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Advisor Client Markups
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Overview
Professional and Friends & Family Advisors may charge their clients for services rendered either through automatic billing, electronic invoice or direct billing. You determine the advisor markup at the time of the clients registration, and may modify these markups at any time within Account Management from the Funds Management/Client Fees section. In the case of fee increases, the client will be required to acknowledge the fee increase with a signature. In addition to the advisor client fees specified, IB will charge its normal commissions to the client.
Automatic Billing
An IB-calculated advisor fee is automatically billed to the client's account with blanket client authorization using any of the following in any combination:
| Percent of Net Liquidation Value: Entered as an annualized percentage, applied on a daily basis. |
| Flat Fee: Entered as an annualized amount, applied on a daily 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 day. 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 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:
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Fee per trade unit (shares, contracts, %) specified
by currency/asset class (i.e. stocks, options, futures, etc.): A
fee per trade unit may be entered as an absolute markup over and above
IB's standard commissions, as a percentage of IB's
standard commission, or as an absolute amount (IB's standard commissions
will be subtracted from this amount). Fee per trade unit is not available
for US or US protectorate legal residents due to regulatory restrictions.
For more specifics on fee per trade unit, see our Broker
Commissions Markup page. Please note the following differences
from the Broker model:
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Notes:
- For specific examples of automatic billing, click here.
Electronic Invoices
A monthly or quarterly markup limit must be specified. Advisor calculates the markup and submits an electronic invoice on a monthly or quarterly basis, up to the specified limit. The invoice amount will be automatically transferred from the client account to the advisor account. Markups will be posted on or around the 10th business day after the close of the month or quarter.
| Client Authorization |
Existing Client Authorization
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New Client Authorization
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| Once IB receives and processes the Advisor Wrap Fees PDF, the advisor may start submitting electronic invoices through Account Management. |
| Client Invoicing |
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Direct Billing
IB will not remove funds from the client's account. It is the advisor's responsibility to bill the client directly.
Caps and Limitations
Automatic Billing and Electronic Invoices are subject to the following caps and limitations:
- If the client account Net Liquidation Value drops below USD 2,000 or USD equivalent, no client fees will be automatically billed.
- If an auto-liquidation occurs, no client fees will be automatically billed.
- IB caps the amount of advisor fees earned in any 360 day period to 25% of
the client's average equity over this period, with additional cap limits
at 30 day increments in between (i.e. 7.2% over the last 30 days, 17.7% over
the last 180 days). When any fee cap is exceeded for a client, the advisor
will not receive any client fees until the fee cap is no longer exceeded.
IB will continue to charge its standard
commissions when the fee cap limit is exceeded. Please be aware that advisors
are solely responsible for ensuring that the fees they charge are reasonable
and in accordance with regulatory requirements. The complete cap schedule
is as follows:
Period Fee Cap % 30 days 7.2% 60 days 10.2% 90 days 12.5% 120 days 14.4% 150 days 16.1% 180 days 17.7% 210 days 19.1% 240 days 20.4% 270 days 21.7% 300 days 22.8% 330 days 23.9% 360 days 25.0%
Client fee cap availability for the day will be reported under Account Management/Report Management. For complete details on how the fee cap is calculated, click here. - A fee per trade may be charged for clients outside of the US (or US protectorates). In addition a fee per trade may be charged for futures trades of US clients if the advisor is registered with the NFA. This fee may not exceed 15 times IB's commissions, and no fee per trade will be applied if the client calls IB to close a trade.