You can always use NTF funds. No ticket charges on those.

Toon - I just left a wire last week, and went indie. I am not passing ticket charges on to existing clients. My new B/D has a program that has a slightly higher admin charge ( 6 bps)and no ticket charges on the first 50 trades, plus trades in the first 90 days dont count toward the 50. The minimum for that program is 100k account, but they make exceptions. I am using that wherever possible.
But for new clients i plan on passing the tix charges along to the client. They pay a fee for my advice and a ticket charge to process the trade. Easy enough for them to understand.

Another aspect you need to consider - beyond the cost and how the client reacts to it - is the regulatory aspect. Here’s what I mean.



If you absorb the trading/transaction costs, then you net less the more you trade, and make more the less you trade. This means, from a regulatory standpoint, you have a potential conflict of interest if you charge a flat fee and absorb the transaction costs yourself. If and when you are audited, you have to expect that they will examine this aspect closely, and the burden of proof will be on you.



OTOH, if your net compensation is unchanged no matter how much you trade a client’s account, it may cost the client more or less but you, personally, have no incentive to be more or less active.



That is why, from a regulatory standpoint it is more common to pass on the transaction costs to the client, than to wrap them in.



Alternatively, you could choose to put them in a third party wrap program where the client pays one fee, but your compensation doesn’t vary with the trading activity level. Now the regulatory burden is shifted from you to the wrap sponsor (the third party manager).



So just be aware of that important aspect of the decision.

[quote=Sportsfreakbob] Toon - I just left a wire last week, and went indie. I am not passing ticket charges on to existing clients. My new B/D has a program that has a slightly higher admin charge ( 6 bps)and no ticket charges on the first 50 trades, plus trades in the first 90 days dont count toward the 50. The minimum for that program is 100k account, but they make exceptions. I am using that wherever possible. But for new clients i plan on passing the tix charges along to the client. They pay a fee for my advice and a ticket charge to process the trade. Easy enough for them to understand.

[/quote]



Congrats, sportsfreak. Hope it goes well for you. Run like hell for a few months and all should level out soon!

Sportsfreakbob- Best of luck and congratulations! I know, by reading your posts over the past year, that the move to independence is one you’ve been contemplating for a while. I’m 6 months into my new venture and just getting back to a “new normal” day but loving it all. No regrets.

Morph, Northfield - thanks. One thing i can say is i dont ever want to have to do this again. It is a real bear. 7 days a week 14 hours a day, but its ok, i think in another few weeks i will be able to slow down just a bit and it will be more phone follow up, rather than running and living out of my car. I have over half my assets signed for in the first week. The rest are coming its just a matter of getting to see them all.

I have over half my assets signed for in the first week. The rest are coming its just a matter of getting to see them all.

Excellent start! Congrats! I know it’s a bit of a bear, but it will be worth it and over before you know it. You’ll probably also find that some (not many, but some) of the clients are content to handle the transition & paperwork now, without a face-to-face, so long as you get something on the calendar later to sit down with them. That was my experience.

I pay the ticket charges for my clients in all my fee based accounts.  When I first moved from a wire the ticket charges really fresked me out.  But then I realized, even with me paying the ticket charges, I was still making more due to the increased payout I now have.

It's interesting if you actually add up all the potential costs with ticket charges, they can dilute your returns by 1-5% p/yr. depending how much you trade and the custodian.  Our firm switched a few years ago to a UMA platform. They charge a flat asset fee for trades, regardless of how much or the frequency of trading.  Maybe you knew that maybe not but thought i would pass it along.