Brokerage Fees to high?? | FerrariChat

Brokerage Fees to high??

Discussion in 'Other Off Topic Forum' started by LLM, Mar 11, 2006.

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  1. LLM

    LLM Rookie

    Nov 1, 2003
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    #1 LLM, Mar 11, 2006
    I have a full service broker. He does a good job constantly beating the indexes. He plays with a few stocks he knows well and trades in and out several times during the year. This method does generate what seems to be high trading fees, although in general I am very happy with his performance. During this years tax meeting, my CPA took a look at my portfolio and commented that I might be better off doing a flat management fee vs. a fee for each trade. After looking more closely at the fees, it does seem that total trading fees are high.

    Let's say for example my total portfolio increases in value about 20%. What would you expect to pay in broker trading fees for that kind of performance?

    Or, should I be looking at the total size of my portfolio and base a fee on total size of the account, however, I do think it should be performance based. That said, using this method, if you think it's the correct way to look at it, what would you expect to pay in fees?

    Any thoughts?
     
  2. Turb0flat4

    Turb0flat4 Formula 3

    Mar 7, 2004
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    #2 Turb0flat4, Mar 11, 2006
    Should be moved to Business and Investments (consider starting a thread there next time).

    I don't personally know the answer to your question, since I've given up on using brokers and just plan and place my own trades through an online brokerage. Commissions are rock-bottom this way.
     
  3. DrStranglove

    DrStranglove FChat Assassin
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    #3 DrStranglove, Mar 11, 2006
    I currently use EdJones. But that is ending gradually as I am getting better at the job. In the end, if stuff stays the same, my entire family is moving to Scottrade which has the smallest per trade fees.

    I just do not want to pay full commissions anymore and their ideas have never really been that good to start with. Some of them have been down right fantasy geared to make the company, and the broker, money.
     
  4. LLM

    LLM Rookie

    Nov 1, 2003
    40
    #4 LLM, Mar 12, 2006
    You are right, Thanks.

    Can someone move it over?
     
  5. Buffarino

    Buffarino Guest

    #5 Buffarino, Mar 12, 2006
    I pay my broker a flat % of my account balance instead of on a per-trade basis. That aligns his goals with mine. We both want the account to get as big as possible. On a per-trade basis, his motivation would be to do a lot of trades instead of focusing on the best performance.
     
  6. indaville

    indaville Formula 3

    Oct 6, 2005
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    #6 indaville, Mar 12, 2006
    Depending on the account size you should be paying around 1% of assets. Stop paying for transactions. Some money managers will allow you to set up an account where they make nothing unless you make money. But they typically charge more than 1% in positve years.

    Matt
     
  7. LLM

    LLM Rookie

    Nov 1, 2003
    40
    #7 LLM, Mar 12, 2006
    Does this fee structure seem about right?

    Portfolio size----------Fees
    $0 - $100k---------3% to 5%
    $100K - $500k-----2% to 3%
    $500k - $1M-------1.5% to 2%
    $1M - $5M---------1% to 1.5%
    $5M + ------------<1%
     
  8. LLM

    LLM Rookie

    Nov 1, 2003
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    #8 LLM, Mar 12, 2006
    What is your flat fee percentage?
     
  9. indaville

    indaville Formula 3

    Oct 6, 2005
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    #9 indaville, Mar 12, 2006

    The $0-500k ranges seem too high. At $1M you should be able to get right at or less than 1%. Around .50% - .75% at $3M+. Any amount less than $1M should never be higher than 3%.

    Matt
     
  10. Buffarino

    Buffarino Guest

    #10 Buffarino, Mar 12, 2006
    I pay 1%.
     

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