Key Data and Analysis
Five ETF fee mistakes: annual and 20-year costs on $300,000
| Mistake | Annual Cost ($300K portfolio) | 20-Year Cost | Fix |
|---|---|---|---|
| Never checking ER (paying 0.75%) | $2,250 | $161,000 | Annual ER audit |
| 3 overlapping index funds at 0.40% avg | $1,200 | $86,000 | Consolidate to lowest ER |
| Active fund vs. index equivalent | $2,160 | $154,000 | Switch to index fund |
| 1% AUM on index portfolio | $3,000 | $214,000 | Switch to fee-only advisor |
| High-cost 401(k), no review | $1,500 | $107,000 | Check options; switch cheapest |
⚠️The 1% AUM Fee Trap
Paying 1% AUM to an advisor managing index funds is paying $3,000/year on $300,000 for something the index funds do automatically. A fee-only advisor for planning at $2,000-$4,000/year flat is a better structure.
Scenarios and Comparison
Common ETF fee red flags and time to fix
| Red Flag | What It Signals | Fix Time |
|---|---|---|
| Index fund ER above 0.15% | Paying legacy premium | 15 minutes |
| Active fund with 10-yr underperformance | Negative value for fee | 30 minutes |
| Three duplicate S&P 500 funds | Paying 3x ER for same exposure | 20 minutes |
| No ER review in 3+ years | Outdated fees accumulating | 1 hour annual review |
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