Paperwork

Once the decision is made to select Hardesty Capital Management, two sets of documents must be signed. The first set is our contract with you. Our contract is a very straight-forward document outlining such things as the discretionary nature of the relationship, the fee structure and the termination provisions. The other set of documents are the custodian's forms. Those forms cover the responsibilities of the custodian including reporting requirements, collection of income and Hardesty Capital Management's role as your investment advisor. We prefer to meet with you to sign these documents, but this can be done by mail if requested.

Custodian Choice

We do not custody securities for any of our clients. We rely on major brokerage firms and banks to perform those responsibilities. Our major custodian relationships include Merrill Lynch, Fidelity Investments, and Pershing on the brokerage side, and Suntrust, M&T Bank, and Investors Bank and Trust on the bank side. Brokerage custodians typically charge a nominal annual fee, while banks charge a reasonably low asset-based fee for the service. The custodian's role is to collect dividends and interest on our clients' behalf and report on the value of the portfolio. All of our custodians offer our clients web access to monitor their portfolios.

Written Investment Goals

From the beginning, we attempt to gauge your tolerance for risk by really getting to know you. In fact, the first investment meeting is designed to assess your tolerance for risk and determine your investment goals. This step is probably the most important element of getting started with us because we determine return expectations, including asset allocation and security selection. With what we have learned from you, we write a formal, personalized document outlining your financial goals and expectations and include your risk profile, recommended asset allocation and investment objectives.

Once the investment objectives are determined, we begin managing the money. Because each client has a unique financial fingerprint, we tailor each portfolio to match the risk tolerance and goals of each client. Depending on market conditions and the client, the timing of fully investing a portfolio varies. Before the first financial review, which usually occurs within three to six months of opening an account, clients can track our progress online or as the custodian sends trade notifications. Of course, we are always available by telephone if any questions need answering.

Meetings

Finally, we set up meetings throughout the year according to the client's comfort level. Although some of our clients request a little more attention, two meetings a year are usually adequate. At those sessions, we cover various topics which might include our market outlook, a detailed analysis of the portfolio, a review of the investment objectives, and investment performance. Because of the importance we place on investment performance, we will cover that topic at every meeting.

Good communication is critical to a successful outcome.