Black Isle offers a highly cost-effective alternative to employing an in-house team.
We are paid primarily for success, but unlike some placement agents we prefer not to operate on a success fee only basis. Many asset managers have approached us after bad experiences with other firms, and the common theme is initial enthusiasm (and over-promising) followed soon after by fast-declining sales activity and waning commitment (under-delivering). This is an inevitable consequence of a success fee only arrangement where a client assignment proves harder than anticipated!
We believe that a success fee only model is not consistent with a committed and professional service. It undervalues the experience, relationships and marketplace knowledge we offer and the time commitment we make to ensure we can represent a client effectively. It does not engender the commitment necessary (from both sides) to develop a mutually beneficial long-term relationship.
Our typical remuneration model is summarised as follows:
- Monthly Service Fee – This covers our overheads and ensures commitment to the relationship from both parties. The level of the service fee reflects the time we would expect to commit to representing a particular client and the “amortization” of the up-front time commitment we make to training and initial advice.
- Success Fee – An agreed success fee (based on AMC or assets raised) is payable in respect of capital raised during the contract and after the contract has finished if the capital resulted from our sales activities. We typically expect success fees to be paid over a three-year period ensuring that our clients receive their fees well in advance of having to pay us. We are happy to discuss different success fee structures to fit with the needs of your business.
- Success Fee Hurdle – Essentially, we expect to be remunerated for success. We therefore believe it clearly demonstrates our alignment with our clients’ objectives that our service fees will be offset against success fees.
- Expenses – Our service fee covers ongoing expenses, but significant expenses may be recharged subject to prior approval.
For certain clients, a service and success fee structure may not be appropriate, usually because the relationship will be a relatively short term one coinciding with the raise of a single fund. In such cases, we will typically expect a significantly higher level of success fee.
We believe our fees are highly competitive given the strength of our proposition. Our clients aren’t just paying for our time but for our experience and relationships. But whatever the structure we agree, it is important to the institutional investors we talk to that our remuneration demonstrably does not impact the fees they pay.