Advisor Fees

Automatic Billing

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Clients will not be charged if funds are withdrawn on the last business day of the month period.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.

Formula:
(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

Blended Fee

Enter up to five separate net asset-value ranges, and an annualized fee percentage for each.

Flat Fee

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:

1. Quarterly as of 3/31, 6/30, 9/30, and 12/31. Fees will be posted 10 days after the close of a quarter.
2. Annually as of 12/31. Fees will be posted 10 days after the close of the year.

The maximum percent of P&L that you can you charge for either period is 30%.

Performance Fee Threshold

Advisors can configure a performance fee threshold by setting a static number or an index/benchmark. This fee can be paid out on an annual or quarterly basis. Your client's performance must exceed the threshold for the fee to be assessed to the client.  It is important to note, performance fees and thresholds begin at the time the fee configuration has been accepted by the client and processed by IBKR.  Fees and thresholds are not applied retroactively.

For Example,

• Static
  Fee configuration is in place effective July 1.  The Advisor charges a performance fee of 20% charged annually and sets a 10% threshold.  Clients will not pay a fee if the client account’s money weighted return from July 1 to December 31 is less than or equal to 10%.  If the account’s return for the configured period was 50%, the FA will receive a 20% performance fee on the excess return. (20% of (50%-10%)).
• Benchmark
  Fee configuration is in place effective July 1.  The Advisor charges a performance fee of 20% charged annually and selects the S&P 500 as the benchmark.  Assuming the S&P 500 had a 10% return for the configured period, clients will not pay a fee if the client account’s money weighted return is less than or equal to the S&P return of 10%.  If the account’s return for the configured period 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:

• Specify a look-back period (in quarters or years, based on the period selection in the Percent of P&L fee schedule). High Water Marking keeps track of cumulative losses per billing period within the specified look-back period. A loss in any period will be added to the look-back period's cumulative losses. A gain in any period will decrease the cumulative loss recorded to date. Advisors cannot charge a profit-based fee as long as a cumulative loss exists. By default, the look-back period is zero. High Water Marking is effective on the day we process the approved client agreement.
• Specify the date on which High Water Marking takes effect.
• Choose to prorate for withdrawals or deposits. If a client makes withdrawals or deposits during a billing period, an Advisor can choose to prorate the loss (P&L) for that period.
• Optionally initialize High Water Marking with previous periods' losses by entering the amount of the losses. These losses may have been incurred for the client in another account or with another 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.

Electronic Invoices

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:

• Client Account Number
• Amount (in client account’s base currency)
• Money Manager Account Number (only if the invoice is to be paid to a Money Manager)
• Memo (this field is optional)

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.

For example:

• If you configure a new monthly fee percentage cap on July 1st, you will not be able to bill until August 1st. The fee limit in August will be based on the percentage cap you set and that is calculated in July.
• If a client account is configured for percentage cap on a monthly basis and you log into Portal to submit an invoice for the client in April, the available fee amount is based on the client's daily NAV for March. You can submit multiple invoices but the total cannot exceed the limit for the period.

Invoicing Limits for New Clients:

Invoice new clients for a limited time after the accounts have been opened or funded, based on the value of the client's account at the time an invoice is submitted. Invoices may be submitted within 30 days after a new account configured with monthly invoicing was opened or funded, and 90 days after a new account configured with quarterly invoicing was opened or funded.

• Rate divided by the number of fee payment periods (12 for monthly, 4 for quarterly) per year to calculate the Period Fee Rate.
• Multiply the Period Fee Rate by the Account Value

After these initial, transition periods, our standard invoicing logic will apply.