Questions about pay and accounts

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Jul 1, 2008 12:07 am

So I think I understand AUM, but I’m still foggy on how it relates to pay on average.

Suppose, hypothetically, you have 25m in AUM, what is the reasonable range for production from that sort of AUM?

Other question… What is the range of accounts you are allowed/ encouraged to open?  Do they get irritated about small (sub 100k) accounts, or do those accounts wind up getting ravaged by fees?

Jul 1, 2008 10:50 am

The average fee for AUM is about 1% as ice says.  The fees are tiered in my B/D  (I’m an independent not at a wire)
25k to 50K     1.50 %
the next 50 to 100K   1.25% and so on.  T

The fees can be adjusted up or down within a range at the discretion of the advisor but mostly the average is 1%.   After all, we do want to KEEP our clients.  

Some of the platforms require a 100K minimum. Others can be as low as 25K and that is usually the mutual fund wrap program.   Some programs have the advisor picking up the ticket costs (for which I charge a slightly higher fee) or have the clients pay the ticket charge for the trade (with a lower fee).  It 's all pretty negotiable.

It all depends on the B/D you are at as to what the minimum account size is and what your fees are.

Unless you go fee only, I wouldn’t be counting my chickens…so to speak.  Only a portion of your book may be suitable for fee accounts.   My book is about 60% commission (with trails on mutual funds) and 40% fee.