The following is an excerpt from an article entitled “Performance Enhancers” that appeared in the “Best Practices” section of the December 2005 edition of Worth magazine.
When wealth manager Tom Zachystal launched his firm, Individual Asset Management in Pasadena, Calif., three years ago, one of his clients, an international business executive, asked for a provision he had heard advisors offer in Europe but which few in the U.S. brought up: He wanted his fees to be calculated on the basis of the performance of his investments rather than via a traditional assets-under-management schedule or a flat retainer fee.
After a short deliberation, Zachystal decided it was a good idea. “We sat down, realized his concerns made sense, and we worked to come up with a system that would be fair to us and would ensure that no clients would ever doubt their interests weren’t in line with ours”.
“Performance Enhancers”, Worth magazine, p.106, December 2005, Gayle B. Ronan