Withdrawal Fees - Why and how much?

 What is the deal with the rule in partnership agreements about withdrawing partners receiving 97% of the value of their holdings? Why not 100%? Why not 100% minus brokers fees?
Camilo Ortiz
Generally, there are two reasons why a club may want to charge a withdrawal fee.    The first, and probably the most obvious reason, is that a club will want the withdrawing member to pay any charges related to the transfer or liquidation of assets to pay off that withdrawal.   The other reason often cited is that a club may want to discourage member's from using the club as a bank account.  They may want to discourage frequent and repetitive withdrawals that may have a negative impact on the long term aspect of their portfolio management.    In this regard, some clubs use a sliding scale where the withdrawal fee reduces the longer that the person has been a member of the club.
Your club should decide what is appropriate and document it in your partnership agreement.
As an example, my club charges a 3% fee on the cash portion of the withdrawal payout plus the actual charges related to stock transferred, if any.
Thanks for using bivio!
Jerry Dressel
St.Louis, Missouri