Fees & Charges by Finacial Institutions

debraose27

Should Institutions who invest our savings only take charges from the profits made,not from the amount invested, this would ensure less risky investments if the investment managers were only paid a percentage on profit made

Lokolo

Eh? I don't get this?

Do all people want lower risk investments?

purch

I think it would have the opposite effect.

If they could only have a part of the profit, then they would take more risk, to make the profit larger and therefore their cut larger.

We used to call it the Acapulco Spread

Reaper

I'm with Purch on this one. The temptation would be to keep taking high risks because to the managers it a no-lose gamble. If it pays off they get a big wodge of cash and if it fails... well it's somebody else's money that gets lost not theirs.

Also they already exist in the form of performance fees but they are always charged on top of the regular fees not instead of, which is a bit cheeky to say the least.

Until the day a fund manager's performance fees work both ways (ie they put money into the fund from their own pocket for below average performace as well as taking it out for above average performace) then I refuse to have anything to do with them. And on that day pigs will fly and Satan will skate to work.

dunstonh

Should Institutions who invest our savings only take charges from the profits made,not from the amount invested, this would ensure less risky investments if the investment managers were only paid a percentage on profit made

Are you talking savings or investments? The charges on savings are hidden but are typically higher than most investments.

If you only pay on success, the rate would have to be higher and there are typically more growth periods than there are declines. So, the consumer would be worse off than having a flat charge.

There is no perfect solution.