What do I do with investment management or administration fees?

This article explains how to record investment management or administration fees on ExpensePlus.

Your organisation's investment portfolio is shown in the Investments module.

How to record fees

Your investment management company or platform may charge you an aggregate total for combined investment funds and fees.

The fees need to be accounted for as expenditure, while any other amount needs to be recorded as an investment transaction (these do not affect income or expenditure).

For example, £505 may be paid out from your current account, with £500 being the investment and £5 being a financial or administrative fee. In this situation, £5 needs to be separately accounted for and recorded as an expense.

There are two options for how to account for this:

Option 1 - split the transaction

From your bank statement, you can split the unmatched single transaction of £505 into two separate transactions of £500 and £5. Then:

• reconcile the £500 as 'Money Invested'
• reconcile the £5 as a 'Direct Debit' purchase to the category where you would code bank and other financial fees.

Option 2 (recommended) - set up an additional bank account in ExpensePlus

We recommend you set up an additional bank account in ExpensePlus called Investment Control Account (or something similar). This will represent the investment company's bank account, and is where the money will be split into investment and fees.

In effect, it is a holding (or suspense) account. This may also be needed where a third party or platform is actively managing your investments.

Money is removed from one investment account, but instead of being returned to your current account, it gets moved/split into other investments (within the company or platform), so never returns to your own bank account. 

In the example outlined above, the outgoing amount of £505 from your current account is reconciled as a bank to bank transfer to the investment control bank account. To enable this to happen, you would need to manually enter the following statement transactions to this 'dummy' Investment Control Account:

• The top £505.00 transaction is the transfer between bank accounts;
• The middle £500.00 transaction is Money Invested;
• The lower £5.00 transaction is a Direct Debit expense allocated to the category where you would code bank and other financial fees.

This process can be completed in reverse for the scenario (mentioned above) where money is returned from one investment and then reinvested in a different product, with fees attached.

To help you better understand the Investments module, please visit the module overview page here.