PRIMER RESEARCH · FEE ARCHITECTURE
The Multi-Fee Conundrum
Problem
Fees reduce wealth when gains and losses do not fully net before compensation, or when a cash fee leaves an SMA without a tax deduction.
I.
Winners are paid before losses net
Profitable PM books can trigger payouts while losing books still reduce the fund’s return.
II.
The SMA fee leaves the account
In this illustration, the fee is nondeductible. It creates no tax savings and stops compounding.
Use the year buttons to see each gap accumulate. Green shows the more efficient structure; red shows the fee drag.