Wealth management · Financial services and fintech
Commission and fee income reconciled to the client assets that earn it
A wealth practice is paid in percentages of assets it does not hold: trail commission from product providers, fees from advisory or portfolio clients, and sometimes a performance fee. We reconcile each payout to the assets and rates behind it. Missing commission is claimed, fees are invoiced correctly, and the practice learns which relationships and products are profitable.
In one paragraph
Wealth management firms — mutual fund and multi-product distributors, registered investment advisers, portfolio and alternative-fund managers, and multi-family offices — usually earn ₹5–200 crore a year. Their revenue is a small percentage of a much larger asset base they do not own. For founders and finance heads, checking that the percentage was applied correctly depends on data held by others.
Founder or chief executive, often with the head of operations
The economics
How the money moves in this trade
Distribution income comes as trail commission from asset management companies and other product providers, paid monthly on statements covering thousands of folios. Mutual fund commission has been paid almost entirely as trail since 2018, so recoveries now arise mainly on other products, such as insurance policies cancelled early. Advisory and portfolio-management income comes as fees on client assets. Portfolio managers may also earn a performance fee above a hurdle or high-water mark. Each stream depends on a rate, an asset value and a period, and an error in any one of them is invisible in a bank credit.
Costs are mostly relationship managers, research and technology, with sub-broker or partner payouts on distributed business. Where a group offers both distribution and investment advice, SEBI's rules require the two to be kept apart at client level. The books need to show that separation too. Many firms hold no client money at all. Portfolio managers that do must keep it in a separate account, apart from their own funds.
The problem
Where the numbers usually break down
Commission statements accepted without a check
Monthly brokerage statements are booked as received, with no comparison against folio-level assets and agreed rates.
Clawbacks netted invisibly
Recoveries for early cancellations and other reversals are deducted from the next payout, so gross commission and clawback are never seen apart.
Fee computations held in unreviewed workbooks
Management fees, hurdles and high-water marks are computed in spreadsheets without review, and errors reach the client as an invoice.
Partner payouts not tied to income received
Sub-broker and partner commissions are paid on expected income rather than on what the provider actually paid.
Profitability by relationship unknown
Revenue is reported by product, but the cost of serving each client relationship or relationship manager is never measured.
What we do
The work, and the result each part produces
Commission reconciliation
Payouts from each provider compared with folio-level assets and agreed rates, with shortfalls listed for claim.
Every rupee of trail due is identified.
Clawback and adjustment tracking
Clawbacks, reversals and arrears recorded separately against the business that triggered them.
Gross income and recoveries are visible apart.
Fee computation review
Management and performance fees recomputed from custodian or back-office data before invoicing, with hurdle and high-water-mark workings kept.
Client invoices are checked before they are sent.
Partner payout control
Sub-broker and partner payouts computed from income actually received, with withholding and GST applied correctly.
Partners are paid on cash received, not on expectation.
Practice and relationship profitability
Revenue and cost by relationship manager, client segment and product line.
Growth decisions rest on which relationships actually earn.
Segregation in the books
Distribution and advisory income and cost, and client money where any is held, kept in separate ledgers and accounts.
The separation the business has to maintain is visible in its records.
Where we start
The first steps of an engagement
Provider statements and folio data
We ask for commission statements from each product provider, folio-level asset data from your back-office system, agreed rate schedules, partner payout sheets and fee workings.
Commission against folio-level assets
Each provider's payout is compared with folio-level assets and agreed rates. Shortfalls, reversals and clawbacks are listed separately.
Partner payouts on cash received
Partner and sub-broker payouts move to a basis of commission actually received, with withholding and GST applied by payee type.
Commission received against expected
The first report shows commission received against commission expected by provider, with the shortfall list ready for claim.
How it is measured
The reports the work is judged on
Each is recorded as a baseline before the work starts, so later reports have an honest comparison.
- Commission received against commission expected, by provider
- Clawbacks and reversals, by product and period
- Fees invoiced against fees recomputed
- Partner payouts against income received
- Revenue and cost by relationship manager
- Client money balances reconciled, where held
Who it suits
Written for, and not the right fit for
- You want investment advice, product research or portfolio recommendations; we are not an investment adviser and do not give advice.
- You need a SEBI or AMFI registration, a compliance certificate or the firm's audit; those stay with your firm or are signed by an independently engaged licensed professional.
- Mutual fund and multi-product distributors with large folio counts and partner networks.
- Investment advisers, portfolio managers and fund managers computing fees on client assets.
- Multi-family offices that need their own operating cost and fee income reported cleanly.
Services
Services this work draws on
Outsourced accounting
Your books kept current and reconciled, closed to a published calendar.
Explore service ↗Costing and profitability
What each product, line and customer really contributes.
Explore service ↗Internal controls and risk
Controls sized to your business, documented and actually tested.
Explore service ↗GST, TDS and tax compliance
GST, TDS and income-tax prepared from reconciled data, not a working file.
Explore service ↗Every other service, also available in this trade
Common questions
Questions owners in this trade ask
Can trail commission be short-paid?
It can be paid on the wrong folios, at an old rate or net of a reversal you didn't expect, and none of that is visible from the bank credit alone. A folio-level check against your own records is the only way to know.
Do you advise our clients on investments?
No. We're not an investment adviser and we don't give investment advice to you or your clients. Our work is the firm's own accounts, fee computations, reconciliations and controls.
How are performance fees checked before invoicing?
We recompute them from your back-office or custodian data and the terms of the client agreement before you invoice, and keep the workings. Responsibility for the fee and its compliance with the regulations stays with your firm.
5th Quadrant is not a registered investment adviser, distributor, portfolio manager or other SEBI-regulated entity, and does not give investment advice. Registrations, regulatory filings and compliance obligations with SEBI and AMFI remain the firm's own responsibility; 5th Quadrant prepares accounting data, reconciliations and supporting records only. Statutory audits and any prescribed certification are signed by an independently engaged licensed professional. Full detail is on our Professional Scope page.
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