AUM Fees for Fixed Income Investments

or Register to post new content in the forum

17 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Dec 4, 2008 11:42 am

I have a client for whom I currently manage a small portfolio (<$200,000).  She intends to transfer approx $1 Million in funds to me in January to diversify in insured investments only (basically she wants CD's at various institutions)

The fees in my current ADV do not separate fees by AUM type ie I charge a set % depending on portfolio size. I'm thinking I should provide a discount for fixed income type investments? Is this wise?

And on this topic...is it OK to charge a client less than your published fee in the ADV or waive a fee at your discretion?

Thanks


Dec 4, 2008 1:24 pm

If you really wanna do right by her, open a non-fee account and toss her CD's in there. Why aren't you showing her fixed annuities? 

Dec 4, 2008 1:31 pm

If she wants insured investments only, I'd definitely show her fixed annuities and indexed annuities.

Dec 4, 2008 1:56 pm

and they are insured by.....? (I think she meant a govt guar of princ like FDIC)

Dec 4, 2008 2:47 pm
newnew:

and they are insured by.....? (I think she meant a govt guar of princ like FDIC)

 
The insurance companies.  Beyond that, state guaranty funds.  You could at least go to the limit your state offers to guarantee. 
Dec 4, 2008 3:35 pm
intrigued:

I have a client for whom I currently manage a small portfolio (<$200,000).  She intends to transfer approx $1 Million in funds to me in January to diversify in insured investments only (basically she wants CD's at various institutions)

The fees in my current ADV do not separate fees by AUM type ie I charge a set % depending on portfolio size. I'm thinking I should provide a discount for fixed income type investments? Is this wise?

And on this topic...is it OK to charge a client less than your published fee in the ADV or waive a fee at your discretion?

Thanks


 
So the idea is to charge someone 1% to "manage" insured CD's paying 2%?  I think you might be able to answer your own question.
Dec 4, 2008 3:38 pm

charge 25-50 basis pts to manage a cd ladder. with full disclosure it is her choice--you or the bank (with their lower rates, higher reinvestment risk, lack of advice etc)

Dec 4, 2008 4:12 pm
newnew:

charge 25-50 basis pts to manage a cd ladder. with full disclosure it is her choice--you or the bank (with their lower rates, higher reinvestment risk, lack of advice etc)



That's a bigger cut than the hedge fund managers take!!!

Dec 4, 2008 4:17 pm
Hank Moody:
newnew:

charge 25-50 basis pts to manage a cd ladder. with full disclosure it is her choice--you or the bank (with their lower rates, higher reinvestment risk, lack of advice etc)



That's a bigger cut than the hedge fund managers take!!!

 
And people think annuity salesmen are all about the commission.................... 
Dec 4, 2008 4:30 pm

what commission?

Dec 5, 2008 8:56 am

I am fixed fee only.  Yes the client wants 100% FDIC insured -she's not comfortable with having the 1 million at one bank (local bank), which I think is fair enough. 

I will shoot Morphius a PM.

This isn't a case of me trying to rob my clients, more that my ADV doesn't spell out an exception for this and I don't want to violate any rules.


Dec 10, 2008 10:24 pm

If you charge different fees for different asset classes, then you are indirectly inducing yourself to put your clients in higher fee / high risk(?) assets -- not wise if you are a fiduciary.

Dec 10, 2008 10:25 pm

Your ADV whould say your disclosed fees are your MAXIMUM.

Dec 11, 2008 10:41 am

What's the rule about discussing the state guaranty funds?

 
I've never mentioned it before to a client and was under the impression that it can't be used to sell annuities.
Dec 12, 2008 9:15 am

Disclosure rules and annuities. Hmmmm.........that's worked well.

Dec 12, 2008 9:18 am
newnew:

Disclosure rules and annuities. Hmmmm.........that's worked well.



Have you ever seen an annuity suitability/disclosure form?

Dec 12, 2008 11:56 am

i've used 'em plenty--they're awesome!