How to Negotiate Investment Manager Fees

by Charlotte Johnson
Investment managers often charge fees of 1 to 2 percent of a client's portfolio.

Investment managers often charge fees of 1 to 2 percent of a client's portfolio.

An investment manager is responsible for investing clients' money in various securities and instruments. The job also involves monitoring the performance of clients' investments, buying and selling securities and generally keeping the investment strategy in line with the client's goals. If you hire an investment manager, expect to pay a certain percentage of your investments in fees. In many circumstances, these fees are negotiable if you know how to negotiate properly.

1. Shop around. Talk to multiple investment managers about how much you want to invest and what you want to gain, and see what they offer in terms of fees. Keep records of their offers. After talking to a number of managers, you can zero in on a few that you like. You could opt to go with a manager who charges a lesser fee. If you feel good about someone who charges a higher fee, simply inform him of the better offer you received and see if he can match it, or at least lower his fees a little.

2. Ask a potential manager to consider a fee-only option in which she would work for a set hourly rate. This can help you if your portfolio is reasonably large, which would mean high fees in terms of commission.

3. Discuss the possibility of bringing new clients for your investment manager through referrals. Just as larger corporations with bigger portfolios have more negotiating power, you may be able to get leverage by bringing more business to your investment manager.

4. Try name-dropping. If you have affiliations with businesses or individuals with large portfolios, your connections may be able to give you some wiggle room in negotiating fees. This is similar to making referrals for your manager, only you would possibly be directing major investors his way.

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