Making Sense of Fees on Intelligent Office€¦ · Making Sense of Fees on Intelligent Office Feb...

Making Sense of Fees on

Intelligent Office

Making Sense of Fees on Intelligent Office Feb 2018

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Contents

Introduction ....................................................................................................................................................... 3

Adding a Fee ...................................................................................................................................................... 3

Initial (one-off or ad hoc) fees.................................................................................................................... 4

Fee type .......................................................................................................................................................... 4

Payment type ................................................................................................................................................ 4

Fee charging type ........................................................................................................................................ 5

Entering a fee amount manually ........................................................................................................... 5

VAT .................................................................................................................................................................... 5

Percentage fee calculations .......................................................................................................................... 6

Contribution amount .................................................................................................................................. 6

Transfers & lump sums ............................................................................................................................. 6

Relating a fee to a plan ............................................................................................................................. 7

Relating a plan to a fee ............................................................................................................................. 7

Rules for linking fees to plan within a plan record ......................................................................... 7

Linking fees to Wrap plans ........................................................................................................................... 8

Top ups ................................................................................................................................................................ 8

Top ups - policy numbers ......................................................................................................................... 8

Mortgage fees .................................................................................................................................................... 8

Adding an initial % fee for regular contribution investment business ......................................... 9

Ongoing fees .................................................................................................................................................... 10

Adding an on-going fee ........................................................................................................................... 10

Working with a fee record ...................................................................................................................... 12

Fee notes ...................................................................................................................................................... 12

Fee status ..................................................................................................................................................... 13

Uploading documents............................................................................................................................... 13

Changing fee details ................................................................................................................................. 13

Cancelling Fees ........................................................................................................................................... 13

Refunding clients ....................................................................................................................................... 14

Fee models ................................................................................................................................................... 14

Fee invoices (including payment details & VAT) ................................................................................ 15

Quick print option ...................................................................................................................................... 15

VAT invoice (includes bank details) .................................................................................................... 15

Joint fees ....................................................................................................................................................... 17


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Auto Enrolment - Employer / Corporate Consultancy ..................................................................... 17

Retainers ....................................................................................................................................................... 18

FAQs ............................................................................................................................................................... 20

Introduction

Intelligent Office (iO) has inbuilt income and fee reconciliation. It enables users to log, monitor

and automatically reconcile fees, retainers and commissions saving businesses valuable time

and money.

Accurate cashflow records are vitally important for any business but especially for an advice

firm that receives large numbers of individual payments from a wide range of providers.

Effectively maintaining those records is a core function that can be both time consuming and

expensive to administer.

All adviser charges (fees) should be recorded within iO for income reconciliation and

compliance purposes. Additionally, the FCA requires various periodic reports including for

example the percentage split (and ££ totals) of fees by product category (Retail Investment,

Non-regulated, Non-investment Insurance, Mortgage etc.); whether fees are paid by the

client/Provider/Platform; numbers of initial and new ongoing fees and numbers of clients

cancelling ongoing services.

This document explains the different categories of fee that can be added to the client and plan

records, and other areas such as adding joint fees, producing Invoices and fees for corporate

auto-enrolment advice.

Adding a Fee

Once a client record has been added to iO a fee record can be created either through the client

or plan actions by selecting “Add fee”. The preferred option is via the plan as this will

automatically link the plan and fee together.

There are three main fee types:


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• A one-off payment – usually an Initial, Ad hoc or mortgage fee

• Recurring Fee:

• An initial fee where a total amount is paid by dividing it over a specific number of

payments i.e. instalments on a regular contribution

• ongoing % service fees paid on a regular basis e.g. monthly/quarterly/annually

• Retainer: a continuous fee that is ‘due’ at regular intervals – usually fixed price

Initial (one-off or ad hoc) fees

Having selected the ‘Add fee’ action you then complete the fields in the Add Fee Wizard to correspond with the details of your charges, those marked with a red asterisk are compulsory fields.

Working through the wizard, a few points to note:

Fee type

Different fee types can be recorded to enable fees to be categorised across the Network and individual AR firm (e.g. Initial or ongoing, etc.). Sense has configured this list centrally so if you think there are additional generic fee types needed please let us know.

It’s important that these details are entered correctly as they directly impact on the detailed regulatory reports required; these include a breakdown of income by fee type.

Payment type

Here you can record how your client will settle the fee. There is a list of the available payment types such as cheque, cash account, bank transfer, as well as including the option to record fees being paid by Product/Platform provider. Please note that Sense do not offer the option to collect fees by either credit or debit card.


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Again, it’s crucial that these details are entered correctly as detailed regulatory reports are

required; these include a breakdown of income by payment source - Client, Platform or

Provider.

Fee charging type

This area enables Sense to configure fee charging types to match the adviser charging structures

for AR firms. Fee charging types include:

• % of all Investment Contribution

• % of FUM/AUM (Funds/Assets

under Management)

• % of Regular Contribution

• Fixed Price

• Fixed Price-Range

Entering a fee amount manually

When you use ‘Fixed Price’ you are presented with a pre-defined list of fee amounts. We have based the pre-set amounts on the most common rounded fee amounts charged by Sense advisers over previous years. This can save time re-keying the same values, however you can still manually enter your own bespoke fee amount where applicable by not selecting any option and typing the amount in free text.

VAT

Enter the relevant data ensuring that you mark the Fee as VAT exempt. If you do not select the VAT exempt option VAT will automatically be added to the amount expected from the client. Select the appropriate VAT rate from the dropdown list where applicable.

The default VAT behaviour is for Fees to be non-VAT chargeable; if VAT is applicable you will need to uncheck the VED box.

In the Description box you can add details of your fee and as our example suggests, this is a good place to record the basis on which VAT has/has not been applied. Please see Making Sense of VAT & Adviser Charging for more details.

https://www.sense-extranet.co.uk/compliance/making-sense-guides/sales-process/vat-and-adviser-charging/



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Percentage fee calculations

When using the fee options:

• % of Investment Contribution/Lump Sum contribution/Transfer/Regular Contribution

• % of FUM/AUM (Funds/Assets under Management)

You won’t have the option to add a monetary amount as the fee will be calculated by applying

the % to either the total value of funds recorded on a linked plan or the amount of contribution.

Contribution amount

The plan against which the fee is to be calculated must have a contribution amount entered

with the contribution type corresponding to the fee charging type i.e. where the fee charging

type is % of lump sum contribution, the contribution type should be entered as ‘Lump Sum’.

Once the plan and the contributions are on iO, and the fee added, relate the plan to the fee

(see next section). The fee % and total amount will then be calculated and shown in the Fees

tab of the plan.

Transfers & lump sums

Where the contribution is a lump sum or transfer these fee options are available for selection:

• % of Transfer

• % Lump Sum

As for the other % fee types you won’t have the option to add a monetary amount as the fee will

be calculated by applying the % to transfer or lump sum contributions recorded on a linked

plan.


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Relating a fee to a plan

Where you have added the fee through the Client Actions menu, you can go back to relate

plans through the “Relate to Plan” action.

Plans which are already related to a fee do not appear for selection under the plan list in the

“Relate to Plan” section.

Plans related to the fee will be shown in the fee record ‘Related Plans’ tab, these can be

unlinked using the option at the side, if related in error or if a fee no longer applies.

Relating a plan to a fee

Through the plan actions you can relate a fee to a plan using the “Link to fee” action.

Multiple fees can also be related to a plan e.g. advice fee, implementation fee and ongoing fee.

Rules for linking fees to plan within a plan record

• Fees can be linked to plans irrespective of the plan status

• Fees to be linked to a plan must be in draft status

• Fees having any status other than draft cannot be linked to a plan

You can view fees related to a plan in the “Fees” tab within the plan record. Furthermore, the

fee reference ID is hyperlinked for each fee record so you can directly go to view the fee details.


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Fees linked to a plan can be removed by using the ‘Unlink’ option.

Linking fees to Wrap plans

To determine which plan to add a fee to for WRAPs, SSASs and SIPPs when they have sub-plans

you should be led by which policy the provider pays the fees on, either the master plan number

or the sub-plan number(s). With Standard Life for example you need to add and link a Cash

Account as well as the plans for individual investments such as ISA/OEIC as they pay all income

to the Cash Account plan.

Top ups

When a fee is linked to an additional contribution to a plan (added to iO as a top up to the main

plan) care should be taken to link the initial fee expectation to the top up plan rather than the

master plan.

With respect to ongoing fees for top ups, where the fee is a percentage of the funds under

management there should be no need to create an additional on-going fee - the percentage

amount of the ongoing fee duly increases to match the additional payments due from the

provider based on increased funds under management. Please note that this is dependent on

you adding a contribution amount to the top up and an up to date valuation on the main plan.

Top ups - policy numbers

For top up plans the policy number should be appended with ‘top-up’ e.g. WP123456-top-up,

when allocating a fee payment to a fee record iO can only match the two when there is one

plan with the relevant plan number, multiple plans with the same policy number will prevent

the payment from auto-matching.

Mortgage fees

Mortgage fees should be added to iO in the same way as Initial (One-off or Ad Hoc) fees with

the fee type ‘Mortgage fee’ selected and the fee linked to a mortgage plan.

If a procuration fee

is paid by the

lender/provider

then this should be

added through the Commissions & Proc Fees tab as shown.


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Adding an initial % fee for regular contribution investment business

Where your charging structure includes a fee for regular contribution business this can be

recorded as follows:

1. Add the regular contribution amount to plan e.g. £100 per month

2. Add fee type ‘Initial’, Fee charging type as % of Regular Contribution and % as per charging

model e.g. 35% of the first year’s contributions.

In ‘Initial Period’ enter 12 (i.e.

the number of months)

3. If the payment is by

instalments - tick the

Instalments box and enter the

number & frequency.1

4. Relate the fee to the plan – net

amount & fee expectation will

be calculated as

35% x (12x£100) = £420

5. Save and change fee status to ‘Due’

1 See guidance in Making Sense of Adviser Charging & Disclosure for Consumer Credit requirements where payment is by

instalments

hhttps://www.sense-extranet.co.uk/compliance/making-sense-guides/sales-process/making-sense-of-adviser-charging-disclosure/


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Ongoing fees

Where you are providing a client with on-going services and are making a charge for this you

should add a fee record to reflect these charges.

Adding an on-going fee

1. Go to the action ‘Add Fee’ and select Fee type ‘On-going fee’

2. Select Fee charging type as appropriate, generally % of funds or assets under management

3. In ‘Payment Type’ select the relevant method of payment

4. In ‘Recurring Fee’ section enter the appropriate timings and start date


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5. Save the fee

6. Relate the fee to plan(s) as appropriate (note that you can add a fee from plan actions, this

will automatically relate that plan to the fee)

Note: Provider paid fees must be linked to a plan so that:

✓ The % of funds under management can be calculated using the value of funds

✓ The monies received through the Provider statement area of iO can be reconciled

against the plan and related fee expectation

7. Add a plan valuation - either manually or via contract enquiry see ‘Valuations’ in the iO user

guide and Making Sense of Funds & Valuations for details of support for valuations.

Adding a manual valuation

If you haven’t set up electronic valuations or if a plan is unable to value, you can add a manual

valuation when you add the plan and

set yourself a task (related to the fee)

to check & update this at the next due

date

8. Change the fee status to ‘Due’

9. A Fee expectation calculated on the fund value, % fee, start date and recurrence will be

created and future fees automatically created when they become due.

https://www.sense-extranet.co.uk/intelligent-office/making-sense-intelligent-office/io-funds-valuations/


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If fees are being paid from the fund, you should also add a regular withdrawal against the plan to

match the amount and timings of the fee.

Working with a fee record

Once created, a fee record can be viewed and updated in the ‘Fees’ tab. Each fee will have a

unique reference or ‘IOF’ number.

You’ll also have a variety of options available via the Fee Actions list.

Fee notes

There is a notes area which allows you to record details relating for example to the progression of the fee.

Using the action “Add Fee Note” you can add, view, edit and delete notes within fee the record.

The following rules are applicable to view, edit and delete the notes:

• The user who has created the note can view, edit and delete the notes

• A user who has not created the notes cannot edit and delete the notes and can only view

the notes

• The last created and updated user, date and time details is displayed for the notes


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Fee status

Once a fee is ready to be paid and an invoice created, you need to change the status using the

action dropdown against the fee to ‘Due’ so that Sense will be able to match the payment

received to it.

iO is configured to automatically change the status of a fee to ‘Due’ when the status of a

related plan is changed to Submitted to Provider or In force.

Uploading documents

On the same basis as for Client and Plan records, you can also upload documents to a fee

record. This could be useful where for example you provide fee based tax planning advice but

no new plan is recommended - copies of your recommendation reports and correspondence

can be uploaded to the relevant fee thus maintaining an audit trail.

Changing fee details

If a fee is at the status of Draft you can make amendments as necessary. Where a plan is at the

status of Due you can change the status back to Draft and make amendments, moving the

status back to Due when complete.

Once cash has been matched to a fee and locked down after the Month End, the only way to

remove it is to change the status to cancelled. This will create an automatic credit note on the

system for the fee. If cash has

not been matched and closed off

via month end, the fee status can

be returned to Draft and the fee

then deleted through the change

status option.

Fee details such as invoice date can be edited when the fee status is Draft. Advice category and

end date for ongoing fees can be edited when a fee is in due status. If a fee needs to be

deleted, make sure that it is moved back to Draft and not cancelled, as cancellation auto-

creates a credit note which cannot be removed from the system, see below.

Cancelling Fees

If cash has been matched and locked down (i.e. month end has been run) you will have to

cancel the Fee.

This is done by changing the status from Due to Cancelled. By marking the fee as cancelled, the system will auto-generate a credit note for this fee. Where a Fee with VAT payable is cancelled, it will be necessary to print a Credit Note using the print button adjacent to the Fee on the Fee list. The Credit Note allows the VAT to be paid back to the client.


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Cancelled fees which have not had cash matched to them can be either changed to a status of Deleted. Any associated Credit Notes will also be deleted, which will be noted during the process.

If you are in any doubt, please refer to Sense before making any changes, once cancelled, a fee cannot be re-instated.

Where an ongoing fee is cancelled, due to an administration error for example, as opposed to being cancelled by the client, the ‘Fee replaced by new On-going fee’ box should be ticked.

Refunding clients

As all client fees are payable to the Network and are processed by us we will arrange for any client refunds.

In the case of any fee becoming re-payable to the client, in full or part, this will be processed by cancelling the fee and creating a credit note on iO. Sense will then arrange for the refund to be paid directly to the client either via cheque or BACS.

Fee models

Fee models are essentially a shortcut to creating all the fees and options for a particular service

proposition in one go, so for example there may be 3 fees to be set up for a client signing up to

a service proposition: Implementation fee of £XX, Initial X% of contribution fee and on-going

fee 0.X% of Funds under Management. A fee model will enable you to set these up at the same

time.

The fees selected will be added in draft for you to finalise in the Fees section.


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Sense have configured fee models for all firms in the Network, based on individual service propositions

Fee invoices (including payment details & VAT)

Quick print option

Once a fee is at the status of ‘Due’, you can create an invoice using the print button. This can

then be printed on your letter headed paper ready to be sent to your client.

The standard invoice document created using the ‘Print’ button against a Fee is generated as a

Word document.

VAT invoice (includes bank details)

If VAT is to be included, this version includes Sense’s VAT details and should therefore be the version used. Many clients now prefer to pay through bank transfer rather than cheque, this alternative version of an invoice also includes the Network’s bank details.

To create an invoice with VAT and bank details:

1. Select the fee and click on ‘Generate Fee Invoice’

2. Follow the on screen instructions to create an invoice


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3. Go to the Fee Invoice tab and select ‘Print/View’

4. In Print/View select the ‘Next’ button (if more than one template is available, select the

appropriate template).

5. Select related client from drop down options where appropriate

6. Click ‘Finish’


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7. Once the document has completed processing there are two different options to open it.

The document can be opened via the ‘open’ button, this requires the desktop agent to be

installed and any changes can automatically be saved to that document.

This is available from iO by navigating to Home > My Setup > Portals > Quote Portals, then

clicking “install Intelliflo Desktop Agent” or alternatively click HERE. If the desktop agent isn’t

installed then the document can be downloaded, edited and then uploaded manually if

necessary.

Joint fees

A fee can be related to two clients, the fee details will be accessible from either client record.

Once the draft fee has been created, an ‘Owner 2’ field shows within the fee details screen under the ‘Joint Fees’ area. All the relationships of the primary owner of the fee will appear in Owner 2 dropdown. A fee can have a maximum of 2 owners.

Points to note for joint fees:

• You will have the option of adding/editing Owner 2 of a fee in Draft status only when the fee is not linked to a plan or a task.

• For cases where a fee is linked to a joint plan, it will inherit the ownership of plans

• A joint fee will appear under the Fees tab of both the fee owners.

• A joint fee will also appear in the Fees tab of the Plan under both the plan owners.

• A fee can have a maximum of 2 owners.

Auto Enrolment - Employer / Corporate Consultancy

Where a fee relates to auto enrolment consultancy you should set up a Corporate client record for the employer and upload documents to this record in the usual manner. Generally the file will comprise:

• Corporate Fact Find

• Client Agreement & Fee Agreement

• Scope of Services

• Supporting Documents

https://www.intelligent-office.net/nio/static/agent/IntelliFlo.IO.DesktopAgent.Host.application


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• Copy Invoice

The fee record is then as follows

✓ Fee type – Employer Consultancy Fee

✓ VAT Exempt Declarations box unchecked – VAT will be applied

✓ Advice Category - N/A

Retainers

From the Adviser Workplace, click on the

relevant client, then click on the Action drop-

down and select Add Retainer.

Enter all the relevant information, all boxes

marked with an asterisk are mandatory fields.

Click Add. The Retainer information will be

displayed at the bottom of the screen.


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From this screen (as with Fees) it is possible to change the status of the Retainer, check

commission in Expected Payments, Upload Documents and view Payment History.

NOTE: A retainer end

date can be added in all

statuses.

A retainer cannot be

cancelled once a

payment has been made

against it.


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FAQs

Q: Are there any reports that detail who has paid a fee? i.e. Client, Provider or Platform?

A: Yes, the following reports will provide this information:

• Policy and Commission Chaser Detail

• Client Profit and Loss

Q: How do I determine which plan to add a fee model to for WRAPs, SSASs and SIPPs when they have sub-plans?

A: You should be led by which policy the Provider pays the fees on, either the master plan number or the sub-plan number.

Q: How should ongoing (with an annual percentage) fees that are paid monthly be set up on the system?

A: You should enter the annual percentage, say, 1% and select Monthly as the Frequency under the Recurring Fee section of the Add Fee wizard. The 1% will then be divided by 12 by iO. So if 1% equates to £120, then £10 will be paid each month.

Q: When a plan is placed out of force, will the fee stop automatically from that date?

A: when a plan status is changed to out of force, you will be given the option to also update any linked fees to Cancelled.

Q: For plans where we are still due a commission would we just add that on the commission tab?

A: Yes that is correct; plans still expecting commission should have the expectation recorded in the “Commission & Proc Fees” tab.

Q: Will iO work out the expected figure for % ongoing fees?

A: Yes but if you want iO to calculate the expectation of ongoing fees accurately then you will need to add an up to date valuation to the plan.

Q: Has it been clarified what fees are VAT-able and non VAT-able?

A: Please refer to our Making Sense of VAT & Adviser Charging guide.

Q: What is a Service Case?

A: A Service Case is a package of Service given to a client in a similar way as a binder is a package of documents, this is used to collate all the work done e.g. fees, retainers, plans, tasks & documents as part of a single piece of service/advice.



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Q: In which circumstances would you use service cases?

A: a service case is a way of ‘packaging’ together an instance of advice in iO. As part of your ongoing service proposition you may offer to hold regular reviews with your clients, e.g. every 6 or 12 months. Creating a Service Case on iO for each review session will enable you to capture all of the activity related to each review.

For example, you can record which plans were reviewed as part that particular advice, whether any fees were charged for the review meeting, whether any particular documents were reviewed/generated, (e.g. Fact find, ATRQ, Quotes, Suitability Report. Portfolio Report etc) and what tasks specifically you performed as part of that review. Whilst you can currently record all of the above on iO, creating a service case will provide you a clear, succinct view of what was covered/undertaken as part of your client review.

Q: Are plan or fee splits applied to Client and Provider fees?

A: Depending on whether the fee is ‘Paid by Provider’ or ‘Paid by Client’ will affect which split is applied. Please see the following scenarios:

Scenario A:

• Plan Related Fee - Paid by Provider - Fee is added at same time as plan so auto linked, or Fee

is added separately but then related to appropriate plan. The fee will be coming out of the

product so paid by the provider

• Split Template set against plan will be used as fee is payable by Provider and fee is linked to

plan.

Scenario B:

• Plan Related Fee - Paid by Client - Fee is added at same time as plan so auto linked, or Fee is

added separately but then related to appropriate plan. The fee is being paid by the client

because they do not want it coming out of the product (e.g. so as not to reduce the ISA

allowance)

• As this is a fee payable by the Client the split template on the Fee will be used, even though

it is related to a plan.

Scenario C:

• Non-Plan Related Fee - Paid by Client - Fee is added separately and not related to plan as not

relevant.

• As this is a fee payable by the Client the split template on the Fee will be used (Therefore the

Fee Models should not be used as the split template cannot be selected)

Q: Is it possible to add a fee where you charge a percentage of the first year’s contributions for regular contribution contracts?

A: Assuming you need to treat this as an ‘Initial Fee’ you should charge a % of investment contribution fee (e.g. 3%) and set the ‘Initial Period’ figure within the fee to 12. This will create an ‘upfront’ fee expectation of 3% of 12 months contributions. If you wished to do this based on two years’ worth of contributions, you would set the initial period to 24, and so on.

If you wish to facilitate this ‘initial’ fee being taken quarterly over the first 12 months, you would

enter the frequency of 4, and the frequency period to ‘quarterly’.


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Care should be taken when charging % fees on regular contributions where there are ALSO lump

sum contributions being made. In this instance (if the % charge being levied is the same for the

lump sum and regular contributions i.e. 3%) you would only need to add ONE fee to cover both

the lump sum and regular payments. E.g. an initial fee which is set to 3% of investment

contributions with an initial period of 12. The initial period is ONLY concerned with the regular

contributions, so if the case were a £10,000 lump sum, and £100 per month contributions, the

fees calculated would be £300 on the lump sum element and £36 on the regular contributions:

(£100 x 12) x3% = £36. Therefore giving a total upfront fee of £336.

If however you wish to charge a DIFFERENT percentage on the regular contributions compared

to the lump sums, (e.g. 3% on lump sums, 5% on regulars) you will need to enter the fee for the

regular contributions as a monetary fee (e.g. fixed price range), not a % based fee. The reason

for this is if two separate percentage based fees are added to the plan, both fee percentages will

be levied against the lump sum contribution, leading to an over-inflated fee expectation.

Q: Our service propositions ask that part of the overall fee for each service offering is paid up front as a Commitment Fee, with the balance due upon completion of the business. How is this set up on iO?

A: This can be achieved by adding 2 fixed price range fees. Each fee can have a different due date and any client paid fees are matched to the corresponding fees.

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