Fees functionality in m2Advisor:
How to set up a Fee Agreement (i.e. preset fee rules) for each portfolio:
a - Click the "+" button to add a new Fee Agreement.
- A Fee Agreement is a fee type that is applicable to a client portfolio.
- A portfolio can have multiple Fee Agreement - e.g. a fee that is charge monthly at a fix price of $100, another fee that is charge yearly at a 2% of asset under management etc.
b - This table list all the Active fee agreement.
c - This table shows the audit log of who has updated the selected fee agreement.
d - Dropdown list that filters all agreements base on their status: Active, Future Dated, Expired, Deleted etc.)
Click on the "+" button (refer to point 'a' above) and a Fee Agreement Maintenance dialog box will pop up as shown below:
Fee Type - (Dropdown list) specify if the fee is Flat Fee or calculated based on a percentage of asset under management.
Fee Name - (Text field) enter a name for this fee agreement (e.g. monthly management fee)
Fee Value - (Numeric field) for flat fee you can enter in "100" for $100. For %AUM you can enter "1" for 1%.
Min Fee & Max Fee - (Numeric field) this is only applicable for %AUM fee. You can set a minimum or maximum figure so that when the fee is calculated, it will always respect the minimum and maximum boundaries. For example, if you set a minimum of $100, and for a particular month the %AUM fee is $80, the fee generated will be $100.
Currency - (Dropdown list) this is the currency of the fee. For example, if your portfolio is valued in USD however the fee you charge is SGD, the system will calculated the AUM% fee in USD and then convert the USD fee to SGD.
Fee Tax Rate % - (Numeric field) this is similar to GST or VAT. If the GST in your country is 7% then you should enter "7" in this field. If there is no Tax Rate then input '0'.
Fee Frequency - (Dropdown list) this is the frequency of the fee. For example if you selected "quarterly", the the fee will generate every 3 months.
Period End - (Dropdown list) this is only applicable when the Fee Frequency is selected for 'quarterly', 'half-yearly', or 'yearly'. This field is to specify when is end of a period. For example, if you have selected 'quarterly' in the Fee Frequency and 'November' for the Period End. The system will generate the fee every February, May, August, November. If this field is left blank, the system will assume the Period End is 'December' and generate the fee every, December, March, June, September.
Start Date & End Date - (Date field) this is to specify when the fee agreement start and expire.
Description - (Text field) this is a free text field for user notes etc.
Asset Exclusion Details
- This is only applicable to %AUM fee type.
- The asset exclusion functionality is listed on the right panel of the dialog box. You can select to include/exclude asset groups, individual assets and accounts.
- Note that 'asset groups' (e.g. cash, derivatives, equities etc.) that are shown in the example below can be customisable based on 'Classification Group'.
- Simply click on the green "+" to add to the fee calculation or click on the red '-' to exclude.
Once you have saved the Fee Agreement, the Fee Agreement will be listed in the table.
Next is to generate the Fee Schedule for the period based on the Fee Agreement you have created. A Fee Schedule calculates the fees based on the Fee Agreement and the period specified.
To generate a fee schedule, click on the button 'Generate Single Portfolio Fee Schedule'. This will generate the fees for the portfolio you have selected.
(Bulk fee generation for multiple portfolios is also available however it is on a separate M2 application outside of m2Advisor (please contact us if you are interested).)
The following dialog box will appear:
Name - (Text field) enter a name for the fee schedule.
Shorts Treatment - (Dropdown list) if a client holds a short position it can be 'excluded', 'treated as long' or 'treated as short' in the fee calculation. If a client does not hold any short position then you can ignore this field.
Period - (Dropdown list) select the period you want the fee to be calculated. Select "Specify Date Range" to activate the 'From and To' field.
From & To - (Date) - select the date range for the fee calculation.
Include Fee Types - (Checkbox) click on the check box to include and exclude All, Flat or %AUM fees.
Once you have fill in the form, click on "Calculate Fees". The system will generate the fees for the period based on the Fee Agreement that applies during that period.
Select the checkbox on the 'Authorised' column to authorised and saved the fee you want.
How is % Asset Under Management Fee calculated?
%AUM Fee for each day = Portfolio value in portfolio currency * %AUM fee / Number days in a year / FX rate (if fee currency is different from portfolio valuation currency)
The system will then add up all the %AUM fee for each day to calculated the monthly fee.
Example of Fee Agreement and Schedule
Example 1 - Flat Fee, Monthly
Example 2 - Flat fee, Quarterly, Period End in November
Example 3 - %AUM, Monthly, Zero tax rate, Different Fee Currency
Example 4 - %AUM, Monthly, Excluding a Specific Asset
Example 5 - %AUM, Half Yearly, Exclude Account, Max and Min
Example 4 - %AUM, Monthly, Asset Groups