Let’s talk about spreadsheets. We all use them.
Even in today’s RIA world, a lot of financial advisors are still dependent on spreadsheets to calculate fees for their clients. Not only is it quite time consuming, but the high risk of incorrect fee calculations due to a simple error in your spreadsheet is unnecessarily stressful.
Fee-based advice has been growing steadily for the past twenty years despite fee compression driven by robo-advisors and passive management strategies. This has pushed wealth management firms to start looking for ways to make their managed account programs stickier (less likely for clients to leave) and provide added value, both in service and performance.
Trends in the use of performance fees in the asset management industry
Performance fees for asset managers can be seen as a double-edged sword – driving revenue when markets are rising but slicing away profits in flat or falling markets. As with Hamilton’s bared sword, the debate over performance fees has threatened to disrupt the asset management industry.
The SEC has been on an examination streak, boosting the number of audits by an incredible 137%
Over the past six years, the SEC has been on an examination streak, boosting the number of audits by an incredible 137%, according to their 2018 fiscal year annual report. In 2018, the SEC’s Office of Compliance Inspections and Examinations (OCIE) audited 17% of RIAs (2,312 firms), which is more than double the 8% audit rate in 2012. One area that regulators have been paying special attention to is billing practices. The SEC has issued multiple letters stressing that billing operations must now be held to higher standards. The U.S. Department of Labor (DOL) has also chimed in, demanding that industry participants focus on providing fee transparency to clients.
The industry’s first cloud-based billing solution also handles termination calculations.
BillFin was developed specifically for Registered Investment Advisors. In fact, since day one, we regularly receive feedback and constantly improve our solution. One such enhancement is termination calculations and rebates!
Being audited is stressful enough—don’t let your billing process add alarm.
BillFin is committed to helping advisors calculate and collect accurate management fees from their clients while helping you understand the fee billing process. This is a continuation of a six-part series discussing the risk alert issued by the SEC last April noting six common errors found in reviewing financial advisors’ fee billing and compliance. Continue reading for details on how BillFin helps with fee rates.