Fee Structure for a million dollar portfolio?

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Oct 9, 2009 9:57 am

Hi all!

 
Thanks for the awesome feedback so many of you have given since I started a few months ago!
 
I am looking for the fee structure you would charge a client with a half million to a million dollar portfolio. This does not include financial plans, analysis, etc. just the investment management fee.  I have seen anywhere between 50bps to 200 bps in California. Then I found some guy charging a 100 bucks a month for any account
 
Thanks for you input.
Oct 9, 2009 10:09 am

What is the portfolio holding? and 500K-$1Mil is kind of a big gap..



If it was all fixed income then 40-65bps. Equities you could do 75bps-150bps. Depends on your costs, profit margins, what the client is willing to pay.

Oct 9, 2009 6:50 pm

And are there SMA's involved?  Or just you managing a portfolio of funds, ETF's, stocks, etc?

Oct 9, 2009 10:29 pm

Hi: Portfolio will consist primarily of Mutual Funds and ETFs. 

 
Thanks to everyone for your responses!
Oct 9, 2009 10:33 pm

I have low overhead and looking to be ALL-IN of 1.00% - 1.25% as suggested. 

Oct 9, 2009 10:33 pm

Why do people who aren't and have never been in this business believe they can create things that people who are in this business will want to buy? 

Examples:  leads, stockpicks, trading strategies, portfolio models like this guy thinks he's going to sell etc.

Oct 9, 2009 11:44 pm
BerkshireBull:

Why do people who aren't and have never been in this business believe they can create things that people who are in this business will want to buy? 

Examples:  leads, stockpicks, trading strategies, portfolio models like this guy thinks he's going to sell etc.





Mutual fund portfolio wrap fee of 1.5%, IMHO, is a bit high.  I love SMA's for the tax advantages.   


Oct 10, 2009 11:51 am

Thanks All for the input. 

Oct 10, 2009 9:24 pm

I hope people are using SMAs purely as an alpha generator.  Allocating to 5-6 different managers is old school.  Core-satellite is how I prefer to roll.  On a core portfolio of MF & ETFs,  I would charge an advisory fee of 1.00-1.25% for that part.  If I satellite an SMA to that, I would probably charge around 1.85% and then I would satellite some managed futures and a Multi-Strategy Hedge Fund, which pay trails of 1-3%.  I'm in the Southeast.

Oct 12, 2009 9:34 am

Thank you Mr. Clutch.

Oct 12, 2009 1:57 pm

My fee is .5% for a million dollar portfolio.  




500k is .8%

 
 
Oct 12, 2009 2:20 pm
Greenbacks:

My fee is .5% for a million dollar portfolio.  




500k is .8%

 
 
 
After haircuts and ticket charges, etc. what is your average net for a $500k-$999,999 portfolio? 
Oct 12, 2009 6:48 pm

For a portfolio that is 70/30 or 60/40, you are selling yourself short. I assume you are using funds as opposed to SMA's?? A 500k acct is going to pay at least 1% with me, and 1mm is looking at .90'ish, depending on the mix.

Oct 12, 2009 7:55 pm
indexwiz:

I have low overhead and looking to be ALL-IN of 1.00% - 1.25% as suggested.









Sounds about right to me. I charge 1% on anything over 1 million if it's funds and etfs.

Oct 20, 2009 5:50 pm

Client picks up ticket charges.

Oct 20, 2009 7:39 pm
Greenbacks:

My fee is .5% for a million dollar portfolio.  




500k is .8%

 
 
Do you also collect 12b-1's?  That does seem a bit low unless you are talking fixed-income portfolios.
Oct 21, 2009 7:07 am

Tier the fees. No retroactive breakpoints. FIrst tier is at 250k, then 500k, then 1mm, North of 2mm is "negotiable".

Oct 21, 2009 10:43 am
iceco1d:

Do you guys "tier" your fees? Or do you run them like mutual fund breakpoints?At my firm it's like "first 100K @ 1.5%, next 400K @ 1.25%, next 500K @ 1%, etc."





Have both. For my discretionary accounts it's like mutual funds under 500K 1.25% under $1MM 1.00%..



But for the firm managed stuff it is tiered.. I don't understand the point of the whole tier system...

Oct 21, 2009 11:58 pm
Greenbacks:

My fee is .5% for a million dollar portfolio.  




500k is .8%

 
 
You mean that's what you hope to charge if anyone with real money is deluded enough to hire you. I've read your posts enough to know better.
Oct 22, 2009 11:52 am

Good forum on this topic.  From what I've seen, fee-billing types are all over the place.  RIA Advisors have shared with me a wide range of billing options including:


1. Flat-Fee BPS
2. Tiered Fee Schedule
3. Sliding Scale Fee
3. Engagement Fee (i.e. Hourly Fee)
4. Income Based Fee
5. Net Worth Based Fee
6. Or some combination thereof
 
A good book I read on the subject of fee-billing types and how to find which one might work best for your practice is:  To Fee or Not to Fee II written by Marc Lamontagne.