RIA Billing Software

In particular, something that will allow us to bill on asset classes

Are you really charging different fees depending on what asset classes you recommend?



[quote=wirehouser] Advent and Black Diamond (so far) at least have shown to be cost prohibitive. [/quote]

Perhaps if you would only be using those services for the purposes of fee billing, since that aspect is but a minor part of the service they provide. What service are you including in your consideration?



And what would you consider to be a non-prohibitive price?

Billing on asset classes is not uncommon.  There are many managed account platforms that bill this way.  This billing structure is related both to advise as much as it is custody of assets.  This method is particularly beneficial since the firm absorbs the trading cost for equity trading while it does not overbill the client on assets that do not trade as frequently, such as fixed income & mutual funds.  Client’s appreciate this instead of a flat wrap.  As for the cost, I’m looking for a product that can do this, but doesn’t put me in a box charging me 5bps on the book every year.

If you’re an RIA, why did you name yourself “wirehouser”? 

I know it is common for asset management firms and/or firms running wrap programs as part of a managed account platform to bill differently for different asset classes. This billing approach is far less common if you are not a wrap sponsor or asset manager, as there are considerably different regulatory issues involved. I assume from your response that you are distributing your managed account strategy through one or more platforms instead of managing the entirety of individual client assets?



As for the cost, I’m still confused. I know Black Diamond’s pricing structure runs less than half of the 5 bps you mention at the $50 MM AUM level you mention, and decreases as a percentage of AUM from there. Advent’s ABOS was similarly priced when I last looked at it about 18 months ago. So where do you get the 5 bps pricing level?

From both firms, Advent & Black Diamond, I have been quoted recently in that range.  No, they don’t charge 5 bps, but I’m speaking in general terms on the cost (including setup).  As for my name, it references my past as I came from a large wirehouse which shall go unnamed.  I just need a solid billing program to get things up-and-running.  I will gladly upgrade later, but for now (considering RIA startup costs) I need something basic.  I’m perfectly satisfied with my custodian’s reporting.

I would suggest you charge more if 5bps is too much.  The time the cheap software packages such as IAS, Portfolio Director and others will take to run will cost you much, much more than 5bps.  You could check out Orion and just turnkey the whole thing for a little more and then you may see there is a lot of value in less than 5 bps.  I use Albridge at 4bps, but I don’t think it allows for asset class billing.

Any way you shake it, the cost is only a big deal if your gross fee is small.  That is a road you shouldn’t go down if you’ve just created the opportunity to make your own rules.

Also, if you are just getting things up and running, be certain you have proper regulatory counsel to fully understand the compliance implications before you start charging clients differently for different asset classes. You can certainly do it if you wish and you disclose it properly, but you will be subject to ongoing requirements to demonstrate and support that your recommendations as to which asset class you put clients in were not influenced by the fact that your compensation will vary depending on your recommendation.



The same concept will apply if you choose to sponsor a wrap program - only now you must be ready to justify your level of trading activity since your net compensation is greater the less you trade, and vice versa.



None of that is necessary if your fee - which after all in the RIA world is strictly for your advice - remains the same regardless of what strategy, or asset class or trading level, is involved. So make these decisions with your eyes wide open, or you might be in for an unpleasant surprise down the road.



Finally, back to the fee billing question, make sure you weigh the value of the cost of these services to the full line of services they actually provide. All of them are ridiculously expensive if all you are looking for is fee billing. That is only one minor part of the service they offer.

Take a look at some of the trust companies like Trust Co of America. If I remember correctly they have the software on their platform to bill by asset class.

[quote=CALI123]Take a look at some of the trust companies like Trust Co of America. If I remember correctly they have the software on their platform to bill by asset class.[/quote]

They also charge significantly more than either BD or Advent ABOS, which the OP already finds too high.

But no ticket charges. If he is pretty active it might be cheaper. 

Cali - He is asking about the the cost of billing fees, and you are talking about whether paying for the entire custodial platform using TCA’s asset based billing might be cheaper than the alternatives.  Whether that might be true or not it is not the question being asked by the OP. 

Do you use TCA? 

I do not use TCA as of yet.  Iam still looking for a suitable stand alone billing system.  I presume the question was directed at me.  Sorry if not. 

I looked at them, but TCA wasn’t a good fit for me. I assumed since his name is wirehouser he is still looking to set up shop on the RIA side. Sorry, just trying to help

First, I’m not the information officer for my firm… but, he uses Schwab’s Centerpiece for my firm’s billing. Seems to work well, and I believe (even though we do not bill based on asset types) that you can bill based on different asset classifications. You just need to make sure that your asset classifications are up to date at the time you reconcile and calculate your billing.



I think it’s a cheap platform - $5k to 10k (?) for starters, and a few thousand per year. I’m not sure if this is practical for you to use from a $$'s standpoint, however, you have to start somewhere… this is one of those upfront costs affiliated with becoming an RIA.



Sure thing, you could use your own spreadsheet (since that’s what gets generated and uploaded to our custodian anyway…), but how you would justify billing, asset classification, and reconciliation to the SEC would be beyond me without the use of a legitimate piece of software.



Good luck in your search.

[quote=wirehouser]I am a new RIA (roughly 50MM under management), and new to the forum, and am wondering if anybody out there has any recommendations on a solid billing software package that is designed around smaller RIAs (<1B AUM).   In particular, something that will allow us to bill on asset classes and link up with multiple custodians, such as Fidelity & Schwab.  Advent and Black Diamond (so far) at least have shown to be cost prohibitive.  Any ideas? Any help is much appreciated.[/quote]

Unfortunately most billing systems today are a part of some performance measurement tool like Advent and Black Diamond.  Are you not offering performance measurement?  If not ask the custodians.  They have a billing system, but it might be expensive.  Negotiate the fees with the custodian upfront.

I actually think you can do this on a spreadsheet, but it also requires understanding how the data is structured by the custodian.  Once you have this in place, it is easy to consolidate by account and put it in the format you need to charge the client. 

From a compliance perspective, I suggest you charge at the end of the quarter.  Regulators like this method best.  If you decide to do it yourself use end of quarter balance instead of average balance.  Average is much harder to figure out on you own. 

Good Luck.
ash
www.FAfreedom.com - The Breakaway Experts

I believe that as a newer RIA, your best bet would be to check out Morningstar Office.

For a flat fee, you get all of Morningstar’s Research, Performance Reporting and Portfolio Accounting (similar to PortfolioCenter or Advent Axys), Investment Planning, a Client Document Vault and Web Portal, and full Billing (customizable by multiple asset classes).

Best of all, there are no set-up fees and because Morningstar has all the research, there is no need to reclassify holdings once you import the data.

Morningstar Office was created with Independent RIAs in mind.

Its advantages are too numerous to name in this post, but let me know if you want to know more.

Morningstar is hosting a free webinar on the system on July 9th.

You can click here for more details: https://www118.livemeeting.com/lrs/morningst_ccc/Registration.aspx?pageName=1581nzr17ztwxbhp


Best of Luck!

Thanks.  I’ll check it out.

check out poweradvisortools.com, inexpensive and functional w/ reports.

After a long since I have got a good information about the RIA billing software which is so handy to us all. A big thank for doing this great job at all. Take it up…
online payment services

An old thread... But if you just found this thread check out PortMan at http://www.vs-tech.com/PortfoloioManager.html works with Ameritrade but others can be added.