Fulcrum Fee

DEFINITION of 'Fulcrum Fee'

An additional, performance-based fee an advisor charges a client. The advisor charges the fee when he or she achieves a return above a specified benchmark.

BREAKING DOWN 'Fulcrum Fee'

This is one of the only performance-based fees that advisors are allowed to charge clients. A couple of conditions must be met in order for an advisor to charge a fulcrum fee:

1) The returns must exceed the appropriate benchmark (and if they don't, the base fee must be reduced).
2) The only clients that can be charged are the following: registered investment companies, individuals with an account value greater than $1 million and individuals with an account value greater than $750,000 and a net worth greater than $1.5 million.

RELATED TERMS
  1. Investment Advisor

    As defined by the Investment Advisors Act of 1940, any person ...
  2. Advisor Account

    A type of investment account where an investment advisor works ...
  3. Wrap Fee

    A comprehensive charge levied by an investment manager or investment ...
  4. Fee-Based Investment

    An investment account in which the advisor's compensation is ...
  5. Exchange Fees

    A type of investment fee that some mutual funds charge to shareholders ...
  6. Finance Charge

    A fee charged for the use of credit or the extension of existing ...
Related Articles
  1. Professionals

    Compensation

    FINRA/NASAA Series 66 - Compensation. In this section permitted fee arrangements and performance-based fees.
  2. Professionals

    Compensation

    FINRA/NASAA Series 65 - Compensation. In this section restrcitions on IA fees under the either the Investment Advisers Act of 1940 or the Uniform Securities Act.
  3. Your Practice

    4 Tips on Being Upfront About Fees with Clients

    Advisors should be proactive in discussing fees so clients know what they are paying. Here are some pointers in how to start the conversation.
  4. Professionals

    Advertising and Solicitation

    Advertising and Solicitation
  5. Retirement

    Advisors Fees: What Are You Paying For?

    Fees or commissions? Which is best? Either way, what matters most is that the investor is aware of each charge and how if impacts their portfolio.
  6. Financial Advisors

    3 Reasons to Fire Your Advisor

    There is no reason for a client to stay with a financial advisor who is not serving his or her needs. Here are some red flags to look out for.
  7. Professionals

    Advisory Fees On The Series 66 Exam

    Learn what you need to know about investment advisory fees and contracts to pass the Series 66 exam.
  8. Financial Advisors

    Management Fees: How Advisors Can Protect Them

    With management fees falling, advisors are wondering what they can do about it. Here are a few tips.
  9. Your Practice

    Are AUM Fees a Thing of the Past?

    Although the assets under management fee seemed like a good idea for a long time, current market trends may be making it a thing of the past.
  10. Your Practice

    Why Clients Leave Their Advisors

    Clients fire financial advisors for many reasons. Here's a rundown on why they're likely to do so and how to avoid losing any from your roster.
RELATED FAQS
  1. How do financial advisors charge fees?

    Learn how financial advisors make their money and how you can make sure they are looking out for your best interests by understanding ... Read Answer >>
  2. Do financial advisors have a base salary?

    Find out how self-employed and corporate financial advisors make a living. Find out whether they get paid based on commission ... Read Answer >>
  3. What fees do financial advisors charge?

    Learn how much financial advisors charge clients; discover the various payment plans available to customers seeking financial ... Read Answer >>
  4. What kinds of fees are involved in futures trading?

    Learn what the various costs are that are charged by brokerage firms and trading exchanges to individual futures trading ... Read Answer >>
  5. Where do I look for fees that I am charged on investments? What are those fees called?

    The fees and expenses charged for investments vary. The fees usually depend on the type of investment and the investment ... Read Answer >>
  6. Do financial advisors get paid by mutual funds?

    Learn how mutual funds reimburse financial advisors for recommending that their clients invest in funds and stay invested ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center