What advisors actually pay through a distributor
4 June 2026 · 4 min read
When an advisor accesses liquid alts through a distribution platform, the cost they see is rarely the cost they pay. There is an explicit platform or access fee, and then there are distribution costs embedded inside the fund itself that never appear on a statement.
A worked example
Take a firm with 160 million dollars allocated to liquid alts and a 0.45 percent annual access fee on that allocation. In year one alone, that is 720,000 dollars, charged regardless of how the funds perform.
Now let it compound. Measured against simply buying the same exposure direct, the drag adds up to roughly 4.51 million dollars of client wealth over five years. That is about 2.8 percent of the entire allocation, quietly transferred to the middleman. For comparison, the cost of neutral data infrastructure over the same period is a small fraction of one percent of the allocation.
Who pays
The client pays first, in compounding returns they never see. The advisor pays second, because fees that erode the client’s balance also erode the AUM the advisor earns on. A basis point paid to a distributor is a basis point you and your client both lose.
None of this requires a distributor to be acting in bad faith. It is simply what happens when the only way to reach a fund is through a channel that earns on the transaction. The fix is structural: separate the data from the distribution, so the advisor can see the whole picture and choose direct where it makes sense.
The platform’s incentive should be to help advisors make the best decision for their clients, not to earn a fee when they invest.