Discussion Posts

    • Accumulating Assets Under Management

      • Posted by TRW
      • on August 4, 2008 12:42 PM EDT

      What is the going rate of commission or percentage for someone who develops assets under management for an RIA or Hedge fund.  I am not talking about someone who would be managing the portfolio or have investment decisions.  I am simply looking to compensate properly for an individual who would gather assets.  I understand that they may receive either a one time commission or an ongoing percentage of assets managed.

       
    • Re: Accumulating Assets Under Management
      • Posted by the observer
      • on August 4, 2008 2:16 PM EDT

      I've paid as much as 20bp for a solicitor on an ongoing basis. I've never paid a lump sum.

       

      Don't forget that you'll generally need a solicitor's agreement and you should create a disclosure letter that the solictor gives to each prospect together with your ADV Form part II. These documents need to be on file with the State or SEC depending on who regulates you and you need to add verbiage to say you use solicitors to your ADV Form part II.

       
    • Re: Accumulating Assets Under Management
      • Posted by WiseFool
      • on August 4, 2008 3:08 PM EDT

      Wouldn't those individuals need to be licensed as IAR's?  How would that work?  I guess I'd have to ask my friendly state regulators again...

       
    • Re: Accumulating Assets Under Management
      • Posted by the observer
      • on August 4, 2008 10:33 PM EDT

      No, they don't have to be licensed in any way as solicitors, but they are very much restricted by law as to what they can say and how much they can say. There is language that needs to be in your ADV Form Part II that explains everything and the rules are that any bp's you give up to the solicitor cannot be added to the bill and must come out of your fees. In other words, if you charge 1% AUM, and give 20bps to your solicitor for finding the business, you take home 80bps and declare in writing to the client that they are not being charged more than they would have been had they met you directly.

      The State regulators are happy to provide info and a Google search could help you assemble both the ADV language, required planner / solicitor contract and client disclosure letter.

      The biggest task is educating the solicitor as to what they are permitted to say to potential new clients, it's the weak point and too much said can bring litigation so make sure your agreement is tight!

       
    • Re: Accumulating Assets Under Management
      • Posted by jstieven
      • on August 11, 2008 1:53 PM EDT
      • Edited on August 11, 2008 1:57 PM EDT

      Be careful of your payout.  While 20% is a rate I have heard of many times (it seems reasonable from the solicitor's point of view as they are only taking 1/5 of your fee), think instead of your profit margin on your average account.  If your profit margin is 40%, then you are giving away half your profits -- if only 20%, then you are giving away the house!

       
    • Re: Accumulating Assets Under Management
      • Posted by the observer
      • on August 11, 2008 8:47 PM EDT

      Good point, but another consideration is to increase your profit margins, through technology, virtualization and automation. Honestly, my profit margin is way above 40% because of the way I run my practice. As a sole practitioner it's easy to be more flexible I guess.

       
    • Re: Accumulating Assets Under Management
      • Posted by indy2006
      • on August 18, 2008 6:31 PM EDT

      How does one find a "solicitor"? I would have an interest in hiring someone to raise assets for my firm, without hiring him/her full time.

      Thanks