$300 an hour and the average client will probably require 10-15 hours/yr so I'm landing right in the range you outlined.
Series 65 (RIA) pros and cons to your production/income/happiness?
- Thread starter honestabe
- Start date
- 11,471
Here's the link to the slides of Ed Morrow, CLU, ChFC, RFC that he gave at the MDRT Day back about 15 years ago (I think?).
http://chapters.onefpa.org/cinci/wp-content/uploads/sites/3/2014/05/EdMorrowFlyer.pdf
Check out slides (pages) 51 & 55 where he lays out the INITIAL fees when bringing a new client onboard... and then the options thereafter for continued engagement which is essentially a discount since most of the initial work may not need to be duplicated.
http://chapters.onefpa.org/cinci/wp-content/uploads/sites/3/2014/05/EdMorrowFlyer.pdf
Check out slides (pages) 51 & 55 where he lays out the INITIAL fees when bringing a new client onboard... and then the options thereafter for continued engagement which is essentially a discount since most of the initial work may not need to be duplicated.
I charge 60 basis points for AUM for most clients. They pay another 30 basis points to be put in model portfolios set up at Betterment. That includes custody and fund fees. Some of the fee talk in this article is too high. Why I charge 60 basis points. Thats my planning fee mostly. It is not a perfect model. If the account size is large and I custody at Assetmark or Schwab I charge the same but the client definetely pays more. A Betterment account opening is so easy, I dont mind taking on very small clients
- 4,908
I am 5'6, very small clients matter too. thank you for for being inclusive to those of us out there. Growing up in the 70s was a tough time to be small with Randy Newman singing about all the bad qualities of short people.
Reminiscing about that song makes me realize now why @Markthebroker has such hatred/phobias of midgets
Reading the lyrics makes me wonder how Randy Neuman hasnt been cancelled with his open bigotry toward my people. Got to run, starting a petition on Petition.org to have all the Randy Neuman songs taken off Spotify & all his statues taken down
Short people got no reason
Short people got no reason
Short people got no reason
To live
They got little hands
And little eyes
And they walk around
Tellin' great big lies
They got little noses
And tiny little teeth
They wear platform shoes
On their nasty little feet
Well, I don't want no short people
Don't want no short people
Don't want no short people
'Round here
Short people are just the same
As you and I
(A fool such as I)
All men are brothers
Until the day they die
(It's a wonderful world)
Short people got nobody
Short people got nobody
Short people got nobody
To love
They got little baby legs
And they stand so low
You got to pick 'em up
Just to say hello
They got little cars
That got beep, beep, beep
They got little voices
Goin' peep, peep, peep
They got grubby little fingers
And dirty little minds
They're gonna get you every time
Well, I don't want no short people
Don't want no short people
Don't want no short people
'Round here
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- 2,584
Good discussion. I don't want to go off track but regarding the series 65, do most RIA's charge fees to the IAR to have your license with them ? Most of the ones associated with FMO's have them.
What do you typically get for those fees ?
What do you typically get for those fees ?
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- 11,471
Most do. There's a state registration fee for each state you're in. The RIA should be passing that on straight to you and that amount depends on the state. (California is $25 a year, I think?)
Most will have a technology fee, primarily for your compliance monitored email address along with any other technology such as e-doc signing and whatever else.
They may require you use their E&O? So that might be bundled in as well.
I doubt you'd see these fees go past $200 a month? Just ask.
- 5,463
- 4,908
Try to tell me this isn't terrifying.
Well sure, when you make him out to be a right wing 2nd amendment nut holding a war weapon, sure. That would scare almost anyone, right?
- 5,463
davephx
Expert
- 57
Yes, if the market never goes up. Remember the client is paying the fee every year on hopefully higher values - if in equities that over time go up. Decades ago the former head of the Mutual Fund Ass was quoted pointing out that a 1% fee is the equivalent of a load fund with a 9.1% sales charge (which would be illegal) over 10 years if the value didn't go up.
AUM fee basis is usually the most expensive way of getting investment advice for long-term growth investors. However, it is far more profitable for the advisor. Now with the Best Interest requirements as well as of course the fiduciary obligations of an RIA this would seem to be hard to justify.
I was at a large financial planning convention hearing the conversation of a "fee-only" RIA telling someone new to the industry who was on the brokerage side how much more money she could make being "fee-only"
In my view, I have never had a client whose best interest was in an Advisory account with Asset management fees. I charge a flat $500 RIA fee (for life) and via my RIA make recommendations in A share mutual funds with breakpoints. Client maybe pays a one-time 2-3% spread (sales charge but its exactly like a bid/ask spread on stocks).
That one-time spread is less than markets often move up or down in a few days or a week.
I implement via a broker-dealer. I would be far richer today if I did a 1% annual fee as just a fee-only advisor. An RIA also avoids a huge amount of paperwork required by FINRA, audits the far more strict regulatory requirements on the brokerage side. and far higher E&O.
However, I believe this structure is by far in the best interest of the client vs using my RIA and charging a 1% or more annual fee based on hopefully increasing values.
Coming from a CPA nerdy background I extensively analyze and monitor many funds looking for long-term consistent excess return for risk, and many other factors. I do 3-4 page advisory reports on any recommendation, monitor, and update using Morningstar analysts and other independent sources. I would never recommend index funds, ETFs, and obviously not most bonds for years due to interest rate risk.
I have owned broker-dealers in the past, am a FINRA Reg Principal, OSJ etc. It is amazing to me the required compliance paperwork etc on the BD side which is why many are moving to RIAs - and making more money by annual fees. I realize there are legitimate other justifications for these fees but this is just the way I feel most comfortable working in the best interest and fiduciary obligation (via RIA Side) to clients.
BTW my E&O is about $5000/year and with over 40 years in business have never had a customer compliant.
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