For those that are Indy or RIA, and do primarily fee-only or fee-based business, how do you handle ticket charges? Client pay? You pay? How do clients react to ticket charges after maybe being served by a wrap program or other similar program with no fees other than the wrap fee?
For me, client pays. On the RIA side, there is additional scrutiny if the advisor eats it, as it constitutes a "wrap program". I cut the clients a little break on the fee, so in most ways, I am eating it. But technically, it is not a wrap.
To be on the safe side, I would tell you to plan to eat the ticket charges on clients you definitely want to keep. For new clients, if you tell them its (for example) 1% plus $10 a trade, no big deal to most people. Hard to go from not paying it to paying it--or at least I wouldn't take the chance with existing relationships. Then you re-evaluate after a year or two and talk to a client individually if trading is eating up your margin.
But generally I think people would rather see 1.2% (for example) "all in" even if that ends up costing more...think about airline baggage fees: just a feeling of nickel and dimed even when total costs are about the same.
Good example Cowboy with the airlines.
My clients have not said anything about ticket charges, $4.50 ticket charges don't seem to matter. Most trades are free.
They also know my over all fee is far less then a wire house by as much .5% to 1%.
My indy bd has a program for managed accounts. They charge 20 bps admin, at zero payout, then say I charge 80 bps on top of that. 80 bps is about what I want to make doing transactional, the way I've always done biz. For you folks that have gone from transactional, to fee based, can I ask what I'm missing?
I don't like starting at virtually zero each month, especially in tough markets like the one we are in, but going from full transaction to fee based looks like a ton of labor, some arm twisting, for roughly the same result?