Setting Up MAM and PAMM: A Broker's Practical Guide

Which structure suits you

In a PAMM (Percentage Allocation Management Module), investors' money is pooled in one account the manager trades, and profits, losses and fees are shared by percentage. It is simple and transparent, and investors understand it quickly.

In a MAM (Multi-Account Manager), investors keep separate sub-accounts and the manager's trades are replicated across them by lot allocation. That allows different leverage or risk multipliers per investor, at the price of extra operational complexity. Most brokers starting out are better served by PAMM, with MAM reserved for sophisticated allocators who want customization.

Whichever you pick, the mechanics must work without fuss: synchronized execution across sub-accounts, correct lot sizing on partial fills and fees that reconcile to the cent. Investors forgive a losing month and don't forgive statements that fail to add up.

Fees and allocation, in writing

Almost every dispute comes from two things: how trades are allocated and how fees are calculated. Allocate by equity percentage as standard, but state precisely how mid-period deposits and withdrawals, partial closes and the manager's own capital are handled.

Use high-water marks for performance fees so managers earn only on new profit above the previous peak, with clearly defined calculation periods. Publish worked examples. Managers raising real capital pick platforms with visible fee math because their investors insist on it.

Protect investors from the manager

You are handing third parties control of client money, and investor-level controls are what make that acceptable: maximum-drawdown limits that pause a PAMM automatically, per-investor stop levels and transparency about strategy and history.

Assess managers as an allocator would. Look at the length of the verified record, drawdown history as well as return, whether the stated strategy matches observed behavior and whether they hold meaningful capital of their own in the product. Your due-diligence process is part of what you are selling, so document it.

Run it as an operation

Money management multiplies your workload: onboarding investors with the right risk disclosures, handling subscriptions and redemptions on time, calculating and paying performance fees accurately, issuing statements and supporting managers' own reporting.

Systematize it in your PAMM/MAM infrastructure instead of working by hand, because manual calculations across dozens of accounts are where mistakes and disputes begin. Involve compliance early too, as managed-account products attract scrutiny and the requirements differ widely by jurisdiction.

Over time the best products become talent magnets that draw managers with their own following. Support that with leaderboards, verified performance pages and fundraising tools, and the offer turns into an ecosystem that competitors find hard to copy.