Credit Suisse Aims to Offer Performance-Based Fees
Credit Suisse is preparing to introduce a fee plan for private banking customers that is scaled to the performance of their investments.
Under the variable structure, a client's base fee would be 50 basis points of the amount under management - about half the flat fee normally charged to private banking customers. As money managers hit performance benchmarks, the amount over the base charge would rise.
"Performance-based fee is a dirty word to money managers," said Kenneth J. Tarr, president of Credit Suisse Asset Management Inc., an arm of the Swiss company's U.S. private banking operation.
Credit Suisse, which uses performance-based fees in Switzerland, has applied to American regulators to offer a similar schedule next year in the United States.
Performance-based fees put pressure on managers, which is just what Mr. Tarr is hoping for. "A money manager should suffer or benefit," he said.