Two types of money managers are:

1. The type that has a contractual relationship with each client. A term of the contract states the fee the client is to pay the money manager for his services. That fee often is a percentage of the net gains for the year.
2. The type that has no such contractual relationship with those who entrust their money to him or her to manage.

Of those 2 types, I prefer #2. As an example, consider Warren Buffett and Charlie Munger. Mr. Buffett is the chairman and CEO of Berkshire Hathaway, Inc., which he bought in 1965. Charlie Munger is Berkshire Hathaway’s vice chairman. They are 2 of the most successful investors of the last 70 years.

Berkshire Hathaway, a highly diversified holding company, has 2 classes of outstanding common stock (Class A and Class B). In 1998, the Class A shares were selling for $41,000 a share. Today they are selling for $502,700 a share! Those shares never have been split, and Berkshire Hathaway never has declared a dividend on either class of stock. If one had bought 2 of the Class A shares in 1998 and held them until today, that $82,000 investment now would be worth $1,005,400!

The Class B shares first were issued in 1996, and then were worth 1/30th of a Class A share's value. In 2010, Buffett split the B shares 50-for-1 when he used Berkshire stock to help pay for the $27 billion acquisition of Burlington Northern railroad. B shares now have a value that is 1/1,500th of a share of Class A stock. Each class B share is selling (3-16-2022) right at $337.00.

Warren Buffet and Charlie Munger are my money managers, and I have no contract with either man requiring me to pay them annually a fee to manage my money!