Introduction to Client Billing for Advisors

Study Notes:

Financial advisors on IBKR’s platform can configure fees to be charged to their clients’ accounts. This video will focus on how to create and apply fee schedules and later videos will discuss the available fee methods more in depth.

Configuring Client Fees

To manage fees for existing client accounts, open the navigation menu on the left side of the screen, click to expand Administration & Tools, expand Fees & Invoicing, and select the Fees menu item. The Account Selector opens on the right-hand side of the screen allowing the advisor to select which account(s) to be configured.

After the account is selected, the current fee schedule will populate and can be edited by selecting the Pencil edit icon in the upper right corner.

Changes to the fee schedule are subject to client approval and will not be effective until the client signs off on the change. Once the advisor submits the fee change, the client can login to their Client Portal and electronically sign via the Pending Item in their notifications. Alternatively, the advisor can generate a paper form for the client to physically sign.

Client Fee Templates

Advisors can use Client Fee Templates to easily maintain different fee schedules for multiple client accounts.

New advisors on the platform will have access to a blank default client fee template, which they can then configure with their own fee schedule. If created, the default fee template will be automatically assigned to new accounts unless a different fee schedule or template is selected by the advisor.

To manage or configure client fee templates within Advisor Portal, open the left side navigation menu and expand Administration & Tools and Expand Fees & Invoicing. Select Fee Templates and the Configure Client Fee Templates page will populate. View an existing template by clicking the blue “i” Information icon to the left of the template name. An existing template can be modified by selecting the Pencil edit icon to the right or it can be deleted by clicking the blue “X”.

To apply an existing template to an account, click the blue arrow icon and select Add/Edit Accounts. The Account Selector will open from the right side of your screen and click the box to select which accounts the template will be applied to. Click Continue on the Account Selector and click Continue on the bottom right of the screen until the confirmation page is reached. As mentioned earlier, changes to the fee schedule will need to be approved by the client.

To create an entirely new fee template, click the plus sign in the top right corner of the Client Fee Templates page. Enter a name for the template and select whether to make this template the default. Once done, click Continue.

On the following page, click the Fee Strategy drop down to see the three available options. If the advisor would like to charge fees that are debited from the IBKR account, then select Charge fees for managing this account.

Underneath, there are the four main methods for configuring fees for advisor clients:

• Annualized Percentage of Net Liquidation
• Annualized Flat Fee
• Percentage of P&L, and
• Invoicing.

The first three methods shown here are the automated billing structures such that the system is automatically calculating the fee based on the advisor’s inputs. The calculated fee will then be automatically debited from the client account and credited to the master advisor account. Note that the automated structures are configured for billing in arrears. If the advisor would like to bill in advance or use a different calculation from the automated options, they can use Invoicing. Invoicing is a more manual option that allows advisors to calculate the fee themselves and electronically submit those invoices.

Note that it is possible to select multiple methods, as long as the total calculated fee is below the cap & limitations. Please see our website for further information on the caps & limitations. In the following videos, we will review these different fee methods in depth and review how to further configure them.

Depending on the advisor’s location and registration, they may have another fee method available called Fee Per Trade Unit, which allows advisors to charge their clients a fee per share, per contract or a percentage of trade value. Fee per trade unit is not available for US or US protectorate legal residents due to regulatory restrictions, with the exception of US commodity-registered advisors, who are allowed a per-trade fee schedule for futures. Please see our video lesson on configuring the fee per trade unit for more information.

Charge Commissions & Client Fees to the Advisor

Advisors can elect to charge client commissions to their own Advisor master account when configuring fees for a client account. Additionally, by default, market data and research fees are charged to the client accounts that subscribed to those services. However, Advisors can elect to charge these fees to their own Master account for each client account.

Commission charges and market data and research fees will revert to the client account if the Advisor master account has a balance of less than 1,000 USD or equivalent when the commission charges are posted.

Fee Reimbursement

Within the Fee Reimbursement menu option, advisors can reimburse fees charged to client accounts up to a maximum of 50% of invoices (net of any prior rebate) for the trailing 12-month period. Advisors can also modify or cancel pending fee reimbursements and view or download the details of fee reimbursements that have already been processed.

Fee Invoice Notifications

To help Advisors who bill advisory fees using one of IBKR’s Automatic Calculation options meet their compliance obligations, IBKR can send your clients invoices detailing the advisory fees automatically calculated and deducted from their accounts (as they have requested). These notices describe the method used to calculate the fee, the amount of the fee, and the period covered by the fee.

To configure the delivery of Fee Notifications in the Advisor Portal, click the head & shoulders icon in the upper right corner and select Settings. Under the Account Communication section, select Delivery Options: Advisory Fee Notifications.

The advisor can elect to either:

1. Do not send notifications,
2. Send the notifications to the client’s email address on file, or
3. Send the notifications to the client’s Message Center and to their email address.

Please note that by default, US Registered advisors will be enrolled during the application to have these notifications sent to their clients. For all other advisors, their clients will not receive these notices unless the advisor instructs IBKR through the Advisor Portal to do so. Regardless of whether the advisor signs up for invoice notifications, all advisory fees processed through IBKR are reflected on the client’s Activity Statements.

In the following videos, we will review the different automated billing and manual invoicing methods in depth.

Resources

Advisor Fees

User Guide: Fee Administration

Short Video: Fee Per Trade Unit