”) with respect to the services provided by the Firms to your ERISA qualified retirement plan (the “Plan”). If you intend to open a managed investment advisory account, please refer to the managed account agreement as well as the applicable Stifel or Century Form ADV Part 2A for the disclosures related to that type of account.

Description of the Firms and How to Contact Us

Your Plan maintains or may maintain a securities brokerage account or accounts with Stifel, Century, or KBW. Stifel, Century, and KBW are securities broker-dealers registered with the U.S. Securities and Exchange Commission, each a subsidiary of Stifel Financial Corp. with headquarters located at 501 North Broadway, St. Louis, Missouri 63102. If you have questions regarding the services and/or compensation related to your Plan after reviewing this supplement, please send an inquiry to our ERISA 408(b)(2) Disclosure questions mailbox at 408b2Inquiries@stifel.com or contact your Financial Advisor.

Description of Services Provided by the Firms to the Plan

Pursuant to our agreement with you, and upon your direction, Stifel, Century, or KBW has opened or will open an account on behalf of the Plan and/or a separate brokerage account for each Plan participant. Please review the ERISA Section 408(b)(2) Notice previously provided for a description of services.

Description of Compensation Paid to the Firms

The Firms may receive various forms of compensation related to the services it provides to your Plan and depending upon the investments selected by your Plan and/or its participants.

A. Direct Compensation Paid to the Firms From the Plan
Stifel brokerage accounts are subject to applicable fees on the Stifel Fee Schedule.

If your Plan utilizes a Stifel-sponsored plan document prototype, your accounts are charged an annual fee. See Stifel Fee Schedule.

The following is a list of securities that may be traded in your brokerage account for which the Firms may receive direct compensation. Click on the securities that your Plan account(s) owns for a description of the forms and amounts of direct compensation that the Firms may receive.

1. Equity Securities

Equity securities represent an ownership interest in the issuing entity. Equity securities include common stock, American Depositary Receipts (ADRs), and closed-end mutual funds made up of pooled or collective investments. The firms are compensated for equity securities purchased or sold on a commission basis, depending upon the quantity of shares or units purchased or sold and their respective prices. The minimum commission is either 10% of principal or $40, whichever is less. The maximum commission is intended to not exceed 10% of the principal amount, and the average commissions for these trades are usually proportionately less than the 5% regulatory guideline. Detailed information on commissions paid to the Firms is included on the specific trade confirmations you receive.

2. Exchange Traded Funds

Exchange traded funds (“ETFs”) are typically registered open-end investment companies or unit investment trusts (described elsewhere on this web site), the shares of which represent an interest in a portfolio of securities. ETFs typically trade throughout the day on an exchange at prices established by the market. The Firms are compensated for ETFs purchased or sold on a commission basis, depending upon the quantity of shares or units purchased or sold and their respective prices. Detailed information on commissions paid to the Firms is included on the specific trade confirmations you receive.

3. Exchange Traded Notes

Exchange traded notes (“ETNs”) are senior, unsecured, unsubordinated debt securities typically issued by a bank that are typically linked to the performance of a market index, less investor fees. The firms are compensated for ETNs purchased or sold on a commission basis. Detailed information on commissions paid to the Firms is included on the specific trade confirmation you receive.

4. Fixed Income Securities

Fixed income securities are investments that provide a return in the form of fixed periodic payments and eventually the return of principal at maturity or when the security is “called” by its issuer. All fixed income products have their own official statements or other disclosure materials from the issuer when initially offered, which are available from your Financial Advisor. Fixed income securities include certificates of deposit, corporate bonds, municipal bonds, convertible securities, federal agency bonds, mortgage-backed securities, preferred stock, and U.S. Treasuries. The Firms are compensated for fixed income securities purchased or sold on a principal basis by either “marking up” (upon the Plan’s purchase) or “marking down” (upon the Plan’s sale) the price of the security paid or received by the account owner. The amount of the “mark up” or “mark down” can range between 0.01% and 2.25%, and averages approximately 1.0% on all fixed income securities trades done at the Firms. Fixed income securities sold on an initial offering are typically sold at “par” (i.e., face value), with the Firms receiving compensation as described in the official statement or disclosure materials from the issuer. Fixed income securities may be sold on an agency basis, under which the Firms are compensated on a commission basis. Detailed information on commissions paid to the Firms is included on the specific trade confirmations you receive.

5. Options

Options are securities contracts that give the holder of the contract the right to buy or sell an asset tied to the contract (e.g., stock, indexes, commodities) at a given price within a given period. The Firms are compensated for options purchased or sold on a commission basis, depending upon the number of contracts and the principal amount of the trade. Commissions paid on a single contract (100 share) $1.00 premium option trade begin at $16.00 and range up to $42.75 for a single contract $14.25 premium option trade. Discounts apply on orders for larger numbers of contracts. Detailed information on commissions paid to the Firms is included on the specific trade confirmations you receive.

B. Indirect Compensation Payable to the Firms From Sources Other Than the Plan
The following is a list of securities that may be traded in your brokerage account for which the Firms receive indirect compensation. Click on the securities that your Plan account(s) owns for a description of the forms and amounts of indirect compensation that the Firms may receive.

1. Alternative Investments

Alternative investments include private equity funds, partnership interests, hedge funds, “funds-of-funds,” and other forms of investment vehicles that may not be registered with the U.S. Securities and Exchange Commission (collectively, “Funds”). The Firms’ compensation with respect to a Fund varies depending on whether or not Stifel is the manager and/or general partner of the Fund (“Stifel-Sponsored”). With respect to Stifel-Sponsored Funds, Stifel receives the management fees and, to the extent applicable, any performance-based fees or administration fees that your Plan pays to the Fund, in each case as specifically set forth in the Fund offering documents that you received prior to investing in the Fund. Management fees generally range from 0.50% to 4.00%. Performance fees generally range from 0%-25%. For non-Stifel-Sponsored Funds, Stifel may receive, from the Fund placement fees, up-front sales loads and/or back-end sales loads as set forth in the Fund offering documents. Placement fees, up-front sales loads, and/or back-end sales loads generally range from 0% to 3.00%. Stifel may also receive, from the Fund manager or general partner, referral or solicitor fees, or may receive a share of the management or similar fees that your Plan pays to the Fund, which the Fund in turn pays to its manager or general partner. Referral or solicitor fees generally range from 0% to 3.00%. Stifel’s compensation from the Fund manager or general partner generally is set forth in the Disclosure Statement provided to you and acknowledged by you prior to investing in the Fund.

2. Collective Investment Trusts

Collective investment trusts are investment funds available generally to institutional investors that pool investor assets for the purpose of larger investments by the trust. The Firms are compensated on a fee basis that can range between 0% and 1.0%. Detailed information on compensation and fees associated with collective investment trusts is set forth in the offering disclosure documentation provided by the specific trust.

3. Payment for Order Flow Exchange Liquidity Credits and Fees

Payment for order flow is defined as any monetary payment, service, property, or benefit that results from remuneration, compensation, or consideration to a broker-dealer from another broker-dealer in return for routing customer orders to that broker-dealer. While Stifel does not receive payment for order flow from other broker-dealers, we do receive certain rebates for routing orders to the electronic communication networks that execute such orders. The rebate varies based on the order type.

4. Fixed Annuities

Fixed annuities are contracts issued by insurance companies that credit the contract with a set interest rate for a specified period of time. The owner purchases the annuity with either a lump-sum investment or premiums over a period of time. When the annuitant/owner reaches a certain age, he or she may elect to begin receiving income payments.
Sales commissions are paid to the Firms from the insurance company’s assets and range from 1% to 6% of the premium paid into the contract. Depending on the issuing insurance company and product sold, a renewal commission of 1% to 6% may also be paid at the end of the initial guaranteed term and/or contingent deferred sales charge period.
Contingent Deferred Sales Charges (CDSC) or “surrender fees” are charged if investors withdraw funds prior to a stated date, typically within 1 to 10 years of purchase date. This fee is deducted from the amount withdrawn and ranges from 5% to 9% in the first year and gradually decreases over the term of the CDSC period. However, during the CDSC period, most annuities allow withdrawals of a certain percentage without incurring a CDSC charge. Any CDSC charged is not paid to the Firms.
For more information about sales charges on fixed annuity contracts you own, please see your annuity contract.

5. Fixed Indexed Annuities

Interest credited to a fixed indexed annuity is linked to the performance of a stock market index. However, your participation in any gain experienced by the index will be limited to the percentage of the gain set by the insurance company. This limits your upside earning potential, while the insurance company helps to protect your principal in negative markets through a minimum guaranteed contract value.
Sales commissions are paid to the Firms from the insurance company’s assets and range from 1% to 6% of the premium paid into the contract.
Contingent Deferred Sales Charges (CDSC) or “surrender fees” are charged if investors withdraw funds prior to a stated date, typically within 1 to 10 years from purchase date. This fee is deducted from the amount withdrawn and ranges from 5% to 9% in the first year and gradually decreases over the term of the CDSC period. However, during the CDSC period, most annuities allow withdrawals of a certain percentage without incurring a charge. Any CDSC charged is not paid to the Firms.

6. Life Insurance

Life insurance contracts are issued by insurance companies, where in exchange for a premium, the insurance company pays a certain benefit to the survivors of the policyholder upon his or her death.
Sales commissions are paid to the Firms from the insurance company’s assets and range from 12% to 75% of the target premium paid into the contract in the first year. Renewal commissions ranging from .35% to 5% are paid in years 2 through 10 if ongoing premiums are paid.
Asset-Based Commissions (often referred to as “Trail Commission”) are paid to the Firms on an ongoing basis from the insurance company’s assets, range from 0.0% to .35% of the contract’s cash value, and generally are applicable to variable life insurance products.
Surrender Charges are applied if an investor withdraws cash value prior to a stated date, typically within 10 to 15 years from purchase date. This fee is deducted from the amount withdrawn and ranges from 10% to 100% during the first year, and gradually decreases over the surrender charge period. Any surrender charge applied is not paid to the Firms.
For more information, please refer to the contract issued by the life insurance company.

7. Cash Sweep Program

Through the Stifel Insured Bank Deposit Program for Retirement Accounts (the “Program”), available cash in an eligible securities account (“Account”) will be deposited into interest-bearing deposit accounts at Stifel Bank & Trust (“Stifel Bank”), a bank that is affiliated with Stifel, Century, and KBW and whose deposits are insured by the Federal Deposit Insurance Corporation. Beginning in 2017, Stifel will receive an annual fee of up to $100 from Stifel Bank on a per-Account basis in connection with Accounts that participate in the Program. Please review XXXVI. Disclosure Documents for Automatic Cash Investment; B. Stifel Insured Bank Deposit Program for Retirement Accounts Disclosure Statement; Fees and Conflicts of Interest in the Stifel Account Agreement and Disclosure Booklet for additional information.

8. Mutual Funds

An open-end mutual fund is an investment company that pools money from shareholders with a similar objective and invests in a diversified portfolio of securities with the goal of achieving that stated investment objective. Mutual funds are generally offered in different share classes or pricing structures that provide shareholders the flexibility to select a structure that best meets their investment time horizon and service and support needs. Although the different share classes represent interests in the same portfolio, each share class or pricing structure will have different fees and expenses that impact investment performance.
Sales Charges are paid by the investor and are typically expressed as a percentage of the fund’s offering price. Some mutual funds are characterized by having a “front-end” sales charge or “load” in which the sales charge is deducted at the time of the original investment, and then the remaining portion is invested in the fund. All or a portion of the sales charge will generally be paid to the Firms. Other funds have a “deferred” or “back-end” sales charge, otherwise known as a “Contingent Deferred Sales Charge” or CDSC. In this case, the sales charge is assessed upon redemption if the investment is not held for a prescribed time period. Any CDSC charged is not paid to the Firms.
For more information, please refer to the “fees and expenses” or similar section of the mutual fund prospectuses previously provided to you or click here to go directly to a list of fund companies available at the Firms and a link to their individual web sites. Please have a copy of your most recent account statement available so that you can identify the correct prospectus based on the specific share class and fund(s) owned.
Service Fees (commonly known as “12b-1 Fees”) may be paid by funds to compensate the Firms for providing distribution-related, administrative, and informational services, as applicable, associated with the funds owned by the Plan. Service Fees are included in the “annual operating expenses” or “expense ratio” charged and reported by each fund, and such amounts are automatically deducted directly from the funds.
Please note that for some funds, the 12b-1 fee expense reported in the prospectus may be lower (by a difference of .01% or .02%) than the amount actually paid by the fund to the Firms. In such cases, the difference is the result of the fund having some accounts that do not have an assigned Financial Advisor to whom the fund pays a 12b-1 fee. Therefore, since the fund does not incur the expense on those accounts, the overall 12b-1 fee reported in the fund prospectus is slightly reduced.
For more information about 12b-1 fees attributable to your Plan, please refer to the mutual fund prospectuses previously provided to you or click here to go directly to a list of fund web sites. Please have a copy of your most recent account statement available so that you can identify the correct prospectus based on the specific share class and fund(s) owned.
Revenue Sharing. Stifel may receive compensation from the funds for providing ongoing marketing, training, and education to the Firms’ Financial Advisors with respect to the mutual fund sponsor and its products. These revenue sharing payments are in addition to the sales charges, 12b-1 fees, and deferred sales charges in the funds’ prospectus fee table. Revenue Sharing is generally paid from the fund manager’s assets and does not directly reduce the amount invested by the Plan or the Plan’s investment earnings. Not all fund companies pay revenue sharing, and revenue sharing that is paid to the Firms varies by fund company.
Amount. The compensation that is received from those that do make such payments is a combination of up to 0.10% annually of new investments and a maximum of 0.08% annually on assets under management. The revenue sharing payments are subject to volume discounting, such that as total assets placed by the Firms’ clients at a fund company increase, the basis points paid for those assets will decrease. Additionally, some fund families may make fixed payments in addition to the above payments or instead of those payments. Financial Advisors at the Firms are not required to recommend any fund providing additional compensation, nor do Financial Advisors directly share in any of the revenue sharing fees received by the Firms.
For more information about revenue sharing compensation, please refer to the “other payments to dealers and financial intermediaries” or similar section of the mutual fund prospectus previously provided to you or click here to go directly to a list of fund families from which the Firms receive revenue sharing payments.
Sub-Accounting Fee Reimbursements. Funds may compensate Stifel for providing record-keeping and related services associated with funds held in a brokerage account. Stifel processes some mutual fund business with fund families on an “omnibus” basis, which means Stifel consolidates the Firms’ clients’ trades into one daily trade with the fund, and therefore maintains all pertinent individual shareholder information for the fund. The compensation for these services is commonly referred to as “omnibus fees” and is paid by certain funds to Stifel. Not all fund companies pay Stifel sub-accounting fees, and sub-accounting fees that are paid to Stifel vary by fund company. Any sub-accounting payments made to Stifel are paid from investor assets in the mutual funds, but in some cases may be subsidized in part by affiliates or the distributor of the mutual funds.
Amount. Stifel generally receives sub-accounting fees of $16-$19 per year per fund position held in a commission-based brokerage account, although certain share classes may pay less or nothing at all. Financial Advisors at the Firms are not required to recommend any fund providing additional compensation, nor do Financial Advisors share in any of the sub-accounting fees received by the Firms.
For more information, click here to go directly to a list of fund families from which Stifel receives sub-accounting fees.
Networking Fees. Fund families that are not traded omnibus at Stifel are traded on a networked basis, which means Stifel submits a separate trade for each individual client to the fund and therefore Stifel maintains certain elements of the shareholder information. Funds may reimburse Stifel for providing these services. Not all fund companies pay Stifel networking fees, and networking fees that are paid to Stifel vary by fund company. Any networking fees paid to Stifel are deducted from the fund manager’s assets, but in some cases may be subsidized in part by affiliates or the distributor of the funds.
Amount. Networking fee reimbursements received by Stifel range from $3-$12 per year per fund position. Financial Advisors at the Firms are not required to recommend any fund providing additional compensation, nor do Financial Advisors share in any of the networking fees received.
For more information, click here to go directly to a list of fund families from which Stifel receives networking fees.

9. Unit Investment Trusts

Unit Investment Trusts (“UITs”) are investment companies sold initially under prospectus. UITs are structured with specific maturity dates (termination dates). The term of a UIT can range from 13 months to more than 25 years. Because UITs are not managed, they typically incur lower annual operating expenses than mutual funds, but have sales charges. The expenses, sales charges, and fees associated with a UIT are outlined in its prospectus and can vary, depending upon volume breakpoints, rollover discounts, and other factors specific to each UIT. The Firms are compensated for a UIT purchase in the form of a concession from the issuer in the range of approximately .65% to 4.00% of the principal value with a current average of 2.60%. Amounts on individual transactions are subject to reduction due to breakpoints that are based on transaction size. In addition, discounts of 1.00% may be given when rolling the proceeds from one UIT to another. Stifel also receives additional concessions from Advisor’s Asset Management, First Trust, Guggenheim, and Invesco in the form of volume rebates on a monthly or quarterly basis. These rebates currently range from approximately .05% to .13% of principal value with an average of .10%.
For further details and information, please refer to the investment prospectus for a specific UIT.

10. Variable Annuities

With a variable annuity, funds are invested in a professionally managed portfolio of stocks and or bonds, depending on your selection.
Sales Charges or Commissions are paid to the Firms by the insurance company from the insurance company’s assets. Sales commissions are received by the Firms as a percentage of the premium paid into the contract. This compensation ranges from 1% to 7.5% of the premium paid into the contract. In addition to an up-front commission, ongoing trail commissions (based on the value of the assets) may be received.
Service Fees (commonly known as “12b-1 Fees”) may be paid by funds in variable annuity subaccounts to compensate the Firms for providing distribution-related, administrative, and informational services, as applicable, associated with the subaccounts’ investments. Service fees are included in the “annual operating expenses” or “expense ratio” charged and reported by each fund. Service fees range from .25% to 1.50% of the current value of the contract.
Contingent Deferred Sales Charges (CDSC) are charged if investors withdraw funds prior to a stated date, typically 4 to 7 years (surrender period) from purchase date. This fee is deducted from the withdrawn amount. The CDSC will decline over a period of a few years to 0%. The CDSC typically ranges from 5% to 9% of the amount withdrawn. However, during the surrender period, most annuities allow withdrawals of a certain percentage without incurring a fee. Any CDSC charged is not paid to the Firms.

C. Compensation Paid Among Related Parties
Stifel, as a self-clearing broker-dealer, provides securities trading, processing, execution, and other services to Century and KBW, as an introducing broker-dealer.

Stifel receives compensation from Century and KBW on a transactional basis for securities trades and processing services provided by Stifel, Century, or KBW as follows:

  • $12.00 per order for Listed Equities, OTC Equities, and Options
  • $25.00 per order for Corporate, Municipal, and Treasury Bonds; Government Agencies; and UITs
  • $15.00 per order for Mutual Fund purchases and sales
  • $5.00 per Mutual Fund exchange
  • $25.00 per notification of Option exercise or assignment
  • $5.00 per cancel & rebill

Stifel receives compensation from Century and KBW on a transactional basis for securities trade execution services provided by Stifel to Century and KBW as follows:

  • $.01/share for Listed Equities (non-third market)
  • $1.25/contract for Listed Options
  • $1.00/bond for Listed Bonds
D. Compensation for Termination of Services
If your Plan utilizes the Stifel-sponsored plan document prototype, each Plan account may be charged a termination fee. Click here for more information. This charge is not paid to your Financial Advisor.
The Firms do not charge any other additional compensation in connection with the termination of the Plan’s services.

Scope of Disclosure
The information provided herein is a supplement intended to address the disclosure requirements under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Your Plan may incur other service charges that are not payable to the Firms. Such charges may include any expenses, fees, and other costs payable to the Plan’s administrative service providers, the cost for auditing the Plan’s financial statements, and other related expenses. Information regarding these other service charges must be obtained from the applicable service provider. The information included herein provides important information for plan fiduciaries; however, is not intended to create, replace, or modify any existing or prospective agreement with the Firms that may exist now or in the future.