On this page
- Why a trustee fee comparison starts with incentives
- The four models in plain terms
- Four fee models against incentives
- The models side by side
- Where each model can go wrong
- An illustration: a model that rewards growth only
- Questions to ask about any model you are offered
- Which model fits which situation
- Selon votre situation: how to conclude
- Frequently asked questions
A trustee fee comparison is not really a comparison of numbers. Two proposals can look similar on paper and still push the trustee in opposite directions: towards caution or towards activity, towards keeping assets in the trust or towards growing them at any cost. This page sets the four common models side by side and asks one question of each: what behaviour does it reward?
No amounts appear here, and none should be read into the comparison. Remuneration depends on the structure, the assets and the workload, and it is explained after a confidential assessment. What you can do today is recognise the model you are being offered and test it.
Why a trustee fee comparison starts with incentives
A trustee holds assets under a trust deed, keeps them separate from personal property, manages them and accounts for them. That is the core of the legal relationship described in the Hague Trusts Convention, which Switzerland applies to foreign trusts. The trustee is paid for doing that job. The way the payment is built shapes how the job is done.
A model is not good or bad in itself. Each one aligns the trustee with some outcomes and leaves others unrewarded. The useful exercise is to read the model against your own priorities: stability, responsiveness, growth, transparency, or a calm handover in years to come. For the wider method of choosing, see how to choose a trustee in Switzerland.
The four models in plain terms
Fixed fee
The trustee charges a set sum for a defined scope of work, usually for a period. The trust knows what it will pay before the work happens.
What it rewards: predictability and efficiency. A trustee who works smoothly keeps the margin. What it can discourage: extra attention. If the scope is vague, anything outside it may be treated as additional work or not done at all.
Time-based fee
The trustee records the time spent and bills it at agreed hourly or daily levels, often by seniority.
What it rewards: effort and responsiveness. Complex periods, such as a dispute or a restructuring, are paid for as they happen. What it can discourage: speed. Nothing in the model rewards finishing quickly, and the total is hard to forecast.
Asset-based fee
The trustee is paid as a proportion of the value of the assets under administration, usually calculated periodically.
What it rewards: keeping assets in the trust and, indirectly, their growth. The trustee's income rises with the value. What it can discourage: distributions, which shrink the base, and attention to small or illiquid holdings, which add work without adding value. It can also tilt decisions towards riskier assets if growth is what moves the number.
Mixed fee
A combination, most often a fixed element for the core duties, plus a time-based element for exceptional work, plus sometimes an asset-based element.
What it rewards: a blend. The fixed part covers routine administration, the other parts respond to unusual demands or scale. What it can discourage: clarity. The more components, the easier it is to lose sight of what is being paid for.
Four fee models against incentives
The diagram condenses the four models into a single grid, so you can see the pattern before reading the detail.
The models side by side
The table below uses the same criteria for each model. It is a map of tendencies, not a verdict: in practice, the wording of the engagement terms matters more than the label.
| Criterion | Fixed | Time-based | Asset-based | Mixed |
|---|---|---|---|---|
| What is paid for | A defined scope | Time recorded | Value held | Scope plus extras |
| Forecasting your costs | Easy | Difficult | Moves with markets | Partly easy |
| Alignment on growth | Weak | Weak | Strong | Variable |
| Alignment on caution | Neutral | Neutral | Weak if growth drives income | Variable |
| Handling of disputes and one-off events | Often extra | Paid as they arise | Often extra | Usually the variable element |
| Handling of small or illiquid assets | Covered by scope | Paid for effort | Easily neglected | Depends on design |
| Transparency needed | A written scope | Detailed time reports | Clear calculation basis | Each element itemised |
| Typical weak point | Vague scope | Open-ended total | Conflict with distributions | Complexity |
No column wins on every row. A fixed model is calm but needs a precise scope. A time-based model is fair to effort but unpredictable. An asset-based model links the trustee to value but may conflict with the purpose of the trust. A mixed model can fit well, provided each part is explained. For a related comparison of how the trustee is organised, see professional trustee company or private trust company.
Where each model can go wrong
Every model has a failure mode, and most disputes about remuneration come from that failure mode rather than from the amount.
Fixed models fail at the edges. The proposal says "all administration", but nobody lists what that includes. Then a bank change, a beneficiary request or a review is billed separately, and the "fixed" arrangement turns out to be a floor. Ask for the scope in writing and for a list of what falls outside it.
Time-based models fail on visibility. The bill arrives, the hours are summarised, and nobody can tell whether the work was necessary. Ask for periodic reports and for a way to approve larger pieces of work in advance.
Asset-based models fail on alignment. A trust is not always meant to maximise value. It may exist to protect a vulnerable beneficiary, to hold a family business steady, or to distribute income regularly. Where distributions are frequent, an arrangement that pays the trustee on the asset base creates a quiet reason to prefer retention. Where growth is rewarded, it can also create a reason to prefer risk. A written investment policy and a clear separation between trustee and portfolio manager reduce the problem.
Mixed models fail on clarity. Several components make it harder to compare offers and easier to hide an expensive element behind a modest one. Ask the trustee to describe, for a quiet year and for a busy year, what each component would pay for, without figures if figures are not yet available.
An illustration: a model that rewards growth only
Example: a family established in Lausanne receives a proposal in which the trustee is remunerated solely as a proportion of the asset value. The trust was set up mainly to provide regular support to two adult children and to keep a family property within the family.
Read against the trust's purpose, the proposal has three weak points. Each distribution to the children reduces the base on which the trustee is paid. The property, which is illiquid and demanding to maintain, generates work but moves the figure only slowly. And the trustee has an interest in pressing for a more aggressive allocation, because that is how the number rises.
None of this means the trustee would act badly. It means the structure does not reward the behaviour the family wants. The family can ask for a different design: for instance a fixed element for routine administration, with any asset-linked element limited and tied to a written investment policy. For the broader question of how the trustee is expected to behave towards the people it serves, see what a trustee owes the beneficiaries.
Questions to ask about any model you are offered
Whichever model is on the table, the same questions make it easier to compare:
- What exactly does the remuneration cover, and what is billed separately?
- How is it calculated, and on what dates or events?
- Does anything in the model make distributions or a future change of trustee less attractive to the trustee?
- Who approves exceptional work before it starts?
- How are third-party costs, such as banks, valuers or lawyers, shown?
- Is the remuneration set by the trust deed, by a separate engagement letter, or both?
- What happens to the arrangement if the trust is reviewed, restructured or ended?
The guide to how trustees are paid goes through these elements in more detail, and the trustee due diligence questionnaire gives you a longer list to take into a meeting.
Which model fits which situation
The right model depends on what the trust is for and how much activity you expect.
- A stable trust with routine administration often suits a fixed or mostly fixed model, because the work is predictable and you value certainty.
- A trust facing a sale, a dispute or a restructuring may need a time-based element, since the workload cannot be forecast. See the situation of a founder selling the business.
- A trust whose main purpose is long-term capital growth may reasonably link part of the remuneration to value, with safeguards on risk and on distributions.
- A trust with several asset classes, family meetings and periodic reviews often ends up with a mixed model. Check that each element is stated clearly.
Your residence, the countries of your beneficiaries, the nature of the assets and the canton in which the trustee operates can all influence what is practical. That is why the model should be assessed against your own trust rather than chosen from a general ranking. If you are weighing a switch because of the cost structure alone, the comparison switch trustee or stay and fix the relationship helps you decide whether a conversation about terms might be enough.
Selon votre situation: how to conclude
There is no universal winner among the four models. The fixed model gives certainty and asks for a clear scope. The time-based model pays for effort and asks for reporting. The asset-based model ties the trustee to value and asks for safeguards. The mixed model adapts to a varied trust and asks for plain wording. Which one is right depends on your situation: the purpose of the trust, the type of assets, how often you expect distributions, and how much change lies ahead.
Frequently asked questions
Which trustee fee model is cheapest?
None is cheapest in every case, because the total depends on the workload and the assets. A fixed model can be economical for a quiet trust and costly if many tasks fall outside its scope. A time-based model can be economical in a calm year and costly in a busy one. Compare the models on what they cover and how they behave in a quiet year and a busy year, not on the label.
Is an asset-based model a problem for a discretionary trust?
It can create tension, because a discretionary trust often involves distributions that reduce the asset base on which the trustee is paid. That does not make the model unacceptable. It means you should look at how distributions are decided, who takes part in the decision, and whether the trustee's remuneration could influence it. Read the trustee of a discretionary trust for how those decisions are normally handled.
Can the fee model be changed after the trust is set up?
Often yes, but it depends on the trust deed, the engagement terms and the applicable law. A change usually needs agreement between the trustee and the persons entitled to approve it, and it should be recorded in writing. If the trustee will not discuss it, that is a signal to consider your options, covered in changing trustee step by step.
Do the models differ for corporate and individual trustees?
The same four models appear in both cases, but the surrounding practice differs. A corporate trustee usually has published structures and internal approval steps. An individual trustee may agree something more bespoke, with less formal reporting. Whichever applies, the points to test are the same: scope, calculation, approval of extras and transparency.
Does regulation set how a trustee must be paid?
Regulation focuses on who may act as a professional trustee and on how the firm is supervised, not on a single compulsory remuneration structure. What you should expect is clear information about the terms before you commit and a written record of them. For the approval side, see FINMA and SO-FIT: what trustee approval means for you.
What should I do if I think the current model works against the trust?
Start by reading the deed and the engagement letter, then ask the trustee to explain how the model is applied in practice. If the explanation is unclear, an independent review of the trust and its trustee can assess whether the structure suits its purpose and whether adjustments are reasonable.
Sources
Considering a trust, or reviewing one?
Describe your situation in a few lines. A Geneva-based trustee reviews it in confidence and replies in writing.