"Fees are the agreement between the client and the firm." The old model was a simple percentage of assets with platform fees, execution fees and other bits, which looks tone-deaf to a generation of clients who want clarity, outcomes and access to scarce opportunities. At the same time, managers face tougher economics: margin pressure on commoditised services, the rising cost of technology and an expanding demand for alternatives. The practical question is not whether fees should change, but how to redesign them so they are simple, defensible and aligned with value.
Start with what clients actually want
What clients want today is twofold: they want predictability and transparency. What they want to budget for is clearly tracked and transparent fees. What they do not want is any hidden structure constraining them from knowing the full cost. Still, some markets are still fee sensitive. Clients always want to get more for less. Any successful fee approach must recognize this and provide predictability when needed and upside participation when there is genuine skill.
The real trade-offs
Predictability vs. upside alignment
Most retail and mass-affluent clients prize predictability. A flat retainer or a simple AUM band lets them budget and reduces surprise complaints. By contrast, performance-linked fees are the clearest way for a manager to capture value when skill, or privileged deal access, generates above-market returns. The tension is therefore behavioural (client comfort with predictable bills) versus economic (the manager's desire to capture a share of realized alpha).
Simplicity vs. accuracy
Simplicity reduces client friction and negotiation. Saying "we charge 0.75%" is easy to explain and compare. But the single-line approach masks important economic realities: underlying fund TERs, custody costs, transaction taxes and bespoke advisory work all have different cost drivers and should not be implicitly bundled if you want honest pricing. Accuracy avoids later resentment but raises operational complexity and the risk of client confusion.
Scale vs. specialist economics
Digital advice and model portfolios scale because the marginal cost of serving an additional client is low. That justifies lower base fees for mass segments. Specialist activities, i.e., sourcing direct deals, negotiating General Partner (GP) co-invests and bespoke estate engineering, are human-capital intensive and often carry legal/execution risk. Those services cannot be priced at the same rate as scaled advice without destroying margins.
Rules that reduce client friction
1. Unbundle on statements: Show "advice fee," "product fee," and "execution/custody fee." Itemisation builds trust and reduces complaints about hidden charges.
2. Use plain language: Replace jargon with one-line descriptions clients can read. E.g., "Private credit: management fee on deployed capital. We charge only for the capital invested."
3. Govern performance fees tightly: Always use hurdles, high-water marks and reasonable look-back periods. Clients want upside alignment but not double-charging.
4. Migrate tactically: Offer legacy clients a grandfathered option and an upgrade path that quantifies new benefits (private access, consolidated reporting and estate planning). Clients rarely change providers for price alone; they change for demonstrable value.
“ What clients want today is twofold: they want predictability and transparency. What they want to budget for is clearly tracked and transparent fees. What they do not want is any hidden structure constraining them from knowing the full cost.”
The Cultural Dimension
Changing fees is as much a people problem as a pricing problem. Relationship managers must be trained to sell value rather than defend price. Conversations should be rehearsed: frame the change as a simplification that buys better access and alignment, not as a price increase. Gradual change will always be better than a shock treatment.
Onza's Thoughts to Readers of this Article
The core principles of our wealth management approach are focusing on our transparent fee structure and the importance of maintaining discipline with your long-term investment mandate and ensuring you feel confident and informed every step of the way on your financial journey with us.
Our Commitment to Transparency and Value
We believe in a fee-based advisory business model that aligns our interests directly with yours, offering clarity and transparency in all aspects of our service.
In return for these fees, you receive a comprehensive suite of services, including ongoing portfolio management, personalised financial planning and proactive communication. We believe this structure offers a superior balance of service and cost, contributing directly to your long-term financial stability and you as a client stay the course and commit to also ensuring we are fairly and reasonably compensated for the services and value add we bring to the table at all points of time.
In our experience, we have seen many mandates of being in the "penny wise, pound foolish" approach and quite clearly the mandate holder does not even know or have a way to comprehend by how much they have been worse off with such an opportunistic approach mode. In our humble yet practical experience, it's much better to commit to a fair fee-based structure upfront between both parties and stay the course than to be in a cut-corners approach/mindset, which only grossly misaligns at the end of it all. History shows that those who stay focused and hold true to their mandate are more likely to achieve their financial aspirations with the right, honest and committed partner by their side, which also provides peace of mind towards the wealth being managed by the trusted partner.
Final thought
Fees are a signal. They tell clients what you believe is valuable and how the upside is shared. The best architecture is simple to explain, honest about the distinct economics of complex products and flexible enough to scale. Done well, fees stop being a reason clients leave and start being a reason they stay.
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