What is non fee paying account?

Why so good? No need pay fee?

On behalf of everybody in this forum, I thank you for tanking this test.

Example: A subadvisor loses a major account which existed for a long time. To preserve the GIPS composite history they will fund another account with some seed money and continue to invest in the strategy for themselves. The hope is some other large account will come and invest . In the meantime GIPS composite history continues without break. This will obviously be non-fee paying because they are advisor and investor both

LOL, well to be quite frank, it’s an account where the investor doesn’t have to pay a fee. Who wouldn’t want that? If Bill Gross came up to you and offered to manage your measly 401k for free, would you not accept that offer?? Well, that’s assuming you don’t think you can do a better job at managing it than he can, but that’s an entirely different story.

“Sticky: Help Keep AnalystForum Free”.

crap i just realized i said tanking… i intended to say taking, which was obviously sarcastic to begin with but not quite as outright evil as tanking. Freudian slip i guess.

Seriously pls advise me on wat is wrong with asking this qn? Am i dumb?

I think your question has already been answered. I am not really sure what you are asking? Are you asking me if a non - fee paying portfolio is good because it doesn’t pay fees? I like free stuff, so i’d be inclined to say yes.

Ok. I finally get ur point. Anyway, my first qn is asking why the investment firm is so good to manage a investor portfolio for free .

I believe an example given is in the case of managing a portfolio for a non-profit or charitable organization. Lets say the investment company waives fees for managing an account for the Red Cross. Lets say they do not charge Red Cross investment management fees because they dont want to take money away from the organization and the people it helps. They can place this non-fee paying portfolio in a composite with other fee-paying portfolios.

maisa are you taking the exam in Tokyo?

no, I think Marissa Tomei would be taking it in Brookyln.

If the question is GIPS related, then the answer should be that non-fee paying accounts can be included in a composite but this should be disclosed.

A non-fee paying account is one that is not charged a AUM fee. So the clients trades and the asset manager earns a commission. No mgmt fees.

Accounts can be fee paying (a % of assets under management are taken quarterly for example). There can be non fee paying accounts, where there are no fees taken out, but there will likely be other charges (trade commissions, mutual fund trails, etc). Where I work, discretionary accounts are fee paying, and non discretinoary accounts are not. I am guessing this is standard or common practice.

The obvious example in the curriculum was the own portfolio of the company.