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Managing Money - Fee structure and mechanics

  • #1
  • First Post: Mar 16, 2008 9:44am Mar 16, 2008 9:44am
Hi,

I'm interested in how one charges for managing opm. I'm familiar with the basic fees of 2 & 20, and a straight fee on performance.

What I'm really interested in is how and when you collect your fee. Do you do it monthly, quarterly, semi-annually or annually? I'm just starting my search on info and thought I'd start here as I believe there are a few managing opm here. Obviously I have the opportunity or I wouldn't be asking. If anyone knows of any places where I can obtain detailed info on this matter I'd be deeply appreciative.

Thanks.
  • #2
  • Mar 16, 2008 6:21pm Mar 16, 2008 6:21pm
generally the "2" part is taken quarterly, and the "20" is taken at the end of the year. but its really up to the fund on how they want to do it. the bad news is that "partnership accounting" (which is what this is) can get kind of complicated. i read a couple books on the subject, the best i came across was written by Advent, a company that makes accounting software: http://www.amazon.com/Understanding-...5709638&sr=8-1

good luck!!
Relax and be happy.
  • #3
  • Mar 17, 2008 8:46am Mar 17, 2008 8:46am
Thanks Merlin. It looks like a good place to start.
  • #4
  • Mar 17, 2008 2:26pm Mar 17, 2008 2:26pm
btw Dopey, there is a third fee that hardly gets any airplay, and that is fund expenses. any expenses the fund incurrs that are directly related to trading (such as news feeds, chart platforms, data, computers, etc) are spread amoung the investors of the fund. this is usually charged quarterly along with the management fee. good luck with your reading and keep us updated on your progess
Relax and be happy.
  • #5
  • Mar 18, 2008 12:22am Mar 18, 2008 12:22am
Hi Merlin,

Thanks, you're right, I've never heard of that one, but it's pretty logical. I wonder if I can slip in pole dancers under operating expenses?



Quoting merlin
btw Dopey, there is a third fee that hardly gets any airplay, and that is fund expenses. any expenses the fund incurrs that are directly related to trading (such as news feeds, chart platforms, data, computers, etc) are spread amoung the investors of the fund. this is usually charged quarterly along with the management fee. good luck with your reading and keep us updated on your progess
  • #6
  • Mar 18, 2008 4:19am Mar 18, 2008 4:19am
Call up a bank for an offer - you get all you need to know what they are charging.
Google also for IB's and also websites that represent international Pro traders that trade client's account. You will have a full list of info on the contracts and the charges - well choose yourself. By email or chat messenger or calls.

Try this http://www.zulutrade.com/Index.aspx?...ookieSupport=1
  • #7
  • Mar 18, 2008 5:32am Mar 18, 2008 5:32am
Thanks Hibbiz.
  • #8
  • Jun 15, 2008 3:11pm Jun 15, 2008 3:11pm
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting Dopey
Hi Merlin,

Thanks, you're right, I've never heard of that one, but it's pretty logical. I wonder if I can slip in pole dancers under operating expenses?

Tax Code : overtrading prevention control unit

or
Primary Overtrading LimitEr
&
Direct Advisor on Credit Enrolled Requirements


wers's there's a will there's a way
  • #9
  • Jun 16, 2008 7:46am Jun 16, 2008 7:46am
Quoting MPP
Tax Code : overtrading prevention control unit

or
Primary Overtrading LimitEr
&
Direct Advisor on Credit Enrolled Requirements


wers's there's a will there's a way
I see what you did thar.

I know for me it is a flat fee on new net highs charged monthly. I don't charge an annual fee, I believe I should only make money if investors do. It's really just linked to my personal account on a PAMM and enters when I do.
The basis of a democratic state is liberty. ~ Aristotle
  • #10
  • Jun 23, 2008 4:50pm Jun 23, 2008 4:50pm
what kind of % are you taking on the profits? with no annual fee i hope your getting at least 30%!
Relax and be happy.
  • #11
  • Jun 24, 2008 10:36am Jun 24, 2008 10:36am
You nailed it.

Instead of 20%-25% of gains and 2% of the entire account annually, I charge 30% net gains. I make more money when I am profitable than my personal account could make me, however I don't feel I am entitled to a portion of someones money for... doing what I love and was going to do with my personal accounts anyway.

Currently I don't take a pip rebate either, I have traded accounts where I earned a pip/1.5 per trade but always felt guilty if I locked in +1 or BE and got nailed but I still earned money. I'm debating changing this and either donating it or giving it back to the clients. I'm kind of torn on not wanting an incentive to force trades or feel like I should always be in one, vs letting the broker keep that extra pip anyway. If their charging a 3 pip spread, I might as well get one and give it back.

I'm a pretty conservative trader, I understand who my competition is and focus on being better than them without adding risk to the account. IE, most of the highly rated MF's or ETF's out there don't make that much they just do it consistently. 10-15% a year is all you need to beat to be better than anywhere else they could be putting their money. If I can average 3-5% a month, I'm blowing them out of the water.
The basis of a democratic state is liberty. ~ Aristotle
  • #12
  • Jun 24, 2008 6:13pm Jun 24, 2008 6:13pm
Quoting Vensik
You nailed it.

Instead of 20%-25% of gains and 2% of the entire account annually, I charge 30% net gains. I make more money when I am profitable than my personal account could make me, however I don't feel I am entitled to a portion of someones money for... doing what I love and was going to do with my personal accounts anyway.
I agree with you. Depending on how long a person has been managing someone's money, if you are starting out, you can think of doing 15-18% with no maintenance fee. It puts a person ahead of the pack and helps build clientele and along with that, a nice fund history, so after two or three years, you can actually show results from the fund and start charging 20-30% when the big money clients show up.

I personally wouldn't manage anything under $10,000 to start if you're just starting your business. After a year, $50,000 would be a minimum...

I had a person ask me if I would manage one of their small accounts... I politely declined. You can't manage an account that size... They'll be calling you day and night worried about every flunctuation in their account... if I'm gonna deal with that, I want a few 100-200K accounts to manage. They can call me any time they want...

And I agree with you about maintenance fees. I think they are silly. Listen -- you either make money or you don't... why charge someone a maintenance fee. I'd feel like some crappy bank who charges a fee for depositing your money. It's better to advertise to your clients that unlike most MMs, you are waiving the 2% maintenance fee. You get more clients that way. Not like 2% is a big deal anyway compared to being profitable and charging 20-30% off of a high watermark on a monthly basis.
Mr. Trend
  • #13
  • Jun 24, 2008 10:24pm Jun 24, 2008 10:24pm
Quoting Mr Trend
I agree with you. Depending on how long a person has been managing someone's money, if you are starting out, you can think of doing 15-18% with no maintenance fee. It puts a person ahead of the pack and helps build clientele and along with that, a nice fund history, so after two or three years, you can actually show results from the fund and start charging 20-30% when the big money clients show up.

I personally wouldn't manage anything under $10,000 to start if you're just starting your business. After a year, $50,000 would be a minimum...

I had a person ask me if I would manage one of their small accounts... I politely declined. You can't manage an account that size... They'll be calling you day and night worried about every flunctuation in their account... if I'm gonna deal with that, I want a few 100-200K accounts to manage. They can call me any time they want...

And I agree with you about maintenance fees. I think they are silly. Listen -- you either make money or you don't... why charge someone a maintenance fee. I'd feel like some crappy bank who charges a fee for depositing your money. It's better to advertise to your clients that unlike most MMs, you are waiving the 2% maintenance fee. You get more clients that way. Not like 2% is a big deal anyway compared to being profitable and charging 20-30% off of a high watermark on a monthly basis.
Yes, the last company I was at accepted funds down to 10k. You could easily get 2-3 phone calls a week from a 10k client, where a 100k client won't call for weeks on end. Currently I have a soft mark of around 25k. I've never stated an official minimum, however I have turned down several accounts below that 25k. Most are over 50k. Much easier money management.

I did trade a 10 million dollar account for about 3 weeks. The guy called me every day, sometimes 2-3 times a day. Eventually I handed it back to him. Hehe, honestly one of the harder things to do but I simply could not trade profitably if I knew every trade was going to result in a phone call. If I couldn't make him money with him breathing down my neck, there wasn't much point in trading it at all.

I simply think of my accounts as an extension of my personal. When I make money I make money, when I don't I don't. It's that simple.
The basis of a democratic state is liberty. ~ Aristotle
  • #14
  • Jul 1, 2008 1:32pm Jul 1, 2008 1:32pm
My fee is deducted directly from the clients' account by the broker based on a breach of the high water mark level. No gain, no fee. 25% of net new profits monthly.
  • #15
  • Jul 3, 2008 6:28pm Jul 3, 2008 6:28pm
Quoting Mr Trend
I personally wouldn't manage anything under $10,000 to start if you're just starting your business. After a year, $50,000 would be a minimum...
im with ya! when it comes to managing money, the less clients you have the better. most money managers try their damndest to make their funds/clients ratio as large as possible. each client brings the same amount of admin work and hassle, no matter how much money they have with you. so unless you want to make a job of managing rich peoples emotions, keep the pool as small as possible!
Relax and be happy.
  • #16
  • Jul 4, 2008 12:27am Jul 4, 2008 12:27am
Quoting merlin
im with ya! when it comes to managing money, the less clients you have the better. most money managers try their damndest to make their funds/clients ratio as large as possible. each client brings the same amount of admin work and hassle, no matter how much money they have with you. so unless you want to make a job of managing rich peoples emotions, keep the pool as small as possible!
The less clients the better. Hence my wonderful idea of my one client...me...
Never underestimate the powers of the Force.
  • #17
  • Jul 4, 2008 8:40am Jul 4, 2008 8:40am
hmm. how about no Clients, no headaches,
You open 10 accounts, boost your profit x10, withdraw regulary, and manage Your money only??

Ok, maybe your Wife's as well (fees negotiable)
  • #18
  • Last Post: Jul 6, 2008 12:37am Jul 6, 2008 12:37am
Quoting merlin
im with ya! when it comes to managing money, the less clients you have the better. most money managers try their damndest to make their funds/clients ratio as large as possible. each client brings the same amount of admin work and hassle, no matter how much money they have with you. so unless you want to make a job of managing rich peoples emotions, keep the pool as small as possible!
That's a good advice.

i have only one client, and i am searching for two more with sum of $2M.
that will be enough for me

the less clients the less phone calls, requests, the less headache.

that will keep you focusing on your trading.
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