Funds typically still charge clients a management fee of 2% of assets and 20% of any profits above a given hurdle.

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Besides a 20% cut of profits, most managers also charge a 1% management fee whether the fund makes a profit or not.

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Next Innovation will charge a 2% management fee and a 20% carry on profits after an 8% hurdle, somewhat akin to the way a venture fund works.

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While many firms charge limited partners a management fee of 2% of the fund annually, that fee can be onerous for limited partners, particularly if a fund does not generate returns.

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In contrast, management consultants, who charge a fixed fee for their work, are regarded as more trustworthy.

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Stockbrokers and insurance agents generally work on commission, while Registered Investment Advisors tend to charge either an hourly fee or a percentage of assets under management as compensation.

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