Hi there. As I dig further into Pralana I've stumbled across an issue around capital gains tax and account management fees.
I noticed that my taxable account is generating capital gains to pay the account management fees noted under Build | Management | Account Fees.
Originally I had assumed these account fees were proxy for a fund's expense ratio but now I'm thinking they're actually a deduction paid out of the account to an advisor to cover fees (like AUM 1% management?).
Is that correct? The user manual isn't very specific about these fees, nor is the interactive help in that section. Thanks for any ideas in helping me understand how these fees work and whether I'm double-counting them for ETFs in a self-managed account.
Enter your account annual management or other fees as a percentage of the account balance. The fee will be applied to the year's starting account balance, unless you have selected the mid-year growth calculation option in which the fee will be based on the estimated mid-year account balance.
Account Management Fees
This page contains a simple list of your accounts where you can specify the annual management fee percentage for each of your accounts.
Good question. Like you I assumed these fees were a "cut" off of the Estimated Returns and not a fee we paid.
When we had an advisor, selling something to pay themselves is effectively what they would do. They would take the fees out of the fixed income and then later rebalance, which amounted to selling stocks to refill the fixed income.
If you are talking about Mutual Fund management, they are always getting new money in and have withdrawals going out, so they can take their fee from the cash reserves that are needed to make that work.
Any fees that you can identify as not causing realization of LTCGs should probably just be entered as a lower return rather than calling it a fee.
Any fees that you can identify as not causing realization of LTCGs should probably just be entered as a lower return rather than calling it a fee.
Makes sense. That won't work for historical analyses though, since those are based on index returns I believe.
@smatthews51/@cstone, can you please confirm what "account management fees" means? The manual/pop ups may need slight clarification too.
In PRC Excel Gold/Bronze, the management fee reduces calculated growth which effectively lowers the rate of return.
Pralana Online used to mirror this, but the 2025/07/10 release implemented a change to treat the account management fee is a cash fee paid to the brokerage firm at the start of each year.
If you click on the balance in the Balance Sheet, the Metric MRI will show the account debit for the fee, if any.
In the taxable account, click on an amount in Balance Sheet column "Unrealized LTCG in Taxable Inv. Acct" and then click the "Click for Asset Details" button. The Metric MRI which will show the assets sold to pay the fee, and any realized LTCG, based on your LTCG Withdrawal Strategy.
Bottom line, as @ricke said:
- if the broker is deducting fees from your account by selling assets, use the Acct Mgt Fee % to handle it.
- for fees on asset classes like mutual funds, etc., lower the rate of return.
I will make a note to update the user manual about this.
From AI overview: Published ETF returns are already reduced by the expense ratio. The fees are deducted automatically from the fund's assets, so the performance figures you see advertised reflect the fund's returns after those costs have been subtracted.
Same for mutual funds.
Bottom line, as @ricke said:
- if the broker is deducting fees from your account by selling assets, use the Acct Mgt Fee % to handle it.
- for fees on asset classes like mutual funds, etc., lower the rate of return.
I will make a note to update the user manual about this.
Thanks for clarifying. Will this affect historical analysis, given historical returns are based on indexes, not mutual funds? Historical analysis will now overstate returns by the fees?
