‘This Is Highway Robbery’: George Kamel Blasts Family Member’s Investment Fees

Dan handed his uncle-in-law $10,000 to manage 2.5 years ago. The money grew to $15,000 through an E-Trade account in what Dan described as an S&P 500-based strategy. Now the uncle wants to formalize the arrangement by taking up to 20% of the profits.

“This is highway robbery,” said George Kamel of The Ramsey Show. “The standard in the industry is around a 1% AUM fee. That’s assets under management. Sometimes it’s 1.25%, maybe upwards of 2% in a crazy scenario, but 20%?” Unheard of.

‘2 and 20’ Fee Structure

Dan’s uncle proposed a “2 and 20” fee structure where he would charge a 2% AUM fee, plus 20% of any gains over a certain threshold (in this case, 10%).  This is a hedge fund compensation model. Actual hedge funds running this structure employ teams of analysts, use sophisticated derivatives strategies, and manage hundreds of millions of dollars. Dan’s uncle-in-law is a DIY investor who, by Dan’s own admission, just “talked to some finance people.”

The math is stark. Assume the $15,000 account grows at a hypothetical 10% annually over five years, reaching roughly $24,000. Under a standard 1% AUM fee, the advisor earns around $150 to $200 per year — perhaps $900 across five years. Under the uncle’s proposed structure, if gains exceed the 10% hurdle in any year, 20% of those excess gains leave the account permanently. Compounded over years, the drag is severe. The investor bears all the risk; the manager captures a disproportionate share of the upside.

The S&P 500 has returned about 33% over the past year and 68% over five years. A passive index fund investor captured those returns in full, paying expense ratios well under 0.1% annually. Dan’s uncle captured similar returns — the account grew from $10,000 to $15,000. “I was going to say, if it’s still at $10,000, this guy needs to go to prison,” Kamel said.
The market has done really well the last few years.” But the gains reflect the market, not the manager.

The Licensing Question

Kamel pressed Dan on a specific point: “Does he work for an actual registered investment advisor, like an actual firm?” Dan confirmed the uncle was not licensed.

A registered investment advisor (RIA) carries a legal fiduciary duty to act in the client’s best interest. They are regulated, insured, and subject to oversight. An unlicensed DIY investor managing someone else’s money operates in a legal gray zone. The fee arrangement Dan described may not even be legal for an unlicensed individual to collect.

Co-hot Rachel Cruze urged an exit strategy: “I would untangle this whole deal. The whole money, family minutia, it just never really ends up good.” She suggested a clean, low-drama exit script. Tell the uncle you’re consolidating your financial picture and moving things around, then cash out and move on. Kamel suggested Dan find a legitimate RIA.

Dan is an example of someone who lacks investing confidence, trusts a family member with apparent financial knowledge, and never establishes written terms upfront. The absence of a written agreement at the start is why Dan is now in a negotiation he didn’t expect.

When Dan admitted he couldn’t explain what his uncle was doing, Cruze responded: “Never put your money in something you don’t understand.” That applies to fee structures as much as investment strategies.

Practical Advice on Fees

For any investor, The Ramsey Show suggests not mixing money and family. Here are three suggestions for working with investment professionals: First, request a written accounting of every trade, fee, and return since inception — a legitimate manager will provide this without hesitation. Second, compare actual performance against the S&P 500 over the same period. If your account hasn’t kept pace, the manager added no value. Third, verify licensing through the SEC’s Investment Adviser Public Disclosure database at investor.gov before agreeing to any fee structure.