Total True Fee Calculator — Methodology

How This Calculator Works

The Total True Fee Calculator computes your all-in investment cost across three fee layers (advisor AUM, fund expense ratios, platform fees), projects the cumulative fee drag over your investment horizon, and compares your current fee structure against a low-cost benchmark.

Inputs and Assumptions

• Portfolio value: Total invested assets across all accounts.
• Monthly contribution: Ongoing additions to your portfolio.
• Years to project: Investment horizon (1–40 years).
• Gross annual return: Pre-fee return assumption (default 10%).
• Advisor AUM fee: Annual percentage charged by your financial advisor.
• Fund expense ratio: Weighted average expense ratio of your fund holdings.
• Platform/wrap fee: Custodian or platform fee (often 0% at Vanguard, Fidelity, Schwab).
• Benchmark: Low-cost comparison scenario (default: 0.03% fund ER, 0% advisor, no platform fee). The result shows two figures: what the full benchmark would keep, and what changing only the fund would keep. If your fees are at or below the benchmark, the page says so instead of showing a negative saving.
• Fee fields: Each is held between 0% and its maximum (10%); a larger entry is read as the maximum.

Formula

// All-in fee rate
totalFeeRate = advisorAumFee + fundExpenseRatio + platformFee

// Net annual return (after fees), an effective annual rate
netReturn = grossReturn - totalFeeRate

// Effective monthly rate: compounds to exactly netReturn over 12 months
// (it was netReturn / 12 until October 2026, which compounds 10% to 10.47% a year)
monthlyRate = (1 + netReturn)^(1/12) - 1
months = years × 12
finalBalance = portfolioValue × (1 + monthlyRate)^months
             + monthlyContribution × ((1 + monthlyRate)^months - 1) / monthlyRate

// Fee drag vs zero-fee
grossFinalBalance = project at grossReturn (0% fees)
currentFinalBalance = project at grossReturn - totalFeeRate
feesDrained = grossFinalBalance - currentFinalBalance

// Fee drag vs benchmark. The benchmark is a fund at the benchmark expense ratio PLUS the benchmark advisor
// fee, with NO platform fee. The gap therefore includes dropping your advisor and platform fees.
benchmarkFeeRate = benchmarkFundER + benchmarkAdvisorFee
benchmarkFinalBalance = project at grossReturn - benchmarkFeeRate
feesDrainedVsBenchmark = benchmarkFinalBalance - currentFinalBalance

// Fund-only switch: only the fund changes, your advisor and platform fee stay
fundOnlyFeeRate = benchmarkFundER + advisorAumFee + platformFee
feesDrainedVsFundOnlySwitch = fundOnlyFinalBalance - currentFinalBalance

// Fee context classification
low: totalFeeRate < 0.50%
average: 0.50% - 1.50%
high: 1.50% - 2.50%
very-high: > 2.50%

// Typical all-in cost: 1.65% (median, portfolios of $500k-$1M;
// Veres Inside Information study, reported by Kitces 2017)

Data Sources

• Bob Veres / Michael Kitces — Veres' Inside Information study of advisory fees, reported by Kitces in 2017: a median all-in cost (advisor fee + fund ERs + platform fees) of 1.65% for portfolios of $500,000 to $1 million.
• Investment Company Institute (ICI) — Fund expense ratio data and trends.
• Morningstar — Annual fee study: an asset-weighted average fund expense ratio of 0.32% in 2025 (published May 2026).

Limitations

• Uses a constant return and constant fee rate — does not model variable fees or tiered pricing.
• Does not account for tax-loss harvesting savings that some advisors/robo-advisors provide.
• Does not model advisor alpha (potential value-add from financial planning, behavioral coaching).
• Fund expense ratio should be the weighted average across all holdings — entering a single fund's ER may understate or overstate.
• Does not account for transaction costs, bid-ask spreads, or trading commissions.

Last Updated

• October 2026: monthly compounding now uses the effective monthly rate, so the default case (250,000 portfolio, 500 a month, 20 years, 10% gross, 1.6% fees) shows $488,410 of fee drain, not $568,553.
• October 2026: the benchmark comparison is labelled as fund plus advice with no platform fee, and a fund-only figure is shown beside it.
• April 2026: fee context thresholds updated based on latest ICI data.