Client Deliverables
A "small" fee on a living.
An advisory fee is quoted as a percentage of assets — say 0.60% — and it sounds modest against the whole portfolio. But a household living on the income that portfolio produces doesn't experience the fee against the assets. They experience it against the paycheck. Measured there, a "0.60%" fee can quietly claim well over a tenth of the cash they actually live on.
The question we actually answer
An asset-based fee is charged on the whole balance, every year, whether or not the portfolio produced income and whether or not markets cooperated. For a household drawing a living from that portfolio, the honest denominator isn't total assets — it's the income the portfolio actually generated. The examination re-bases the fee from "percent of assets" to "percent of the income stream," which is the figure the household feels at the kitchen table.
On an income-oriented portfolio producing roughly a 4% cash yield, a 0.60% asset-based fee equals about 14.5% of the income the household lives on. The same fee that reads as "0.60% of assets" reads as "about one out of every seven dollars of income" when measured where it lands.
| Portfolio cash yield | Income produced | 0.60% fee on assets | Fee as share of income |
|---|---|---|---|
| 3.0% | ~$40,500 | ~$8,100 | ~20% |
| 4.0% | ~$54,000 | ~$8,100 | ~15% |
| 5.0% | ~$67,500 | ~$8,100 | ~12% |
| 6.0% | ~$81,000 | ~$8,100 | ~10% |
Illustrative. The fee is fixed in dollars by the asset base, so its bite on income rises as yield falls — the leaner the income, the larger the share the fee takes. Not a recommendation about any fee or advisor.
"Quoted on the assets. Felt on the income."
How the examination is built
- Take the fee at face value. We start with the quoted asset-based rate exactly as written — no embellishment.
- Convert it to dollars. Applied to the asset base, the percentage becomes a fixed annual dollar charge that does not flex with income.
- Find the real income. We measure the cash the portfolio actually produced — the money the household draws on to live.
- Re-base the fee. Dividing the fee dollars by the income dollars expresses the cost the way the household experiences it: a share of the paycheck.
- Show the sensitivity. Because the fee is fixed but income varies, we show how its bite on income grows in lean-yield years.
What this examination is — and is not
This is a reframing of how an asset-based fee is measured. It is not a claim that any fee is too high, and it is not advice to renegotiate or leave anyone. It changes the denominator to the one the household lives on, so the conversation about value can happen with the honest number in view.
Want this checked against your actual account?
This examination shows one way money can quietly leave a portfolio. If you want us to examine what may be happening in your actual accounts, request a confidential fee review.
Related examinations
The Reverse-Compounding Examination — What a layered fee really costs — measured not by how small the percentage sounds, but by the share of the final result it removes.
The Cash-Coverage Benchmark — Whether a portfolio's income actually covers a household's fixed yearly cash need in year one, or forces a sale to make up the shortfall.
The Same-Exposure Examination — Five funds tracking the same slice of the market tie on return, leaving the expense-ratio gap as the only thing that moves the result.