What is Fee Drag?
Fee Drag is the compound reduction of investment returns caused by percentage-based management fees (AUM). On a £100k portfolio, a 1% fee costs £27,000 over 20 years.
The £27,000 Subscription
If Netflix charged you 1% of your Net Worth, you'd cancel it. Why do you let your Wealth Manager do it?
A 1% annual fee on a £100,000 portfolio doesn't just cost £1,000 per year. Over 20 years with 7% average returns, it costs £27,000 in lost compound growth.
Why percentage fees are a scam
Percentage-based fees (AUM - Assets Under Management) scale with your wealth. As your portfolio grows, your fees grow—even though the service doesn't improve. You're paying more for the same service.
The Math: £100k Portfolio Over 20 Years
Without 1% fee: £100,000 × (1.07)^20 = £386,968
With 1% fee (6% net return): £100,000 × (1.06)^20 = £320,714
Fee Drag Cost: £66,254 (17% of your final portfolio value)
The Sovereign Solution: Lifetime Membership
We charge a flat £100 lifetime fee. Not 1% per year. Not 0.5% per year. One payment, forever. As your portfolio grows from £100k to £500k, your fee stays the same. That's Sovereign Ownership vs. Renting your wealth stack.
Learn About Lifetime Membership →Key Takeaways
- Percentage fees compound against you. 1% doesn't sound like much, but it's £27k over 20 years.
- Fees scale with wealth, not value. As you get richer, you pay more for the same service.
- Flat fees are mathematically superior. One payment vs. percentage of growing wealth.
- Sovereign Ownership beats renting. Own your tools, don't rent them.