Advisors’ Billing Practices Inconsistent with their ADV or Advisory Agreement
October 15, 2018 | Product News
The six part “improper practices” BillFin article series continues this month moving onto risk number two: Billing Fees in Advance or with Improper Frequency. Since the US Securities and Exchange Commission issued a risk alert on advisory fee billing and compliance back in April, Redi2 is committed to resolving these worries by explaining how BillFin handles such concerns.
Issue: Advisors’ Billing Practices Inconsistent with their ADV or Advisory Agreement
OCIE staff found that many advisors’ claim to bill on a quarterly basis; however, they actually ran their advisory fees on a monthly basis. They also found advisors’ billing in advance when their agreement states in arrears.
BillFin Solution: Flexible Billing for Consistency
While BillFin will not review your ADV before you bill, it will allow the flexibility advisors need to properly bill and maintain accuracy with their ADV and advisor agreement. Advisors can bill monthly or quarterly, forward and arrears, with override settings available for clients with different billing arrangements.
Issue: Advisors Billing in Advance Improperly
The OCIE also found advisors billing new clients for the entire billing cycle instead of properly prorating the fees based on the start date. Similarly, advisors did not reimburse clients who terminated mid-cycle per their ADV’s language.
BillFin Solution: Properly Prorate Accounts
Prorating fees for partial opening periods in BillFin is easily accomplished and automatically calculated. By entering a “start billing date,” the desired number of days billed is used to calculate the client’s fee, thus ensuring no overbilling.
When ready to close an account, the close date can be entered into BillFin, causing BillFin to stop recognizing the account as of that date. Refund amounts can then be entered for the necessary accounts.
BillFin is designed to address the challenges advisors face when it comes to billing and compliance. Using its intuitive and flexible features eliminates all issues the OCIE staff found. Simply enter the billing parameters in your ADV and let BillFin handle the rest. Contact us for a demo or free trial today.