Management fees are one of the least visible — and most impactful — forces in long-term investing.
A management fee is what you pay for professional oversight of your money. That can include portfolio construction, rebalancing, tax planning, and advice. In many cases, that help is genuinely valuable.
The issue isn’t whether fees are “good” or “bad.” It’s how they’re charged.
Many advisors charge a percentage of assets under management. Others charge a flat annual fee. Both models can make sense — but they behave very differently over time.
A flat fee is predictable. It stays the same as your portfolio grows. A percentage-based fee grows automatically as your balance increases — even if the work being done doesn’t change.
Over short periods, the difference can feel negligible. Over decades, it often isn’t.
Flat fee vs percentage-based fee
The calculator below doesn’t judge either approach. It simply shows how each fee structure adds up over time.
This doesn’t mean all percentage-based fees are wrong, or that flat fees are always better. Advisors provide different levels of service, expertise, and involvement.
What matters is understanding what you’re paying, how that cost scales, and whether the value you receive grows alongside it.
Fees are easiest to accept when they’re invisible. They’re hardest to undo once time has passed.
Seeing the math early gives you the option to ask better questions — or make different choices — before the cost becomes irreversible.