Fees for Free
How similar is this to what's happening in Chicago? This is in New York:
- Wall Street managers were paid an astounding $708 million in fiscal year 2015 to handle the city’s pension system — but did such a terrible job that taxpayers were forced to cough up $9.9 billion to make up for their shortfalls.
Most of those costs, moreover, were kept secret.
Management fees jumped by $178 million from $530 million the year before. But Comptroller Scott Stringer says the “vast majority” of the increase stems from the discovery of previously undisclosed “incentive fees.”
These up front fees, non-performance based fees, would appear to be a major drag on pensions. And if history is any indicator, the "managers" are surely connected to New York politicos, and we can't imagine the same thing isn't happening here, right down to connected firms getting their fees up front.