Client Fees

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May 14, 2008 2:09 am

I really don't have the time to run around town trying to find out what other firms are charging in fees to clients.  Through LPL using any one of our various advisory platforms, clients typically pay an AUM fee in addition to custodial fees for IRA's, transaction fees for confirms at $5 ea, and on SAM accounts up to $26.50 for a fund purchase or sale (some rare circumstances even as high as $40).  My question to the audience is how do other firms charge for these things?  Is LPL the only B/D and RIA zinging clients for all these fees?  When clients question me about these fees I generally tell them there is no such thing as a free account nor is there truly a zero fee account.  They are paying for it somewhere.  But what is really happening out there at other RIA's and B/D's?

May 14, 2008 9:16 am

At Jones, the standard ticket charge is $4.95 per transaction (charged to client) for commissioned accounts.  IRA's are $40/yr., and $20/yr. for additional IRA's per person.  Wiaved for households over 500K.  There is no fee on our brokerage accounts. 

 
For SMA accounts, the fee can start as high as 2.5% (discounted to 1.875 at discretion of broker), and scale down to 1.50 (discounted to 1.125) based on account value, for an all-equity portfolio.  Fixed income is lower by almost 100bps, so on a blended basis, you are looking at anywhere from 2.0% to 1.0% (plus any discount).  This is not exact, as it is a graduated scale, but close enough.  There are no additional account fees, ticket charges, or custodial/IRA fees.  I am guessing our Advisory Account platform coming out this summer will be fairly similar (though it could be identical to our commissioned accounts - I don't know).
 
Keep in mind, they will charge for other things (specific services, i.e. expanded check writing, on-line bill pay, ACAT-out fees, minimum MMKT balance, etc.).
 
JW, I think if you wrap it all together, most firms are about the same.  They may call them different things, and structure them differently, and charge for different services, but I think the only place you really get a "deal" is at the no-load direct or discount online firms.  I have never heard that LPL is any more "fee-happy" than any other B/D.