Institutional Managed Money: What to charge?
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By a fortunate (read: blind luck) turn of events I have a shot at a large 50mm+ account, it’s a corporate account set for very low risk, and very strict rules on investments.
I figured the easiest way might be a wrap account, but what is a reasonable range to charge? 1% is obviously obscene, 50bps, 25bps, 10bps? I want the account, but I have no idea what the guy I’m up against will charge, nor do I want to destroy the clients returns.
If by “wrap account” you mean mutual funds with a fee wrapped - that’s a really tough sell regardless of fee. If you’re referring to a managed account (SMA/UMA) then you’ll likely need to be in the neighborhood of 50bps total cost. The managers will likely be about 1/2 of that. Getting down to 50bps will be very difficult with a lot of managers and managed account platforms; but not impossible. Personally, I would shoot for 65bps - hope to get your managers, transactions, etc for 30bps.
Good luck, a 50MM account can be a nice account and often times the residual business (referrals from institution/foundation/retirement plan) can be even more lucrative.