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Overview of Advisor Client Fees

With advisor client fees, a calculated fee is automatically billed to the client's account with blanket client authorization using any of the following in any combination:

Fund Investment Managers with Separately Managed Accounts (SMAs) can also configure fees based for their SMA accounts.

See examples of advisor client fees below.

Percent of Net Liquidation Value

Enter this as an annualized percentage, applied on a daily, monthly or quarterly basis.

Note: Check Blended to charge a blended or unblended rate based on up to five ranges of your client's Net Asset Value (NAV).

Flat Fee

Enter this as an annualized amount, applied on a daily, monthly or quarterly basis (apportioned by 252 days).

Percent of P&L

A fixed percent is applied to the mark-to-market P&L (positive or negative) at the end of each period. Any changes made to the specified percent during a period will only be applied on a forward looking basis and will not be applied retroactively.

If you do make changes during a period, we break the period into two pieces and apply fees accordingly. If at the end of the billing period the accumulated fee calculation is negative, no fee will be charged. Two periods may be specified for this calculation:

• Quarterly as of 3/31, 6/30, 9/30, and 12/31. Fees will be posted 10 days after the close of a quarter.
• Annually as of 12/31. Fees will be posted 10 days after the close of the year.

For the purpose of calculating performance fees, P&L on FX trades is included solely on the dates at which the position is either open or closed and excludes the effect of any exchange rate fluctuations between those dates. On the open and close dates, P&L is calculated based upon the difference between the trade price and the end of day conversion rate.

Fee per trade unit (shares, contracts, %) - Specified by currency/asset class

Advisors can set a fee per trade unit as one of the following:

• An absolute markup over and above our standard commissions.
• A percentage of our standard commission.
• An absolute amount, from which our standard commissions will be subtracted.

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 schedule for futures.

The following rules apply to advisor client fees per trade:

• Fees per trade unit may not exceed 15 times our commissions.
• No fee per trade will be applied if the client calls us to close a trade.
• When entering a fee per trade, an advisor must also enter a minimum fee per trade that cannot exceed the following limits:

• Futures and Futures Options Fee per Trade Unit may only be entered by currency and not product.
• A global fee schedule is not applied to all client accounts by default, but may be copied from memory to make input of new client schedules easier.

Automatic Invoicing - Setting Maximum Invoicing Amounts or Percentage Caps

When you configure client fees, you can include a maximum invoicing amount, a percentage cap or both on a monthly or quarterly basis. You can charge up to a maximum percentage annually. We calculate the daily equivalent of that limit by multiplying the maximum annual rate by the value of your account at the end of each business day of the previous month or quarter and dividing that by the average number of business days per year. The sum of those daily values over the course of the month or quarter is the maximum amount you can charge for that month or quarter.

You can set an amount, a percentage cap or both. If you set both the amount and the percentage cap, we will use the lower of the two amounts as the amount to be charged.

For percentage cap, we look back on the prior period to calculate the fee limit, while amount looks at the current period.

(Fee Cap % x Ending Client NAV) / 252

Where 252 is the average number of business days in a year.

For example:

• If a client account is configured for a maximum invoicing amount of 500 USD on a monthly basis and you log into Account Management to submit an invoice for the client in July, the total amount processed in July cannot exceed 500 USD. You can submit multiple invoices but the total cannot exceed 500 USD for the month.
• If a client account is configured for maximum invoicing amount of 1000 USD on a quarterly basis and you log into Account Management to submit an invoice for the client in July, the total amount processed between July and September cannot exceed 1000 USD. You can submit multiple invoices but the total cannot exceed 1000 USD for the quarter.
• If a client account is configured for percentage cap on a monthly basis and you log into Account Management to submit an invoice for the client in April, the available fee amount is based on the client's daily NAV for March. You can submit multiple invoices but the total cannot exceed the limit for the period.
• If a client account is configured for percentage cap on a quarterly basis and you log into Account Management to submit an invoice for the client in November, the available fee amount is based on the client's daily NAV from July to September. You can submit multiple invoices but the total cannot exceed the limit for the period.
• If a client account is configured for both a maximum invoicing amount and a percentage cap, we calculate both and use the lower of the two amounts.

To view the amount of fees that you can deduct from the client, select Manage Clients > Fees > Invoicing and look at the Available Fees column.

Monthly/Quarterly Invoicing

Before you can submit electronic fee invoices for client accounts, you must first configure Invoicing for the account(s) on the Client Fees page in Account Management. You must specify an amount or a percentage cap on a monthly or quarterly basis. Then, calculate the markup and submit an electronic invoice for each client account at any time, up to the specified limit. The invoice amount will be automatically transferred from the client account to the advisor account. Invoices submitted prior to 5:30 (17:30) PM EST will be processed by us the same day (U.S. night) and appear on that day's statements. Invoices submitted after 5:30 (17:30) PM EST will be processed by us on the next business day. You can submit invoices for up to ten clients at a time, but only one invoice per client account per day.

For more information on electronic invoices, see Advisor Invoicing.

High Water Marking

Advisors who select Percent of P&L as the basis of their client fees can apply High Water Marking to the billing period client fees to offset periods of losses in a volatile market. For more information, see High Water Mark Setup.

Performance Fee

Advisors who select a threshold set a static number or index/benchmark as a performance fee on an annual or quarterly basis. Your client's performance must exceed the threshold for the fee to be assessed to the client.

For example, if the Advisor charges an annual performance fee of 20% and sets a 10% threshold, he/she would not be paid a fee if the client account’s annual money-weighted return is less than or equal to 10%. If the account’s return for the year was 50%, the FA will receive a 20% performance fee on the excess return (20% of (50%-10%)).

Caps and Limitations

Client fee schedules and electronic invoices are subject to the following limitations and caps. See the Advisor Fees page on our website for more details on caps.

• Markups for advisors are limited to three times the IB commission if the client has an account balance of less than 25,000 USD.
• Advisors' fees are not deducted from client accounts with balances below 3,000 USD.

Examples

Percent of Net Liquidation Value

Description:

Percentage of Net Liquidation Value entered as an annualized percentage, applied on a daily basis (252 business days are applied in this calculation method).

Assumption:

You specify 5% of Net Liquidation Value as an annualized percentage, and your client’s previous day-ending equity is $100,000.

Calculation:

Your advisor client fees for the given day will be: 5%*$100,000/252=$19.84.

Flat Fee

Description:

Flat fee entered as an annualized amount, applied on a daily basis (apportioned by 252 days).

Assumption:

You specify $1,000 as an annual flat fee for your client.

Calculation:

Your advisor client fees daily payment will be: $1,000/252=$3.97.

Percent of Annual P&L

Description:

Percentage of Annual Positive P+L entered as an annualized percentage, applied on an annual basis as of 12/31.

Assumption:

You specify 20% of annual positive P+L as your advisor client fees, and you made $50,000 in P+L for your client for that year.

Calculation:

Your advisor client fees would be: $50,000*20%=$10,000.

Percent of Market-to-Market P&L

Description:

Percentage of Positive Market-to-Market P&L entered as a percentage, applied on a quarterly basis as of 3/31, 6/30, 9/30, and 12/31.

Assumption:

As an example, if you specify 2% of Market-to-Market P+L, you made $50,000 in P+L for the last quarter.

Calculation:

Your client will be charged $50,000*2%=$1,000 for the quarter.