Advisor Fee Drag Calculator

Frequently Asked Questions

Does a 1 percent fee really only cost 1 percent?

No. Because the fee is charged every year, the lost growth compounds. Over several decades a 1 percent fee can reduce an ending balance by far more than 1 percent.

Is an advisory fee always bad?

Not necessarily. A good advisor can add value through planning, tax efficiency, and behavior coaching. This tool shows only the cost side so you can weigh it against the value received.

What is a typical AUM fee?

Around 1 percent of assets per year is common, often declining for larger balances. Flat-fee and hourly advisors are alternatives worth comparing.

Is this investment advice?

No. It is a general estimate and is not investment or financial advice. Actual returns vary and are not guaranteed.

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Estimates only. Not investment advice.

Investment Disclaimer: Estimates only. Not investment advice.

This calculator provides estimates for educational purposes only and is not investment advice. Past performance does not guarantee future results. Consult with a qualified financial advisor before making investment decisions. All investments carry risk, including potential loss of principal.

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How This Calculator Works

Enter your starting portfolio balance, the expected gross annual return, the advisor fee as a percent of assets (AUM fee), and the number of years. The calculator grows the portfolio twice, once at the full gross return and once at the gross return minus the fee, then shows the ending-value gap and the total fees paid. This makes the long-term drag of a seemingly small fee visible.

Formula

Gross ending value = principal × (1 + gross return)^years. For the net value, each year the balance grows by the gross return and then the fee is charged on that balance, the same way an AUM fee is billed; the fees are summed as total fees paid. Lifetime cost of the fee = gross ending value − net ending value, which exceeds the fees paid because of the growth those fees would have earned.

Common Mistakes

Thinking a 1% fee only costs 1%; over decades the compounded drag is far larger.

Comparing fees without comparing the value or returns the advisor actually delivers.

Ignoring fund expense ratios, which are an additional layer of cost.

Treating the projection as a forecast; it is a general estimate, not investment advice.

Tips & FAQ

Is a 1% advisor fee worth it? It can be if the advisor adds value through planning, tax efficiency, and behavior coaching that exceeds the cost. This tool only shows the cost side.

What is a typical AUM fee? Around 1% is common, often declining for larger balances. Flat-fee and hourly advisors are alternatives worth comparing.

Is this advice? No. It is a general estimate and is not investment or financial advice. Actual returns vary and are not guaranteed.

Advisor Fee Drag Calculator

Frequently Asked Questions

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