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MrBook    |  0 | |
| Could anyone please tell me a list of all brokers that will provide support for someone that wants to start a Spoke Fund? This would include Long only strategies, Long/Short strategies, trading FX and any other Hedge Fund or exotic strategies as well. I know that Cale has mentioned www.folioadvisors.com. Any other brokerage firms that you can think of? Thanks! |
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Post 1 • IP
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calesmith | 0 |
| Hi Book, Sorry for the delay in responding...somehow missed this earlier. Some quick thoughts on other platforms: Other managers are either looking into or are already using Interactive Brokers and Wealthfront (formerly KaChing - which uses IB as it's back-end, too). I am also aware of at least two guys considering using TradePMR, though I believe it may be cost prohibitive in terms of commissions. Another manager was recently looking into TD Ameritrade as well, though they weren't a viable option for me a few years back (again, commissions pretty high)...and now sounds like they may have a $10M minimum AUM as well. So, there are other options out there, but in my mind, FOLIO is just the best, hands-down, when it comes to plain vanilla, long-only spoke funds. The control of tax lots there alone is a huge deal which can save you and your investors quite a bit come tax time, and can help returns via averaging down...which I need to talk more clearly about in the future. Plus a slew of other features, too. That said, if you want to run a long/short fund, use options, or get exotic, you're probably looking at something other than FOLIO. (IB probably.) FOLIO just doesn't have other options outside long-only investing. And here are some notes I was recently relaying to someone via email re: what I would focus on when talking to potential custodians "TD, like Fidelity and a couple of other better known shops, had some but not all the functionality I needed - and even more important, it was way too expensive. TD had sort of rudimentary "basket trading" technology, meaning you could make a bunch of trades across a number of client accounts at the same time. It was clunky, though, in the process sense. Some manual elements to it that were borderline impractical for a business trying to emphasize scale. Also, it seemed to almost be really just a guise to milk more commissions out of people. That's because even in basket trades, you had to pay a commission on each security. For instance, take a $20,000 client account. Say 20 positions in the fund. They charge $12 per trade. Just to get that client fully invested, was going to cost 20 x $12, or $240. That's 1.2% of assets right there right to TD...meaning if you add in your fees, it's effectively a prohibitively high expense ratio for the guy...or you gotta go in after the fact and reimburse his account to reduce the fees paid. (That's cuz if you say you only charge 1.25% of fees all-in, the regulators do not want to see you charge that client a penny more. Or else.) Cost thing was less of an issue with bigger accounts, but it was way more important for me to have things standardized and scalable on a single platform. Didn't want another custodian for small accounts...wanetd everything together. FOLIO is just way past everyone else there." And later on, from that same email chain... "Costs are the big thing...just make sure everything is transparent. Execution quality also important, obviously, but usually not an issue with these bigger firms. Be great if they have a library of checklists that you can use to help make sure you gather all the right info from prospective clients before you start bringing them onboard. Also, make sure ya get a sense of if they can handle the widest possible range of accounts possible...SIMPLE IRAs, revocable trusts, qualified plans, etc. Not necessarily critical, but helpful in bringing all manner of customers onboard. Folio didn't offer SIMPLE IRAs until about six months ago, which created some headaches from me on a couple of clients who wanted to bring all assets over. I'd also make sure that share allocation on the platform is automated and equitable. Sometimes in those older basket/block trade systems, they leave it to you to manually assign shares to each account after you buy them. Most newer systems should automate it, but might be worth asking. Don't want to have to do that...pain in the tuckus in terms of process and then compliance." And to be clear, I'm not tied to FOLIO...if something else comes along that is better for my investors, I'll switch. I just don't think a better solution exists yet. Maybe some of the other guys on other platforms will chime in over time here, too... Thx. Cale |
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| Post 2 • IP
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plandfreedom | 0 |
| Been doing some research on IB... I cannot find an equivalent of folio's 0.3% advisor account fee, which is interesting... Also, it seems that by trading the advisor account one could avoid inactivity fees in IRA subaccounts, which would be great... IB does have pretty low commissions... It seems to me that in the age of Vanguard super low cost ETFs and funds and Fidelity Spartan funds one may do well shaving investor costs to the minimum... What do you think? |
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| Post 3 • IP
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calesmith | 0 |
| Yes, absolutely...and when ya consider you're charging yourself those same fees, all the more reason to keep them as low as possible, eh? And I believe IB does have a minimum annual fee per account, which on smaller accounts is comparable to FOLIO's bips, but would have to check again to be sure what that was. | ||
| Post 4 • IP
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itconsultant | 0 |
| The min fee for IB is $10 a month. So if you do trades worth $5, then the client will see $5 in commissions and $5 in other/inactivity charges. IB lets you do block trades and the commission is split proportionately to the size of the order per account. Min trade commission is $1 for 200 shares. So, you could have bought 200 shares across 10 accounts (equal sized) and it be 20 cents for each account. |
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| Post 5 • IP
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