True Link (YC S13) is launching an investment division
I&#x27;ve long been interested in an investment company that had a variable cut that was directly based on the customers&#x27; preferences. Ultimately you&#x27;d want the managers incentives based on the fees to be exactly aligned with the customers&#x27; needs, which means that different fee structures are needed for different kinds of customers.<p>Basically the hedge fund fee structure extended. So someone who wanted more risk would give a higher cut of fees for higher gains and a lower cut of fees for lower gains, and vice versa. The average expected value to the manager should be a constant percentage of assets, but the distribution changes for each customer.<p>One cool thing that naturally falls out of this idea is negative fees: if someone is risk averse enough, then the incentives require the manager to lose money if the customer loses, which causes the manager to be risk averse as well for those funds.<p>(I have more detailed thoughts on this that this margin is too small to contain; feel free to email me for some disorganized elaboration on the above.)