The True Calculated Cost of a Financial Advisor (AUM Model)

Many financial advisors charge fees as a percentage of the assets they manage.

Advisors may also recommend or sell investment products (including mutual funds and ETFs) that carry additional management expenses, which further reduce net investment returns over time.

Over long time horizons, the true cost of this fee structure is not limited to the fees paid. It also includes the opportunity cost of no longer being able to compound those fees over time.

This calculator accounts for both components — direct fees and lost compounding — to estimate the true long-term cost of using an advisor with an assets-under-management (AUM) fee structure.

Rarely, advisors may charge flat annual fees or hourly fees instead of percentage-based AUM fees. Because these fees do not scale with portfolio size, they are usually arithmetically less costly over time. A calculator outlining these fee structures is available here.

No opinions. No hidden assumptions. Just arithmetic.

Inputs

Presets reflect common situations. Adjust any assumption below.

Expected annual return slider
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If unchecked, a flat annual advisor fee entered below is applied instead.

Typical mutual funds ~2%+. Broad index ETFs often ≤0.30%.

Calculated Results

Inspect the Arithmetic

Total calculated cost

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Fees paid + lost compounding

Break-even advisor performance

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Ending value (with advisor)

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Ending value (without advisor)

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Fees paid

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Lost compounding

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Calculated using the assumptions shown above.

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Method & assumptions

Advisor fee model (default)

Uses a tiered percentage-of-assets (AUM) fee schedule consistent with those used by large Canadian institutions (Big Five–style) and similar platforms. Fees are applied to invested assets over time.

Display only (your calculation uses this schedule when "Use default advisor fee schedule" is checked).

Assets under management (CAD) Annual fee (%)
$0 – $250,0002.00%
$250,000 – $500,0001.75%
$500,000 – $1,000,0001.50%
$1,000,000 – $2,000,0001.25%
Over $2,000,0001.00%
Advisor fee (user override)
If the default schedule is disabled, a single flat annual percentage of assets—entered by the user—is applied instead.
Product costs (MER)
MER is the Management Expense Ratio. It is the fee charged by each individual mutual fund to cover trading fees, salaries, and other expenses of their fund managers. When enabled, the MER is applied to invested assets in addition to advisory fees.

MER is usually charged in addition to any fees your advisor would charge, causing further fee drag on investment returns. Occasionally, your advisor's fee may be partially embedded within the MER of a product they sell you. MERs can vary significantly—usually between 2–6% for mutual funds—but are much less expensive for ETFs, often <0.3%.

We assume 2% in this calculator by default. Please adjust accordingly based on your own investment portfolio.

Note: MER meaningfully changes outcomes. Careful consideration is required to determine true calculated costs in your specific case.
Fees paid
The cumulative dollar amount deducted from the portfolio due to advisory fees (and MER, if included).
Lost compounding
The reduction in ending value attributable to fees no longer remaining invested and compounding.
Total calculated cost
Fees paid plus lost compounding, including both advisory fees and any included MER.
Break-even advisor performance
The average annual return required for an advisor-managed portfolio to produce the same ending value as the non-advisor case, using the assumptions you selected.

Example: The "Starting out" scenario assumes a 7% return on your portfolio over time. If this same portfolio were managed by an advisor, using the default fee schedule plus the assumed 2% MER, the advisor would need to obtain a 10.71% annual return to break even with an unmanaged (and MER-free) portfolio returning 7% annually. If you applied the default advisor fee schedule but de-selected MER (appropriate for a portfolio containing no mutual funds/ETFs/other managed products), the portfolio must return 8.65% annually to break even with an identical unmanaged portfolio.
Scope note
Trading commissions, taxes, and other account-specific costs are not included.

Disclaimer: All content on The Long Math — including articles, essays, calculators, tools, or any other material — is provided solely for educational and informational purposes and does not constitute financial, tax, legal, or investment advice. Any results or projections are based on simplified models, assumptions, and user-supplied inputs and may not reflect real-world outcomes. You are responsible for evaluating the accuracy and applicability of the information provided and for conducting your own due diligence. Before making financial decisions, consult a qualified professional.