Held-Away Accounts: The Business Case and How Firms Get Paid

A held-away account is one a client holds somewhere the firm does not custody: a 401(k), 403(b), 457 or Thrift Savings Plan account held with the plan's recordkeeper, or a health savings account at an HSA provider. Some firms advise on these accounts for a fee, through a third-party platform or by giving the client instructions to carry out.

The business case has three parts: what the advice adds for the client, how the firm gets paid, and what it costs to do it within the rules. Rules here come from SEC rules, forms, interpretations and staff statements and from an Oregon regulator's alert. Vendor details come from vendor pages. All were checked on November 1, 2026. For keeping held-away records current day to day, see held-away account monitoring. For the controls compliance will ask about, see supervising held-away accounts.

Why firms advise on assets they don't hold

For a client who contributes every paycheck, the workplace plan keeps growing whether or not the firm advises on it. An allocation set across the accounts the firm manages, with the plan left out, is an allocation for part of the household. Advising on the plan lets the firm place investments across every account the client has.

Charging a fee comes with obligations. The SEC's 2019 interpretation of the adviser standard of conduct says that when an adviser has an ongoing relationship with a client and is paid a periodic asset-based fee, its duty to provide advice and monitoring "will be relatively extensive." An asset-based fee on a 401(k) means ongoing monitoring of that 401(k). Price the service with that work in it.

Client retention

A job change or a retirement forces a decision about the plan balance: leave it, move it, or start drawing on it. A firm already advising on the account is in that conversation from the start, instead of hearing about it after the client has decided. The rollover question itself is separate and has its own SEC staff guidance. For keeping that decision apart from the account data, see the monitoring guide.

How firms bill for held-away advice

AdvicePay, a billing vendor, describes three ways to bill for held-away advice:

• A one-time invoice each quarter based on the account size, "similar to traditional AUM billing."
• A fixed-fee subscription, set as a flat annual fee or a percentage of account value and paid in monthly or quarterly installments.
• A line for held-away advice inside an ongoing financial planning fee.

AdvicePay says clients can pay by credit card or ACH from an outside bank account, and frames invoicing for the case where "the plan cannot be billed directly, and there are no other investment accounts to cover your fees." The other two routes are billing the plan, where the plan permits it, and taking the fee from another account the firm already manages.

Fee deduction has a custody consequence. The SEC custody rule, Rule 206(4)-2, treats authority to withdraw advisory fees from client accounts as custody, and its paragraph (b)(3) excuses the annual surprise examination when that authority is the only reason the firm has custody. Before taking a held-away fee out of a managed account, get the client's written authorization and confirm with the custodian and compliance that the account agreement allows it.

Platforms connect to billing systems too. Pontera, a held-away platform, says its integrations "streamline your reporting, billing, rebalancing, and more."

What the brochure has to say

Item 5 of Form ADV Part 2A asks the firm to:

• describe how it is compensated, provide its fee schedule and disclose whether fees are negotiable (5.A)
• say whether it deducts fees from client assets or bills clients, and how often (5.B)
• describe other fees or expenses clients may pay in connection with its advisory services (5.C)
• disclose fees paid in advance and explain how a refund works if the contract ends early (5.D)

For held-away advice, that means the fee on held-away accounts, how it is collected, and any platform cost passed on to the client. Item 4.E asks for the client assets the firm manages on a discretionary and a non-discretionary basis. Its note allows "client assets you manage" to be computed differently from regulatory assets under management, as long as the firm keeps documentation describing the method. Decide where held-away balances go in each number and write the decision down. The regulatory AUM test is on the supervision page.

What a state regulator has said about the fee

Oregon's Division of Financial Regulation issued an investment adviser alert on March 17, 2025 about unlicensed third-party platforms that state-licensed advisers use to "actively manage, trade, and bill on assets in held away accounts." It said at least one platform charges the adviser a fee "believed to be between 25 to 30 basis points" based on held-away assets, and that some advisers charge clients anything from the platform fee passed through to their full advisory fee.

The alert says Oregon prohibits unreasonable advisory fees. The Division "questions whether it is reasonable" to charge an AUM fee for managing a held-away account "where the adviser has no authority or control over the securities that are available in the plan and where the account is automatically rebalanced." It asks advisers to consider how an annual AUM fee erodes returns on held-away assets.

The alert is addressed to Oregon state-licensed advisers. Any firm can apply the same test to its own pricing: list the work done on the account (choosing among the plan's funds, rebalancing, coordinating with taxable accounts, reviewing contributions), and set the fee for that work. Keep the list in the file.

Custody is part of the cost

How the firm reaches the account decides whether it has custody. Under Rule 206(4)-2, custody includes any arrangement under which the firm is authorized or permitted to withdraw client funds or securities. SEC staff said in custody FAQ II.6 (May 20, 2010) that an adviser with a client's ID and password to a pension account has custody "if password access provides the adviser with the ability to withdraw funds or securities or transfer them to an account not in the client's name at a qualified custodian." A February 7, 2017 SEC risk alert reported advisers that had not identified custody arising from access to online accounts using clients' personal usernames and passwords.

Unless an exception such as the fee-deduction one applies, a firm with custody must, among other requirements, have those client assets verified in a surprise examination by an independent public accountant at least once each calendar year.

Platforms describe controls aimed at this. Pontera says advisers cannot use its platform to "withdraw or transfer funds, change beneficiaries or contributions, or initiate distributions," and cannot view client logins and passwords. For any platform, Oregon's alert reminds advisers that "marketing statements are not determinative of whether custody in fact exists" and tells them to review the agreements themselves. The SEC's fiscal 2026 examination priorities list "advisers utilizing third-parties to access clients' accounts, where controls may be insufficient to protect client assets and data." Budget compliance time for that review before the first account goes live.

Tracking the revenue and the assets

Keep held-away revenue on its own line instead of inside the managed-account fee total. For each held-away account, record:

• plan type, recordkeeper, and how the firm reaches it (a platform, instructions the client carries out, or the firm's own read-only login)
• discretionary or non-discretionary, as agreed in writing
• fee method and rate, and who pays any platform cost
• last balance and its as-of date
• whether it counts in regulatory AUM and in brochure assets, and why

Each quarter, report held-away balances by fee method, fees billed and collected, platform cost, and the net. An invoice can go unpaid in a way a deducted fee cannot, so track collections separately. Set the net against advisor time spent on held-away accounts to see whether the price covers the work.

Where software and AI help

Most of this is reconciliation, and it is a good first job for automation. AI and ordinary scripts can:

• pull balances and as-of dates from statements and platform exports into one table
• flag an account whose balance is stale before a fee is calculated from it
• check that each account's fee code, regulatory AUM flag and brochure category agree
• draft the quarterly held-away summary for the advisor to edit

A person approves every invoice and every change to how an account is classified.