The percentage fee is the most successful piece of marketing in financial services. It sounds modest — one percent, less than a tip — and it is charged on a number most people never multiply out. So let us multiply it out.
Growth is a factor, and a fee lowers the factor
Your money does not grow by an amount each year; it grows by a factor. At 7% the factor is 1.07, and over a decade that compounds to 1.967 — almost a doubling. A 1% annual fee does not subtract 1% once. It lowers the factor to 1.06, which over a decade compounds to 1.791.
That gap — 1.967 against 1.791 — looks small. Then it happens again the next decade, and the next. Factors multiply, and small differences in a multiplied quantity become large differences in the result.
Over thirty years, the same starting pound reaches roughly 7.6 times its size at the flat-fee growth rate and only about 5.7 times after a 1% charge. The fee has not taken 1%. It has taken close to a quarter of the growth — and the more you have, the more it takes, because a percentage fee scales with the pot.
Why we charge a flat fee
A percentage fee has a strange property: the adviser is paid more as your pot grows, whether or not the work grows. Reviewing a £600,000 portfolio is not six times the work of reviewing a £100,000 one, but a percentage fee charges six times as much.
We charge a flat fee — the same each year, whatever your pot is worth. On our site the price is set deliberately at the smallest size on the page, because it is the one figure that does not compound. That is the point.
- A flat fee is legible: you know exactly what you pay.
- It does not scale with the pot, so our incentive is your plan, not your balance.
- Over a lifetime, the difference between flat and percentage is often measured in years of retirement.
The value of investments can fall as well as rise, and none of the figures above are a promise. But the fee is not a projection. It is a certainty, and it is the one number you can control.