Transfer Fees

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May 3, 2007 3:16 pm

I have a quick question about transfer fees. Can a rep "absorb" them or are there rules that prohibit such actions. <?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


I have heard two different sides to this. Clients who claim that they were paid for when they transferred to MS. I also heard that it violates the $100 gift rule (example $75 closing fee for each of the 4 IRA's). Does anybody know if it is up to the rep, a firm thing, or a federal thing?


Thanks in advance.

May 3, 2007 3:26 pm

I believe that if the acoc**t is big enough (ex 250K or more) or there is enough revenue potential that the firm can eat those fees when a client transfers in an account. Talk to your Director and they can help you out...

May 3, 2007 3:29 pm

LPL allowed me to reimburse actual fees incurred.  I've never heard the "gift" angle, but I view it simply as making the client whole...no different that eating a ticket charge.  If this "gift" issue is a problem for that, wouldn't it also be an issue for discounting stock trades from the published schedule?

May 3, 2007 4:01 pm

LPL let me pick up the cost too. I spent almost $3,000 picking up the fees when I moved. Luckily, I left before Jones starting charging an ACAT fee for regular accounts.

May 3, 2007 4:07 pm

So far, very helpful. Thanks.

May 3, 2007 5:29 pm

I ate Acat fees, and the ones for when I brought in an associate.


I eat annual fees for the clients that came with (not as big a deal as I make it out to them in that the majority of housholds are north of $250M.


Bottom line, you make a business decision, and your firm only cares that they get their money.

May 3, 2007 7:59 pm

Let them enough buy mutual funds at NAV to equal the acat expense. Works very well and you and the b/d share the hit that way.

May 3, 2007 8:53 pm
CIBforeveryone:

Let them enough buy mutual funds at NAV to

equal the acat expense. Works very well and you and the b/d share the hit

that way.





OK, maybe I am being naive. But how do you give purchases at NAV

unless they are family, at the $1mm zero breakpoint, etc? I always

understood that you had to follow prospectus for NAV purchases.

May 3, 2007 9:25 pm

I just met with an indy b/d and asked the operations people the same
thing.  I was told we CANNOT pay for the fees a long time ago, but
found out today we in fact can, through an arrangement with the new
b/d.  I am guessing it means we cannot simply write a check to
each client is all.  It has to be reimbursed by the b/d and "paid"
by us somehow.

May 3, 2007 9:39 pm

Lemme put it this way.


If there's an error in the account, or a DK or any fee that hits above and beyond what the bd can hit the account for, they have a mechanism to write it off versus the FA. They're going to charge it against your gross net (comes out pre tax so uncle gets to share it with you.)

May 3, 2007 9:45 pm

my company paid our transfer fees up to 60k for the 3 of us when we moved. i know someone who went from MS to SB and he paid about 15k in tranfer fees himself because he did not work it into his deal. we used about 50kk of the allowance. other ideas are change of dealer on mutual fund accounts and dtc transfer of securities. i also de-networked many mutual funds in small accounts before i left. MS actually started to charge a fee to denetwork a mutual fund around the time i left. i worked covering the fees into our deal. i also will pay account fees if an account is big enough or i like them(only if they ask). we do not have an account fee on our regular account but have an IRA fee. our company also charges a 30 fee a year to access account on the internet. i forgot to work that into our deal so this is where i tend to eat the fee. Nusance fees, the constant changing of the fee structure, and lack of input from FA's was the main reasons i left MS.

May 3, 2007 10:54 pm

A client recently asked me to pay his fees charged by his former brokerage. Why would I do that?

May 4, 2007 7:47 pm

just transfer the client assets that incurred the transfer fee in a VA. the upfront bonus will offset the fee