Why Premium Portfolio Managers Are Failing To Justify Their Fees

A recent social media post caught my attention—not so much for what it said, but for the torrent of responses it unleashed.

- DHIRENDRA KUMAR

An investor shared how his relative had entrusted ₹65 lakh to a portfolio management service (PMS) in 2022, only to see it grow to about ₹74 lakh by mid-2025. That translates to an annual return of roughly 6.9%—barely ahead of a bank fixed deposit and lagging most mutual funds and market indices. Meanwhile, the portfolio manager earned a comfortable 2% fee each year, regardless of performance.

What stood out wasn't just this one case, but the chorus of similar stories that followed. Investor after investor described paying hefty fees for underwhelming results. The pattern was all too familiar: high costs, mediocre returns, and portfolio managers who prospered while clients bore all the risk.

This reflects a deeper problem with many premium investment services, a fundamental misalignment between what investors expect when they pay more, and what they actually receive. The concern isn't simply that these services sometimes underperform. All investment strategies have their lean years. The real issue is the lack of transparency.