shaking hands

SEC Issues Risk Alert on Advisory Fee Billing & Compliance

Major Concern: Advisors are simply not billing in accordance with the terms in their Form ADV

June 15, 2018 |

On April 12th, the Office of Compliance Inspections and Examinations released a four page risk alert detailing the most frequent issues with advisor fees and expense compliance. We encourage you to review the alert on their website provided below. We also want to assure you BillFin is the solution to the concerns they raise. Please read Redi2’s statement below the link for some peace of mind regarding your fee billing practices when using BillFin.

The major concern expressed in the risk alert is that advisors are simply not billing in accordance with the terms in their Form ADV and other materials that are provided to their clients. The most frequent compliance issues they list are outlined below:

  1. Fee Billing Based on Incorrect Account Valuations
  2. Billing Fees in Advance or with Improper Frequency
  3. Applying Incorrect Fee Rate
  4. Omitting Rebates and Applying Discounts Incorrectly
  5. Disclosure Issues Involving Advisory Fees
  6. Adviser Expense Misallocations

Of the six most frequent deficiencies cited by the OCIE, five relate specifically to periodic management fees and BillFin can help you systematically avoid these issues. A huge benefit of using BillFin is that it is a billing program tailored to RIAs and is thus programmed to do billing consistently. That means you get the same calculation process every time. You set up your clients and accounts for advisory fees according to your ADV and BillFin will calculate them for you every billing period the exact same way. You can change a fee schedule, insert a discount or exclusion, or make other changes any time and the fees will calculate to those parameters consistently for your customers month after month or quarter after quarter. You can have confidence BillFin is a trustworthy and reliable partner in your billing.

Another benefit of using BillFin is that you can go to the Reports page and run your Billing Setup Report whenever you need. This will export all your accounts with the billing setup details so you can see how every account is billed. Of course, you can see all that in BillFin at any time too, but this is a simple report you can review regularly and provide to auditors if needed.

Additionally, you can quickly see how any fee was calculated in BillFin by clicking View Fee Calculation for any client. The details provided here include assets, fee rates, and any other adjustments for a quick confirmation that everything is correct and consistent with your ADV. BillFin is transparent and consistent for you and for your clients.

Lastly, after the fee is calculated, BillFin provides a customized PDF for each client with a clear and professional representation of the calculated fees which can be shared with your customers. This allows the advisors and their clients to understand their advisory fees.  Your customers should be able to trust your systematic fees so you both can focus on generating wealth. You provide a great service to your customers and we will provide a great service to you.


Interested in learning more? Why not get a free demo today?

advisory fee billing