25% of profits above some sort of hurdle rate (maybe 6%?) would be a lot better : )

Though recommending a hurdle rate is a bit disingenuous, as I didn't have one. In case anybody is interested, I used to be a money manager. My fees went like this:
* If profit to client is 0-15% for the year, fees are 12% of profit.
* If profit to client is over 15% for the year, fees on the portion above 15%/year are 7% of profit.
* If profit to client for the year is negative, management firm pays client 2% of the loss, with unlimited personal guarantee from the owner of the firm (me).

The reason for the middle step is to dampen the temptation for the investment manager to take big risks to try to knock it out of the park one year, or (more subtly) seeking returns that alternate very good and very bad years. Step 3 works even better to focus the mind.

Clients managed low double digits after fees in each of 2008 and 2009 while fully hedged, which I'd call a win. The biggest client was a public company who had a pile of cash sitting around after having sold some subsidiaries. They made me use an insanely high fee broker, da bums--returns would have been 3% higher at a normal place.

Jim