Advisors1 may charge their clients for services rendered either through automatic billing, electronic invoice or direct billing. You determine the advisor fees at the time of the client's registration, and may modify these at any time in Account Management. In the case of fee increases, the client will be required to approve the fee increase with a signature. In addition to the advisor client fees specified, IBKR will charge its normal commissions to the client.
Specify all client fees on the Manage Clients > Fees > Configure page in Account Management.
Client Fee Templates
Client fee schedules can be applied to accounts individually or can be stored in templates. As an advisor, you can configure fees for one or more client accounts, or set up client fee schedules in templates, then assign the templates to client accounts. The use of templates allows you to easily maintain different fee schedules for multiple client accounts.
If you are a new advisor (i.e., you just opened your IBKR account), then there will be a blank default client fee template, which you can then configure with your own fee schedule. If you are an existing advisor, your old global fee schedule is now the default client fee template. You can modify the default template but you cannot delete it.
Charge Commissions and Client Fees to the Advisor
As an Advisor, you can elect to charge client commissions to your own Advisor master account when configuring fees for a client account. Commission charges will revert to the client account if the Advisor master account has a balance of less than 1000 USD or equivalent when the commission charges are posted.
By default, minimum monthly fees, market data and research fees are charged to Advisor client accounts. However, Advisors can elect to charge these fees to their own Master account for each client account. Client fees will be charged to the client account if the Advisor master account has a balance of less than 1000 USD or equivalent when fees are posted.
Charge Fees on Client Investments in Hedge Funds
As an Advisor, you can also charge fees on the current value of the amount that your clients have invested in hedge funds who participate in our Hedge Fund Capital Introduction Program (HFCIP), which is part of our Investors' Marketplace. If you have already invested funds for your client at the Hedge Fund Investor Site (available at the Marketplace), the amount invested in the hedge fund will automatically be enabled for the fee program.
For each client who invests in a participating hedge fund, you can charge fees based on the Annualized Percentage of Net Liquidation Value of the current value of the client's investment in the Fund and/or the percentage of profit and loss of the client's investment in the Fund, as well as configure the fee posting frequency (monthly or quarterly). Your clients must approve the fee schedule by signing a form.
Fees entered for the first time in the middle of a period will be calculated and applied as of the date the fee agreement is approved and entered into the system. Fees changed during a period will take effect as of the beginning of the next monthly or quarterly period. If you change the frequency from monthly to quarterly, the change will take effect as of the next calendar quarter. If you change the frequency from quarterly to monthly, the change will take effect after the end of the current calendar quarter.
Client Fee Reimbursements
Advisors can reimburse fees to client accounts up to a maximum of 50% of invoices (net of any prior rebate) for the trailing 12-month period. Advisors can also modify or cancel pending fee reimbursements and view the details of fee reimbursements that have already been processed.
Trade Allocation Minimum Commissions
We charge a minimum fee for US stock trades allocated by Advisors to their clients. Advisors can choose to charge the allocation minimum fee to their master account or to the client account. By default, the allocation minimum is charged to the client account unless there is a specific rate arrangement between the client and the Advisor.
The minimum amount charged per trade allocation is as follows:
An IBKR-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, monthly or quarterly basis.
Percentage of Net Liquidation - End of Month/Quarter Billing
End of Month_/Quarter_ fee is calculated by using the End of Month_/Quarter_ Net Liquidation Value, the rate and the number of business days in a particular month period.
Clients will be charged for number of business days in a month period for which the fee configuration was enabled.
Clients will not be charged if funds are withdrawn on the last business day of the month period.
Fees will be charged the first U.S. business day of the next month.
(Last Business Day of Month/Quarter NLV amount * Rate) / (Number of business days per year / Number of Fee Days)
Number of business days per year set as 252
Number of Fee Days is the number of business days in a month period for which the fee configuration was enabled
Enter up to five separate net asset-value ranges, and an annualized fee percentage for each.
Entered as an annualized amount, applied on a daily, monthly or quarterly basis (apportioned by 252 days).
Percent of P&L2
A fixed percent is applied to the mark-to-market P&L (positive or negative) at the end of each period. 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 you do make changes during a period, we break the period into two pieces and apply fees accordingly. 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:
The maximum percent of P&L that you can you charge for either period is 30%.
Performance Fee Threshold
Advisors who select a threshold set a static number or index/benchmark as a performance fee on an annual or quarterly basis. Your client's performance must exceed the threshold for the fee to be assessed to the client.
For example, if the Advisor charges an annual performance fee of 20% and sets a 10% threshold, he/she would not be paid a fee if the client account’s annual money weighted return is less than or equal to 10%. If the account’s return for the year was 50%, the FA will receive a 20% performance fee on the excess return. (20% of (50%-10%)).
High Water Marking
Advisors who select Percent of P&L as the basis of their client fees can apply High Water Marking to the billing period client fees to offset periods of losses in a volatile market. You set up High Water Marking on the Client Fees page in the Account Management. High Water Marking lets an Advisor:
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 commissions charged by IBKR, as a percentage of commissions charged by IBKR, or as an absolute amount (commissions charged by IBKR will be subtracted from this amount). Fee per trade unit is not available for US or US protectorate legal residents due to regulatory restrictions, with the exception of US commodity-registered advisors, who are allowed a per-trade schedule for futures. For more specifics on fee per trade unit, see our Broker Client Markup page.
See specific examples of automatic billing.
Send Fee Invoice Notifications to Your Clients
To help Advisors who bill advisory fees using one of IBKR's Automatic Calculation options meet their compliance obligations, we can send your clients invoices detailing the advisory fees automatically calculated and deducted from their accounts (as they have requested) when those fees are actually charged. These notices describe the method used to calculate the fee, the amount of the fee and the period covered by the fee.
Some states' "custody" rules require that advisors send, or have their broker send, these invoices to clients who sign up for automatic billing of advisory fees. (You may also need to send these invoices to your clients if you have "custody" under the SEC's or your state's custody rule for another reason.) Please review the state (or SEC) rules relevant to your firm to determine if you need IBKR to send your clients these invoices.
In Advisor Portal, you can configure how we send these notices to all of your clients: by email only, by email and in the Customer Service Message Center, or no notification at all. Please note that by default, US Registered advisors will be enrolled during the application. For all other advisors your clients will NOT receive these notices and you must instruct IBKR (through Advisor Portal) to send these invoices to your clients. Regardless of whether you sign up for invoices, all advisory fees processed through IBKR are reflected on the client's Activity Statements.
Advisors can submit electronic invoices from the Invoicing page in Portal (go to Administration & Tools > Fees & Invoicing > Invoicing). Before you can submit fee invoices for client accounts, you must first configure Automatic Billing for Monthly/Quarterly Invoicing for the account(s) on the Configure Client Fees page in Portal (go to Administration & Tools > Fees & Invoicing > Fees > Configure Client Fees).
You must specify the maximum percentage of the client’s Net Asset Value that can be deducted as advisory fees each month or quarter. Your client must then confirm this limit.
You then calculate the amount of fees and submit an electronic invoice for each client account at any time during the period, up to the specified limit. The invoice amount will be automatically transferred from the client account to the advisor account, again up to the specified limit.
Invoices submitted prior to 5:30 (17:30) PM EST will be processed by IBKR the same day (U.S. night) and appear on that day’s statements. Invoices submitted after 5:30 (17:30) PM EST will be processed by IBKR on the next business day. You can submit invoices for up to ten clients at a time, but only one invoice per client account per day.
You can also upload a .csv (comma-separated values) file containing multiple client invoices. The .csv file must contain fields for:
Setting Maximum Invoicing Percentage Caps
When you configure client fees or create a client fee template, you will need to include a maximum invoicing limit, set as a percentage of the client’s Net Asset Value. You can charge on a monthly or quarterly basis.
To determine the available fees, we look back on the prior period to calculate the amount of fees your client has agreed you can charge during the current period.
To calculate the limit, at the end of each business day of the previous period (month or quarter) we multiply the annual percentage rate by the value of your account and divide that by the average number of business days per year. The sum of those daily values over the course of the previous period is the maximum amount you can charge for the current period..
(Fee Cap % x Ending Client NAV) / 252
where 252 is the average number of business days in a year.