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Duration: 3:59

Level: Beginner

Use a template to configure fee structures for clients. Whether you create a single template or multiple versions to cater to different types of clients, this set-up can help streamline the account application process.

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Study Notes:

When you invite a prospect to open an account, you can attach a fee schedule to the application. This lesson describes how to create a fee template within the Advisor Portal.

Using Advisor Portal, select Fee Administration, and then click on Configure Client Fee Templates.

You will see the default schedule plus any other templates that you may have already created. Use the ‘+’ sign to create a new fee template.  First assign a name for your new template and then click Continue.

From the Fee Strategy dropdown menu make a selection; you will likely select the third choice here to Charge Fees for Managing this Account.

Four choices appear for US Advisors. You may charge clients according to the net liquidation value of an account, annualized flat fees and performance fees.

Let’s review each selection:

Annualized Percentage of Net Liquidation – When checked, select one of two types: Blended or Fixed. A Fixed percentage requires the user to choose the frequency of calculation and to enter a percentage value.

When Blended is selected, select the frequency of calculation and set a percentage fee to different levels for NAV. For example, you may choose to set a higher fee on smaller amounts under management.  By default, there are two NAV levels, but additional levels may be configured using the Add sign.

Annualized Flat Fee – Here select the time period over which the charge will be incurred and enter a dollar value in the Amount input field.

Percentage of P/L – Performance fees can also be set. This time when choosing the period from the Applied selection dropdown menu, two additional fields will display beneath the percentage input field.

  • Go ahead and enter the percentage to charge – let’s say 5%. This means that you will charge the client 5% of profits. You can configure a Performance Threshold and / or a HighWater Mark.
  • If you change the selection to Performance Threshold, determine whether to use fixed, or to measure against one of the many available benchmarks listed.
  • For example, by selecting the S&P 500 index from the list, you will only collect that 5% of client’s profits should your performance on the client’s behalf exceed that of the S&P 500 index.
  • By selecting the Type as Fixed, you must enter a percentage value that must be exceeded before the stated profits would be calculated for collection.
  • The HighWater Mark settings enable you to look back across X number of periods and determine whether to prorate fees when client withdrawals are considered and to configure for previous losses.

Invoicing – Checking the Invoicing box enables Advisors to establish maximum fees for a billable period or set maximum fees as a percentage of net liquidation value.

Start by determining the applicable invoicing cycle as either monthly or quarterly. Then enter a maximum dollar amount in the first field or a percentage value in the lower field.

Use the Other Client Fees section to configure other client expenses, including commissions, minimum monthly fees, market data and research fees. Then click continue.

The message screen will show you that you have finished.

To save some time, you may create multiple fee templates.

When you send application invitations, you will be prompted to use a Fee Template. Select Yes and choose the template to apply to the invitation for the new prospect.

Disclosure: Interactive Brokers

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