What is asset based pricing in the context of a Registered Investment Advisor (“RIA”)?

Definition: In RIA context, this typically refers to when a custodian prices the custodial services they provide for an RIA based on the RIA’s level of client assets held at the custodian. The fee is typically expressed as basis points (bps) on the assets.

The fee is sometimes alternatively referred to as a “custody fee.”

When used in an RIA context: “The custodian charges the RIA 5bps asset based pricing for the provided custodial services.”

See also: Episode 23, Custody Fee, Custodian