Note / October 14, 2026
What a 1% fee actually costs over 30 years
Almost every wealth management firm in the Bay Area charges about 1% of your portfolio each year. It sounds small. It is quoted as a percentage because it sounds small. Here is the same fee in dollars, over the length of a typical retirement, next to a flat fee for the same work.
The setup
A household retires with $1,500,000 invested. The portfolio returns 6% a year before fees, every year, which no real portfolio does but which keeps the arithmetic honest. Nothing is added and nothing is withdrawn, so we can see the fee by itself. Advisor A charges 1% of the balance, deducted at the end of each year. Advisor B charges a flat $7,200 a year, never increased.
| Year | 1% fee, paid so far | 1% fee, balance | Flat fee, paid so far | Flat fee, balance |
|---|---|---|---|---|
| 1 | $15,900 | $1,574,100 | $7,200 | $1,582,800 |
| 5 | $87,752 | $1,908,959 | $36,000 | $1,966,751 |
| 10 | $199,429 | $2,429,416 | $72,000 | $2,591,370 |
| 15 | $341,554 | $3,091,770 | $108,000 | $3,427,250 |
| 20 | $522,427 | $3,934,708 | $144,000 | $4,545,847 |
| 25 | $752,614 | $5,007,463 | $180,000 | $6,042,782 |
| 30 | $1,045,558 | $6,372,694 | $216,000 | $8,046,018 |
What the table says
Over 30 years the 1% advisor is paid $1,045,558. The flat fee advisor is paid $216,000. That difference, $829,558, is the fee you can see.
The ending balances differ by $1,673,324. The extra $843,766 is growth that never happened, because the money that would have earned it was gone.
That is the part a percentage hides. A fee taken in year one is not just the fee. It is the fee plus everything the fee would have earned for the next 29 years. At 6%, a dollar taken in year one costs about $5.40 in year 30.
The fair objections
Three of them, and they are fair.
- Real portfolios do not return 6% in a straight line. True. Sequence changes the exact numbers and does not change the shape.
- The 1% firm may do more than manage the portfolio. Sometimes. Ask what, and ask what it would cost from someone who only did that. Our planning fee is on the pricing page for exactly this comparison.
- A flat fee is a larger percentage of a small portfolio. Also true. Below roughly $500,000, a flat $7,200 is more than 1%. For those households an hourly planner, or a one time plan, is often the better answer, and we say so in the intro.
What to do with this
Ask your current advisor for last year's fee in dollars, including fund expenses. If it takes more than one email to get the number, that is also information. Then put it next to a flat fee for the same services and decide. We do not mind which way you decide. We mind that you got to see the number.
Illustration only. Not a projection of any portfolio, including yours. Assumes smooth returns, fees deducted at year end, no contributions or withdrawals, and a flat fee held constant for 30 years.