Selecting investment managers and structuring the proper kind of incentives and alignments of interest is an incredibly daunting job. Our databases currently track more than 600 managers worldwide with 800 different offerings, each of whom are vying for investors’ time and attention.

Compounding the sheer size of these numbers is that most managers and their offerings sound a lot alike. Then there’s the issue of incentives. As Bob Burke, a cofounder of AMB Property Co. (now part of Prologis), once told me, “The trouble with incentives is, they work.”

In the 1980s, the common fee structure was to pay an acquisition fee, an asset management fee and sometimes a disposition fee. When the markets crashed in the late 1980s, most investors were disturbed that none of their managers sold. And most concluded that their managers didn’