How/When would you take out performance fees?

[pistolpt]

Lets say you have a $300,000 IB master account with family and friend sub-accounts. You charge a 10% performance fee & your strategy kicks but and makes them a combined $100,000 one year.

When would you take that fee out? Monthly? Annually? When they redeem?

 

[rmorse]

Quote from pistolpt:

Lets say you have a $300,000 IB master account with family and friend sub-accounts. You charge a 10% performance fee & your strategy kicks but and makes them a combined $100,000 one year.

When would you take that fee out? Monthly? Annually? When they redeem?

Monthly is typical.

 

[jack hershey]

Quote from pistolpt:

Lets say you have a $300,000 IB master account with family and friend sub-accounts. You charge a 10% performance fee & your strategy kicks but and makes them a combined $100,000 one year.

When would you take that fee out? Monthly? Annually? When they redeem?

Maybe someday you can think things through.

People put money in and they get a return.

you, as a participant, do more than put money in. You earn fees which, any thinking person knows, are earned and in the fund from the point forward when they were earned.

So far you don't understand how much money each person has in the fund and especially you.

When building wealth, no one who is building wealth stops doing it.

I'm sure you can find a new lawyer who knows something about building wealth to help you rewrite your contracts with these people. Your present lawyer is fairly ignorant.

 

[Roark]

Yes, you want to get those fees asap, because next month you'll probably lose them $200,000.

 

[Alcibiades]

Quote from pistolpt:

Lets say you have a $300,000 IB master account with family and friend sub-accounts. You charge a 10% performance fee & your strategy kicks but and makes them a combined $100,000 one year.

When would you take that fee out? Monthly? Annually? When they redeem?

I would think quarterly so as to let
profits accumulate more than a monthly
draw . Plus it will reflect in your % track
record if you take monthly. You give it
2 extra months to let money work to
earn more money.

 

[Alcibiades]

Quote from pistolpt:

Lets say you have a $300,000 IB master account with family and friend sub-accounts. You charge a 10% performance fee & your strategy kicks but and makes them a combined $100,000 one year.

When would you take that fee out? Monthly? Annually? When they redeem?

I would think quarterly so as to let
profits accumulate more than a monthly
draw . Plus it will reflect in your % track
record if you take monthly. You give it
2 extra months to let money work to
compound and earn more money.

 

[heech]

Like anything else.... it depends.

I do quarterly, which is not uncommon in the CTA/CPO space.

 

[LEAPup]

Quote from Alcibiades:

I would think quarterly so as to let
profits accumulate more than a monthly
draw . Plus it will reflect in your % track
record if you take monthly. You give it
2 extra months to let money work to
compound and earn more money.

With monthly fees, the Clients will see less sag in their statements. IMO, monthly is the only way to go.

 

[heech]

Quote from LEAPup:

With monthly fees, the Clients will see less sag in their statements. IMO, monthly is the only way to go.

No, you can certainly "show" performance fees every month... But they'd just be liabilities/fees due. That's what I do, but fees only crystallize into my accounts quarterly.

 

[toc]

Quote from pistolpt:

Lets say you have a $300,000 IB master account with family and friend sub-accounts. You charge a 10% performance fee & your strategy kicks but and makes them a combined $100,000 one year.

When would you take that fee out? Monthly? Annually? When they redeem?

How many accounts and funds can you accumulate in IB Master Account. Sounds something a start up advisor can work on.