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RIA Fees / Accrued Interest

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I presume your query is about a registered investment adviser and its fee measured on assets under management or advice.


Law regulating investment advisers generally requires a written agreement.  Just as many BenefitsLink commenters might say about a retirement plan, Read The Fabulous Document, to discern an investment adviser’s fee one might say, Read The Investment-Advisory Agreement.


An agreement that anticipated the client’s investment in bonds might specify counting accrued interest.


Or an agreement might specify that assets to determine the fee is measured by a custodian’s reporting or accounting.


If there is an ambiguity in the client’s agreement with the adviser, some might look to some interpretation aids:


Some might prefer an interpretation that is consistent with the adviser’s brochure or other disclosure over an inconsistent interpretation.


Some might prefer a measure that does not involve the adviser’s discretion (if the discretion could allow the adviser to affect its fee).


After considering the investment-advisory agreement, relevant law, and other interpretation aids, some might prefer a measure that is consistent with generally accepted accounting principles over one that is not.


This is just some abstract thinking, not advice to anyone.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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Interesting Q; what brings it up?

Is it of any significance, dollar-wise?

I'd think it should be included - doesn't the value of the bond reflect the accrued interest - in other words, if a buyer were to purchase the bond, I think they would pay a bit less for the bond since they would get the bond itself plus the accrued interest.  So the accrued interest is really part of the portfolio.

Ed Snyder

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