AUM Fees for Fixed Income Investments
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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
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?
If she wants insured investments only, I’d definitely show her fixed annuities and indexed annuities.
The insurance companies. Beyond that, state guaranty funds. You could at least go to the limit your state offers to guarantee.and they are insured by…? (I think she meant a govt guar of princ like FDIC)
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.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
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)
[quote=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)[/quote]
That’s a bigger cut than the hedge fund managers take!!!
And people think annuity salesmen are all about the commission....................[quote=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)[/quote]
That’s a bigger cut than the hedge fund managers take!!!
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.
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.
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.[quote=newnew]Disclosure rules and annuities. Hmmmm…that’s worked well.[/quote]
Have you ever seen an annuity suitability/disclosure form?