question about a refferal fee

L

lasner

I have a question about a referral fee. I'm referring someone on to a broker and I'm going to get a referral fee.

I was wondering what the standard fees are. I think it's 10-30% of what the account will generate in the first year. Just wanted to check to see what you guys thought it should be.

Thanks
 
Not sure about referral fees with respect to brokers. Make sure the broker's compliance department has signed off on the arrangement and that all documentation, including documentation to the client of the referral fee, is made properly.
 
Quote from formikatrading:Not sure about referral fees with respect to brokers. Make sure the broker's compliance department has signed off on the arrangement and that all documentation, including documentation to the client of the referral fee, is made properly.
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Wouldn't a nice "thank you" and maybe a shot an a hard to get IPO, or a lunch with the broker be all that's normal? Assuming we're talking an account of less than $5M in asset value...

Now, if we're talking a $100M asset account then that's a different story.
 
Quote from stocksonly:

Wouldn't a nice "thank you" and maybe a shot an a hard to get IPO, or a lunch with the broker be all that's normal? Assuming we're talking an account of less than $5M in asset value...

Now, if we're talking a $100M asset account then that's a different story.
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Are you kidding me...that's funny. The account will be around 3 million. That will generate 30k a year in revenue. I think it's usually 10-30% of the first year revenue for a referral. Anywhere from 3k-9k.

I was wondering what the industry standard was
 
Quote from lasner:I was wondering what the industry standard was
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And as I said. Maybe a lunch where he picks up the tab. Maybe if there were a several referrals of that size, a few thousand shares of a Hot IPO or maybe being let in a Private Offering.

That's my observations anyway (from the outside looking in).
 
One thing you might want to clarify is whether this is a "broker" or a RIA firm? I assume if you're talking about 30k per year, then the firm is charging a 1% fee based on assets under management. For RIA firm referrals, I'm not sure there is a standard referral fee -- as the situation depends on whether the person making the referral maintains a professional relationship with the client. In your case, it seems like you're just making the referral and then have no further obligation. Accordingly, a possible fee (maybe 1/4 of the fee for the 1st year) is probably all you should get ($7,500).

Again, make sure the firm's compliance dept signs off on this and that the client gets properly notified of the referral arrangement.




Quote from lasner:

Are you kidding me...that's funny. The account will be around 3 million. That will generate 30k a year in revenue. I think it's usually 10-30% of the first year revenue for a referral. Anywhere from 3k-9k.

I was wondering what the industry standard was
More...
 
Screw that, tell em you want a % of the fees for the next 5 or 10 years.

There is no standard, you get what you negotiate....so negotiate well.
 
Quote from lasner:

Are you kidding me...that's funny. The account will be around 3 million. That will generate 30k a year in revenue. I think it's usually 10-30% of the first year revenue for a referral. Anywhere from 3k-9k.

I was wondering what the industry standard was
More...

hey, didnt you just post on another thread about your situation with a caca bank? You are a cta and you have someone with a pool of over 3mm? why not take him for yourself? p
 
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