Fee Structure for a million dollar portfolio?

or Register to post new content in the forum

33 RepliesJump to last post

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Oct 9, 2009 1:57 pm

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 2:09 pm

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 10:50 pm

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

Oct 10, 2009 2:29 am

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

  Thanks to everyone for your responses!
Oct 10, 2009 2:33 am

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

Oct 10, 2009 2:33 am

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 10, 2009 3:44 am

[quote=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.
[/quote]



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


Oct 10, 2009 3:51 pm

Thanks All for the input. 

Oct 11, 2009 1:24 am

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 1:34 pm

Thank you Mr. Clutch.

Oct 12, 2009 5:57 pm

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

500k is .8%    
Oct 12, 2009 6:20 pm

[quote=Greenbacks]My fee is .5% for a million dollar portfolio.  

500k is .8%    [/quote]   After haircuts and ticket charges, etc. what is your average net for a $500k-$999,999 portfolio? 
Oct 12, 2009 10:48 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 11:55 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 9:50 pm

Client picks up ticket charges.

Oct 20, 2009 11:39 pm

[quote=Greenbacks]My fee is .5% for a million dollar portfolio.  

500k is .8%  [/quote]   Do you also collect 12b-1's?  That does seem a bit low unless you are talking fixed-income portfolios.
Oct 21, 2009 11:07 am

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

Oct 21, 2009 2:43 pm

[quote=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.”

[/quote]



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 22, 2009 3:58 am

[quote=Greenbacks]My fee is .5% for a million dollar portfolio.  

500k is .8%    [/quote] 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 3:52 pm

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.