Financial Services
Fee reconciliation, regulatory expense tracking, and portfolio accounting for RIAs, financial planners, and private lenders.
The Industry
A registered investment advisor managing $40 million in client assets bills quarterly AUM fees through their custodian. The custodian calculates the fee, deducts it from client accounts, and deposits the net amount. The advisor checks the deposit and assumes everything is correct. But the calculation used last quarter’s asset values instead of current values. One client transferred in $200,000 mid-quarter and the fee didn’t adjust. Over a year, these small discrepancies add up to thousands in uncollected revenue that nobody noticed.
Financial services professionals operate with fee structures that vary by client and service model. Some clients pay AUM fees calculated by custodians. Others pay flat retainers billed monthly. Some pay hourly for specific projects. Private lenders collect interest income that accrues daily but arrives in monthly payments. Regulatory requirements add another layer with ADV filings, state registrations, E&O insurance premiums, and continuing education costs that need tracking. The accounting complexity doesn’t match the size of most practices.
Who This Covers
Who This Covers
Registered investment advisors, fee-only financial planners, wealth management firms, and private lending operations in the Merrimack Valley and Greater Boston area. Solo practitioners managing client portfolios and multi-advisor firms with complex fee arrangements and partnership structures.
What Makes It Complex
What Makes It Complex
Multiple fee structures running simultaneously. AUM fees calculated by custodians that need verification. Flat retainer billing with different client cycles. Private lending with interest accruals, origination fees, and loan tracking. Regulatory costs spread across multiple categories. Revenue that arrives weeks or months after services are delivered.
What We Handle
Fee reconciliation matters when someone else calculates what you should collect. Custodians use their own systems and timing for AUM fee calculations. We verify those calculations against your fee schedules and client asset levels. When the custodian deposits $8,400 and you expected $8,750, we find out why. Private lenders need loan-level tracking showing principal balances, interest accrued, payments received, and origination fees recognized over the loan term. We set up systems that track each loan individually so you know portfolio performance by borrower.
Regulatory expenses need separate tracking. E&O insurance premiums, state registration fees, ADV filing costs, compliance software subscriptions, and continuing education all represent required costs of doing business. These shouldn’t get buried in general expenses where you can’t see what you’re actually spending on compliance. Tax planning for financial services professionals means quarterly estimates that account for variable income timing and capturing deductions specific to your practice like home office costs, technology expenses, and professional development.
Fee Reconciliation and Revenue Tracking
Fee Reconciliation and Revenue Tracking
Custodian fee verification against your fee schedules. Multi-stream revenue tracking for AUM, flat fee, and hourly billing. Private lending portfolio accounting with loan-level detail. Proper revenue recognition so monthly reports show actual performance, not just when cash arrived. Billing for flat fee clients managed on schedule.
Compliance Tracking and Tax Strategy
Compliance Tracking and Tax Strategy
Regulatory expenses categorized separately showing E&O premiums, licensing fees, compliance costs, and continuing education. QuickBooks configured for financial services with proper income categorization. Quarterly estimated taxes calculated based on your actual income patterns. Tax preparation that captures home office, technology, and professional development deductions.
Common Problems
Most advisors accept custodian fee calculations without verification. The deposit hits the account and gets recorded as revenue. Nobody checks whether the custodian used the right asset values, applied the correct fee schedule, or included all billable accounts. Over time, systematic underpayments go unnoticed. A fee schedule change that didn’t get programmed correctly at the custodian. A new account that wasn’t added to the billing. These aren’t dramatic errors, they’re small discrepancies that accumulate quietly.
Revenue timing creates confusion about actual performance. AUM fees billed quarterly in arrears mean January shows Q4 revenue. Flat fee clients billed at different times create uneven monthly numbers. Private lenders record interest income when payments arrive instead of when it accrues. Monthly financial reports become unreliable for understanding how the practice is actually performing. Tax planning suffers because income appears lumpy and unpredictable when the underlying business is actually stable.
Unchecked Fee Calculations
Unchecked Fee Calculations
Custodian calculates fees, deducts from client accounts, deposits the net. You see the deposit and assume it’s correct. Fee schedule changes, new accounts, mid-quarter asset movements, all create opportunities for calculation errors that favor the custodian. Without reconciliation, you trust the numbers without verifying them.
Revenue Timing Distortion
Revenue Timing Distortion
January looks great because Q4 AUM fees arrived. February looks weak because only flat fee clients paid. Private lending interest income recognized when checks clear instead of when earned. Monthly reports swing based on billing cycles, not business performance. Hard to make decisions when the numbers don’t reflect reality.
What Changes
Fee reconciliation becomes a monthly process. Custodian deposits get verified against fee schedules and client asset levels. Discrepancies surface immediately instead of accumulating for years. You know exactly what you billed, what you collected, and whether the numbers match. Private lending portfolios show performance by loan with interest accruals, payment history, and current balances. You can see which loans are performing and identify collection issues before they become problems.
Revenue recognition smooths out the monthly swings. AUM fees recorded when earned, not when billed. Flat fees matched to the service period. Interest income accrued properly. Monthly reports show actual business performance you can rely on for decisions. Regulatory costs tracked separately so you know what compliance actually costs. Quarterly estimates calculated based on real income patterns. Tax returns prepared by someone who understands the deductions available to financial services professionals and structures them defensibly.
Fee Accuracy and Portfolio Visibility
Fee Accuracy and Portfolio Visibility
Custodian fees verified against your schedules and client assets. Discrepancies caught and addressed promptly. Private lending portfolios tracked by loan with clear performance metrics. Revenue recognized when earned so monthly numbers mean something. You know what you’re owed and what you’ve collected.
Compliance Clarity and Tax Readiness
Compliance Clarity and Tax Readiness
Regulatory costs visible as a category showing true compliance overhead. Books organized for any regulatory examination or audit. Quarterly estimates that account for your actual income timing. Tax preparation capturing professional deductions while maintaining defensible positions. Clean financials that support practice growth and planning.
The Merrimack Valley's Trusted Accounting Partner
The Next Step:
A 15-Minute Call
Tell us about your business and what you're dealing with. We'll listen, ask a few questions, and give you a straightforward quote.