Start the fee discussion with the arithmetic of aggregate active returns.

Family Office Private Wealth Journal · Editorial research desk · 2 November 2026

Companion to The Arithmetic of Active Management by William F. Sharpe.

Decision in practice

A manager shows strong gross results but the family pays management fees, custody and trading costs through different accounts.

Committee assignment

Reconstruct a net, investable passive comparator and the manager’s all-in result over identical dates. Identify which services justify any premium.

Record and decision rule

Use actual fee invoices. Escalate a renewal when the fee comparison omits a material cost paid elsewhere.

Illustrative application by the editorial desk. The source authors did not evaluate or endorse this procedure.