formal programs with an open or semi-open architecture shelf—within the limits of the registrant and as structured by the program sponsor—and a negotiated fee structure. Fees are calculated on average assets held within the program and are charged directly to the client. In the case mutual funds, only F-series or HNW F-series funds are permitted. A comprehensive measure of the cost-to-customer, which is also known as the cost-of-ownership, or CoO, has to also reflect any internal product manufacturing fees associated with the ownership of specific products within fee-based account. An example is management expense ratios charged directly to an F-series mutual fund, an exchange-traded fund or a structured product.
Fee-based programs come in non-discretionary and discretionary varieties.