Within the IBKR platform, financial advisors can charge clients using automatic billing methods or manual electronic invoices. This video reviews two automatic billing methods: Annualized Percentage of Net Liquidation and Annualized Flat Fee (IBKR Traders´Academy, s.f.). These automated billing structures charge fees in arrears, meaning the fee is applied at the end of the payment period. Advisors can configure Fee Templates by navigating to the Fees & Invoicing section within the Administration & Tools menu. Detailed instructions for configuring fee templates are covered in another video.
1. Annualized Percentage of Net Liquidation
The Annualized Percentage of Net Liquidation (NLV) is an asset-based fee where advisors charge a percentage of the assets in the client account. There are two calculation types within this method: Fixed and Blended. The Fixed method charges a constant percentage, such as 1% of the account value. The Blended method uses tiered rates, allowing advisors to specify different percentages for different asset ranges, such as 2% on the first $100,000, 1% on the next $200,000, and 0.5% on amounts above $300,000. These percentages are annualized, but the advisor can select the period (daily, monthly, or quarterly) when the fee is applied (IBKR Traders´Academy, s.f.).
2. Annualized Flat Fee
The Annualized Flat Fee method charges a specified dollar amount periodically, regardless of account size. For instance, an advisor might charge $1,000 per year. This fee can be applied daily, monthly, or quarterly. If applied monthly, the $1,000 annual fee is divided into 12 monthly payments, charged at the beginning of each following month.
Both methods offer flexible options for calculating and applying fees based on the advisor’s preferences. For further details on the formulas and examples of fee calculations, advisors are encouraged to refer to additional resources on the IBKR website (IBKR Traders´Academy, s.f.).