WealthManagement Magazine

Reps Beef About Ticket Charges on Fee Accounts

Broker complaints about charge backs on wrap-fee accounts is causing many brokerages to adopt new trading policies.Take the Investment Advisory Services unit at Raymond James. There, many brokers had complained that hitting them with a ticket charge for excess account turnover is unfair. The firm changed its program to allow more trades in its discretionary fee accounts.The firm still charges for

Broker complaints about charge backs on wrap-fee accounts is causing many brokerages to adopt new trading policies.

Take the Investment Advisory Services unit at Raymond James. There, many brokers had complained that hitting them with a ticket charge for excess account turnover is unfair. The firm changed its program to allow more trades in its discretionary fee accounts.

The firm still charges for excess turnover, according to Thomas Hamilton, president of the Investment Advisory Services division at the firm in St. Petersburg, Fla., but now were pretty generous with the turnover--300%. If it goes above that, we do charge.

Thomas G. Seitz, director of the managed asset group at Dain Rauscher in Minneapolis, says his firm researched the turnover rates and charges on all of its competitors fund wrap programs. Some firms allowed just 20 or 25 trades per year with limited fund choices, says Seitz. Then they would charge a ticket charge on top of that.

Dain Rauscher recently launched a program that allows 50 trades per year. What I sense is that more brokerages are becoming sensitive to the issue of account turnover, Seitz says. More of us want to be flexibly priced so the investment executives prices can be flexible.

The idea of adding ticket charges is meant to reduce firm costs and give brokers some parameters.

[Brokers] arent traditional money managers, says one fund wholesaler who is familiar with the fee programs at several firms. They still complain about the ticket charges, so the firms had to do something. But dont get me wrong, the charges are still on the books for the firm and still come out of the brokers pocket in the form of lower gross credits or payouts, he says.

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