Just started managing strategies for clients and honestly not sure what to charge for performance fees.
Seen everything from 15% to 30% but wondering what’s actually reasonable when you’re just getting started. Don’t want to price myself out but also need to make it worth the effort.
I’d go with 15% to start. Better to have more clients with lower fees than no clients at all.
Starting at 20% seems fair while you build your reputation. Clients often hesitate to pay high fees without a proven history. Once you establish consistent results over time, you can consider raising your fees. Concentrate on producing good returns and the fees will come.
Most new managers charge 15-20% for performance fees but should also consider adding 1-2% management fees. This helps cover ongoing costs. Your track record will affect what you can charge. If you lack proven results, you might need to lower fees, even down to 10% to attract clients. Additionally, set a minimum account size. Small accounts can lead to high compliance and reporting costs, regardless of your fee percentage.
Been there. Started managing accounts at 10% fees - huge mistake. Only attracted cheapskate clients expecting miracles.
Tell new managers: start at 20% but drop it to 15% for the first 6 months. Prove yourself, then bump it up.
Be upfront about your experience. I’ve watched managers with zero track record try charging 25% and get crickets.
Think about drawdown policy too. Waiving fees during losing streaks justifies higher rates and shows you believe in your strategy.