How to collect investment advisory and related fees 

How to collect investment advisory and related fees 

With the proper authorization, you can deduct investment advisory fees and related services fees directly from your clients' Schwab accounts. The most efficient way to collect fees and expedite your payment is to use the Management Fees worksheet on Schwab Advisor Center®.

You can use the Management Fees worksheet to electronically submit your instructions by manually entering in the fees, importing information, or editing a previously created file. To receive same-day service, submit your fees before 2:30 p.m. ET. Fee payment is at Schwab’s discretion.

If you collect fees for outside assets, you must have an Authorization to Bill Fees on Assets Held Outside of Schwab form on file with Schwab.

To complete actions regarding investment advisory fees, you will need the following:

All processes
  • The Schwab account number from which funds will be withdrawn, the dollar amount of the fee, and your Trader Fee account number
  • The Access Management Fees Tooltip security function
  • Authorization to withdraw fees:
    • If the account was opened without the appropriate authorization from the account holder(s), a completed Limited Power of Attorney (Investment Advisor LPOA) form or Authorization to Pay Fees to Investment Advisors form
    • If the client does not want to establish a standing authorization for fee billing, a letter of authorization (LOA) for a one-time fee request (with the amount specified)
Import fees
  • A .csv, .txt, or .mfa file following Schwab’s required format
  • Upload data access Tooltip for at least one master account
Reverse fees
  • A completed Management Fee Reversal Request Form for Non-Schwab Advisor Network® Accounts
  • Adobe® Reader® or Adobe Acrobat® 7.0 or higher (download the latest version on the Adobe website)

This process is used to manually bill advisor fees:

  1. Go to the More tab at the top of Schwab Advisor Center. In the dropdown menu, select Management Fees.
  2. On the Management Fees worksheet, select the desired master account from the drop-down list (only master accounts for which you have upload data permissions will be included in the drop-down).
  3. Click Add accounts.
    • Use the Browse tab to see a list of accounts, or
    • Click the Find tab to search by account #, name, master #, custom group, organization, or tax identification number (TIN).
  4. Select an account (use the Shift key to select more than one account) and click Add to Worksheet.
    • Alternatively, you can type the account number in the Account field to populate the worksheet.
  5. If any accounts have insufficient funds or other issues, information will display in the Errors and warnings column. Errors need to be corrected before sending the worksheet, but warnings do not prohibit you from submitting fees for the account.
    • To edit the account number or fee amount in the worksheet, select the row you want to change or click in the field you want to update and enter the new value. The record will be updated in the worksheet and validated as appropriate. 
  6. Click the Delete drop-down to clear a selected row.
  7. Save a copy of the worksheet as a .csv file to your computer in case the submission is not completed. Click Export table data.
  8. After all the fees have been validated and no errors exist, click Send fees to Schwab to submit.
  9. Review the confirmation screen to verify accuracy. Save a copy of your management fee information by clicking Save as .MFA file.
  10. Exit the Management Fees worksheet, click More, and then elect View Upload History. Filter the list by the Management Fees file type and the current date to confirm Schwab has received your fees.

This process is used to bill advisor fees by uploading fees from a file.

  1. Go to the More tab at the top of Schwab Advisor Center. In the dropdown menu, select Management Fees.
  2. On the Management Fees worksheet, select a master account from the drop-down list (only master accounts for which you have upload data permissions will be included in the drop-down).
  3. Select Import csv, txt, or mfa file and select the management fees file from your computer.
  4. If all accounts and fees are valid, Send fees to Schwab will be enabled; otherwise, error messages and warnings will be displayed.
    1. If any error messages or warnings are displayed, edit the account number or fee amount in the worksheet to correct them.
    2. Select the row you want to change or click in the field you want to update and enter the new value.
    3. The record will be updated in the worksheet and validated as appropriate.
  5. If accounts with error messages need to be removed and corrected at a later time, click the Delete drop-down and then select Delete selected or Delete all rows with errors.
  6. To remove accounts with no fee amount, click the Delete drop-down and then select Delete all rows with zero fees.
  7. After all the fees have been validated and no errors exist, click Send fees to Schwab to submit the fees.
  8. Review the confirmation screen to verify accuracy. Save a copy of your management fees information by clicking Save as .MFA file.
  9. Exit the Management Fees worksheet, click More, and then select View Upload History to confirm Schwab has received your fees. Filter the list by the Management Fees file type and the current date.

This process may be used to view management fees files you’ve already sent to Schwab:

  1. Go to the More tab at the top of Schwab Advisor Center. In the dropdown menu, select Upload Files, then choose View Upload History sub tab. Filter the list by the Management Fees file type and by date. 
  2. Select the appropriate file to view details about the management fees submitted.

If the fees have been submitted, but not yet processed, call your service team to cancel the request. If it has been processed, use the following process to reverse management fees. 

  1. Select the Management Fee Reversal Request Form for Non-Schwab Advisor Network® Accounts in the Forms library on Schwab Advisor Center. Click Select > Open PDF.
  2. Complete all necessary fields.
  3. Print the form and obtain the signature of an authorized agent of your firm. Send the signed form(s) to your Schwab service team via a Schwab Advisor Center service request.

If a fee is rejected from Schwab, you will receive an alert to submit a new file with the corrected fees. To complete the process, review the steps in the above sections:

  • How to manually enter fees using the Management Fees worksheet section
  • How to import fees using the Management Fees worksheet section

Once you have submitted the fee disbursement request: 

  • Check for Management Fee Rejections, Management Fee Follow-up, and Management Fee Restriction alerts.
  • Go to the Accounts tab in Schwab Advisor Center, select More > View Upload History to verify your fees have been successfully uploaded. Select the appropriate file to view details about the management fees submitted.
  • Once fees have been deducted from your clients' accounts, Schwab will credit them to a fee disbursement account established for your firm. Schwab will then disburse the funds to you in accordance with your standing instructions, in which you may select one of the following options:
    • Internal transfer (Journal)—the most expedient way to receive your fees is to have them internally transferred to your Schwab business account.
      Note: If you don’t already have a business account, you can easily set one up by completing an account application and, if applicable, the Supplemental Trust Account Application for Entity Trustees.
    • Schwab ACH (MoneyLink®)—Schwab can transfer your fees via Schwab MoneyLink® to a designated account at another financial institution.
    • Wire transfer—You can receive your funds via wire transfer to a designated account at another financial institution. Fees may apply to outgoing wires.
    • Check—You can receive a check; Schwab may call to request additional information as part of our effort to manage the risk of fraud.
  • If you have questions about collecting investment advisory and related fees, contact your Schwab service team.

To select a form, go to the Forms library on Schwab Advisor Center.

Form: Authorization to Bill Fees on Assets Held Outside of Schwab
Form: Authorization to Pay Fees to Investment Advisors
Form: Check and Journal Request Form
Form: Limited Power of Attorney (Investment Advisor LPOA)
Form: Management Fee Letter of Authorization Form
Form: Management Fee Reversal Request Form for Non-Schwab Advisor Network® Accounts
Form: MoneyLink (ACH)
Form: Schwab Advisor Network Request for Fee Correction
Form: Supplemental Trust Account Application for Entity Trustees
Form: Withdrawal Power and Trading Authorization Addendum to Limited Power of Attorney (LPOA)
Resource: Management Fees Clickable Guide

Am I limited to only selecting client accounts from within the selected master?
No. The master account sent with the management fees file is used to process all fees for your firm, but not all the client accounts need to belong to this master. However, client accounts must belong to another master for which the user ID has upload permissions.

Can advisor fees be billed if they were not set up when the account was established?
Yes, but the account holder will have to sign, date, and complete the Authorization to Pay Fees to Investment Advisors form.

I have a separate agreement with my clients to bill them for services unrelated to investment advice (e.g., tax advice). Can Schwab automatically deduct those fees?
Yes, these fees can be deducted from your clients' account and paid to you, but Schwab will need a separate letter of authorization signed by your clients specifying the disbursement amount. Alternatively, you may send your clients a bill for the amount owed and receive payment other than through your clients' Schwab account.

Do I have to provide Schwab with a copy of my client agreement?
While it is not required, Schwab may ask for a copy of your signed client agreement. 

Are there any special requirements for state-registered advisors?
States may require additional documentation for state-registered advisors. Consult with your compliance personnel, legal counsel, or state regulatory authorities.

Are advisors deemed to have custody of client funds solely because of fee deduction?
Yes, but they are not subject to undergo an annual surprise examination. The SEC observed that the principal risk associated with this limited form of custody is that advisors may deduct fees to which they are not entitled, because this examination does not require the verification of fees. This fee-related risk is covered through the provision of account statements to the clients by the qualified custodian.

Are there any fee limitations on retirement or other accounts?
Federal income regulations place limits on the fees advisors may charge to IRAs, and other retirement accounts, to the ordinary and necessary expenses of the IRA or plan. Similarly, your fees should be directly attributable/related to the assets of charitable and testamentary trust accounts, custodial accounts, and collateral accounts. Therefore, Schwab may refuse instruction to deduct or reverse previous deductions of fees from these types of accounts that are attributable to assets held in other accounts.

What types of accounts cannot be billed on outside assets?
It is Schwab's policy not to allow the billing of certain accounts for fees attributable to assets held outside Schwab. These account types include, but are not limited to, IRA, ERISA, 403(b)(7), custodial accounts, and some trusts. The regulations (ERISA and the Internal Revenue Code) affecting these accounts are complex and billing them for fees attributable to assets not held in the particular account is generally not permitted. For example, billing an IRA for assets held outside could be interpreted as a distribution.

Am I required to disclose fees?
Yes. In Part II of your Form ADV, you are required to describe the types of fees for the various types of services you render (see Item 1 – Advisory Services and Fees, Item 7 – Other Business Activities, and Item 8 – Other Financial Industry Activities and Affiliations). We may, from time to time, ask for the fee disclosure in your current Form ADV Part 2.

What are the possible system warnings?
For accounts, the following warnings may be generated:

  • You have specified a $0.00 fee amount. This will show up if you have not yet entered a fee for a specific account. If you submit an account with this error, it will be ignored for purposes of fee processing.
  • You have multiple entries for this account. This will show up if the account is already present in the worksheet. If you submit this account, all fee amounts present in the worksheet for the account will be processed.
  • This account cannot be processed. Please check that it’s a valid Schwab account for which you are authorized to upload management fees. This error indicates that the account is not a valid Schwab account, does not belong to your firm, or that you do not have proper upload permissions for this account.
  • This fee exceeds the maximum amount of $999,999.00.
  • The master account in your .mfa file (nnnn-nnnn) does not match the master account currently selected (nnnn-nnnn). Would you like to use the master account from the .mfa file? This is only a warning and the user can proceed with the import after making a choice.
  • The master account nnnn-nnnn cannot be processed. Please check that it’s a valid Schwab master account for which you are authorized to upload management fees. The user will not be allowed to use this file to import.

Why would an account be ineligible for outside asset billing? 
Certain account types cannot be billed for assets held outside of Schwab because they are court-appointed, custodial accounts for the benefit of a minor, or subject to IRS or Department of Labor regulations that do not permit outside billing. These include, but are not limited to, certain retirement accounts – qualified or non-qualified; charitable, pension, fiduciary trusts; education savings accounts; custodial, collateral, pledged asset, guardianship and conservatorship accounts.

Will a warning prevent me from submitting the file for processing?
No. You can still submit a file with warnings to Schwab for processing.

Why didn't my advisory fee process?
Occasionally, Schwab will be unable to process fees. Some of the reasons an advisory fee may not be processed include:

  • Account holder has not authorized you to deduct fees from their account
  • Account is no longer linked to your master account
  • There are insufficient funds in the account to cover the fee
  • A restriction has been placed on the account
  • There is an account transfer in process

In such cases, you will receive an alert identifying the account(s) and the reason for the rejection. Make the necessary corrections and re-upload only the corrections since only the rejected fees will fail to process.

How can I see a management fees file after I have sent it to Schwab?
Use the Upload History screen to see management fees files sent to Schwab. You can also save files on your local computer after sending them.

Can I bill a client for ancillary services (e.g., tax preparation or estate planning)?
Yes. Submit the fee as you would a management fee, but be sure to include a note explaining the fee and an invoice for services rendered.

How to create a standing letter of authorization
How to submit a check request online
How to use an SLOA to submit transactions through the Move Money tool