Adding a Fee, and More Efficient Trading
In the beginning of my independent life as an advisor, the majority of my business income came from financial planning fees and I spent a great deal of time developing my planning tool in Excel. I’m very glad I took the time because it offers a very unique analysis which my clients greatly appreciate.
Up to this point in 2009, I haven’t spent much time seeking out new planning opportunities, but I have been updating the plans of existing clients.
I have also resolved that I will charge a “retainer” fee to continue monitoring my client’s progress. The fee will be deducted quarterly and the plan will be updated at least annually.
Asset Management
This year I have spent more time focusing on the asset management side of the business which has been growing well. I realize that the majority of my income will be derived from managing portfolios so I have been searching for a way to efficiently handle a larger number of accounts. When I had just a few accounts it was relatively easy. If I needed to buy or sell a security, I could accomplish this by starting with one account and moving to the next, then the next, etc. However, now that the number of accounts has grown, this task has become increasingly more challenging. I realize I will have to “group” certain accounts together so that when I need to make changes, I can change the accounts all at once. Fortunately, my custodian has a state-of-the-art trading system to make this easier. Although I am new to their system, I’d like to share a couple of things I’ve learned.
Model Trade
One of the features of my custodian’s trading system is called a Model Trade. With this, I can create a model portfolio, assign any number of accounts to it, and set it to rebalance on whatever frequency I choose. I can also set parameters for rebalancing such as, “Do not rebalance unless it is more than X% out of balance.” I can also set the minimum as a dollar amount. For example, “Do not rebalance unless the trade is more than $XXX.” It’s very easy to do and I’m excited about incorporating this into my practice.
There’s much more to this and as I learn more I will share it with you.
Thanks for reading!
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Mike,
Nice post, but I’m curious why not nam your custodian. We use Schwab and the portfolio rebelancer is not user friendly at this point. They seem to have an interest in developing it, but are very slow to improve. Does TD have a better rebelancer option? Our firm is looking to implement Tamarac at some point in the future, but the economics and other prerequisits are not met. Thanks for the post, and if you are using Schwab, I’d be very interested in sharing notes on how we each are using it.
Rob Siegmann
Hi Rob,
I use TradePMR as custodian. I haven’t yet used their rebalancing tool so I can’t speak to its user friendliness. It does seem to be easy. I’ll post after I’ve used it.
hmmm…I’m just venturing a guess,but I’d say Sterne, Agee, and Leach, Inc. (or maybe I just read the ADV II)
note…there are a ton of rebalancing tools available now that offer model-level rebalancing and Stern Agee’s is good but, by no means, totally unique.
Yes, TradePMR clears through Sterne. Trade also has their own tools which includes a rebalancing tool.
Are you on Twitter? pattonfinancial? Please let me know. Thanks!
Hi Joshua,
That’s not me on Twitter. At this time, I don’t Twitt. Guess I haven’t worked it into my life yet.
Mike
Hi Mike – thanks for sharing your journey with us. I am a few years behind you, but following a similar path of trying to start up an independent RIA company, so I greatly appreciate your openness to sharing your unfolding experience with the rest of us.
I would like to hear more about your custodian, TradePMR. You started out very pleased with the service, but your more recent posts appear more moderate. Have you drawn any conclusions as to the value of brand, are clients responding with Trade who? What other custodians did you research when you left Fidelity, can you share pros and cons of any others? Is there a service, maybe Morningstar that has ever done a rating/review of these Indy RIA focused custodians that you know of? It is obviously a critical decision so I am searching for differentiators among the choices, and by the way, I need one that does not require a minimum which is what drew me to Trade PMR to begin with. – thanks