Cost Savings to The Clients

Using an Institutional Platform

Switching from a commission only or a fee-based broker to a fee-only advisor can save you a lot in management fees, but investors can save money just by being on an institutional platform.  There are certain exclusive benefits institutional investors receive that retail investors do not.  The ability to purchase institutional funds is one.  Another is low trading costs.

INSTITUTIONAL SHARES normally have very high minimums to buy into.  These high minimums only apply to non-institutional investors.  They usually range in the six figure mark.  Some funds have minimums high as $10,000,000.

These shares also have low expense ratios compared to retail shares.  They also do not have Loads to get into the fund and carry no 12b-1 Fees.  Those two features alone make institutional shares very attractive.  Normally, expense ratios for institutional shares range somewhere between 10 and 100 basis points.  That is much cheaper compared to retail shares which charge investors 75 to 250 basis points.  These expenses cut into investor’s portfolio performance.  Historically, institutional shares had better performance as well.  When research firms quote performance of funds, they quote returns after extracting fees (Net Returns). 

TRADING COSTS are lower for an institutional investor.  Retail investors do not get the discounted rate.  Charles Schwab charges us, who are on an institutional platform, 48 basis points on the principal amount of the transaction with a minimum total fee of $29 and a maximum of $49.95 so any client under our management would receive the same savings.  Schwab’s retail platform charge is $49.95 per transaction regardless of the size of the transaction.