I think it's partially because they manage so much money. I agree that they're overpaid, but maybe their funds don't think so. Let's take a hedge fund manager

I think it's partially because they manage so much money. I agree that they're overpaid, but maybe their funds don't think so. Let's take a hedge fund manager who's making $10m a year. If he's managing a $5b fund, even if his performance is 0.2% better than that of someone who works for free, he has "earned" that $10m in terms of value added. Now, why they charge over 1% is another question...