Hidden fees quietly eat your returns. Over 20 years, 1% a year can erase a quarter of your terminal wealth. Here’s why a fixed subscription — plans from €0 to €10/month (example pricing) — is often the most honest, predictable, and cost‑efficient choice.
Hidden fees quietly eat your returns. Over 20 years, 1% a year can erase a quarter of your terminal wealth. Here’s why a fixed subscription — plans from €0 to €10/month (example pricing) — is often the most honest, predictable, and cost‑efficient choice.
Fixed fees vs percentage fees: the real math over 20 years
If you feel you’re “barely paying anything,” it’s usually because you’re not seeing everything. Percentage fees skim “a little,” but the skim compounds year after year while layers of costs (fund management fees, product fees, and until recently in France, per‑trade “commissions de mouvement”) quietly erode performance. A fixed subscription flips the power dynamic: you pay for a service, not a slice of your wealth, and you know why. In this article, we compare the models, put numbers on the gap, and explain why, for most investors, the fixed subscription is the rational path.
Why percentage fees bite
Each year a percentage is taken from your assets, and the smaller base compounds thereafter. Over time, the terminal‑value gap comes largely from fee compounding and volatility drag. As anchors: 0.85% on €50,000 is €425 per year, 1.00% is €500, 1.60% is €800. With a 7% gross baseline (illustrative), 1.6%/yr nets ~5.4% and, over 20 years, drives a large difference. A useful rule of thumb: 1% a year often removes ~20–25% of terminal value over 20 years.
Three models, three incentives
First, the traditional percentage model (e.g., 1.6%/yr) pays for full delegation — custody, human relationship with your manager, compliance — and mechanically incentivizes AUM gathering and retention. Next, many robo‑advisors use tiered % (0.85–1.65% depending on allocation), the same logic with threshold effects. Finally, the alternative we advocate is a fixed subscription (example pricing: €0–10/month) paying for a software service — explainable AI, backtests, monitoring — which focuses effort on product quality and education, independent of your AUM.
Ballparks (20 years, 7% gross)
At €50k, a 1.6% model cumulates about €27k in fees, while 0.85% still runs to five figures; €10/month totals €2,400 regardless of your savings. At €100k, 1.6% generally tops €40k in cumulative fees, 0.85% is roughly half that, and €10/month remains €2,400 over 20 years. The message is simple: fixed stays flat as your wealth grows; percentage scales with AUM.
The quiet scandal of “commissions de mouvement”
Worse, for years countless investors — like you and us — paid, often without knowing, per‑trade “commissions de mouvement”: every time the manager traded in the fund, an extra remuneration could stack on top of brokerage costs. In practice, your portfolio paid “by movement,” encouraging turnover at the expense of your net performance. France’s AMF has ended this practice for discretionary mandates; it will take effect in 2027. It’s a textbook case of invisible fees: beyond the headline “management fees,” per‑trade charges silently piled up — real money, out of sight. By contrast, a fixed subscription clarifies the equation: you pay for a service, not a tax pegged to an unknown person’s clicks on your orders.
Cognitive bias and pricing psychology: why “1%” feels harmless
Why does this silent extraction persist? Because our brains underweight what isn’t salient. Salience bias makes discrete, recurring costs feel negligible until you see the 20‑year bill. Anchoring locks perceptions around the initial label (“1%”, “0.85%”), even when multi‑decade compounding tells a very different story. Present bias overweights today’s convenience and underweights a slow but certain leak. These mechanisms are well‑documented in behavioral finance; for accessible references, see the St. Louis Fed explainer on anchoring and the broad taxonomy of cognitive biases (https://files.stlouisfed.org/files/htdocs/publications/page1-econ/2021/04/01/the-anchoring-effectSE.pdf, https://en.wikipedia.org/wiki/Listofcognitivebiases). Internally, our Knowledge Garden sections on the “Psychological Paradox” (preference for hidden product fees over explicit advice fees) and “Behavioral Finance & Psychology” inform our commitment to explainability and flat pricing (synthesized publicly here).
When % makes sense, when fixed fits
If you need Assurance‑Vie/PEA wrappers, custody, a sustained human relationship, and full delegation, the % model is defensible — particularly for large or very large balances. If, instead, you want predictable, minimized costs, an explainable method, and to validate actions through your own brokers (e.g., IBKR, Alpaca, Saxo), fixed pricing is the right choice, especially below ~€200–300k or while accumulating. That’s what we offer.
What fees really cover
% of AUM pays for advice, custody, reporting, compliance, and a dedicated relationship; mechanically, absolute euros rise with your gains. A fixed subscription pays for the platform (explainable AI, backtests, monitoring, integrations); its costs are decoupled from your AUM.
Context and public links
The AMF’s Observatoire documents a general downtrend in fees with wide dispersion by product (Letter #61: https://www.amf-france.org/fr/actualites-publications/publications/observatoire-de-lepargne/lettres-de-lobservatoire-de-lepargne/lettre-de-lobservatoire-de-lepargne-de-lamf-ndeg61-mai-2025 ). On private‑sector pricing, compare Nalo’s stated 0.85–2% range (https://www.nalo.fr/notre-tarif) and Yomoni’s “1.6% tout compris” messaging on Assurance‑Vie (https://www.yomoni.fr/ ).
Three questions to decide
Delegation or control? Simple passive allocation or transparent quantitative selection? Black box or explained method? Your answers choose the model; price follows.
Conclusion
There’s no universal winner. First find your philosophy, then the total cost will follow. If you value control, transparency, and stable costs, a fixed subscription (plans from €0 to €10/month, example pricing) is often the best option over 5 to 20 years.
References
AMF — Movement commissions ban (announcement): https://www.amf-france.org/fr/actualites-publications/actualites/frais-lamf-annonce-la-suppression-des-commissions-de-mouvement-pour-la-gestion-sous-mandat
AMF — Doctrine update: https://www.amf-france.org/fr/actualites-publications/actualites/frais-lamf-met-jour-sa-doctrine-la-suite-de-lannonce-de-la-suppression-des-commissions-de-mouvement
AMF — Investor explainer: https://amf-france.org/fr/espace-epargnants/actualites-mises-en-garde/gestion-sous-mandat-les-commissions-de-mouvement-bientot-interdites
AMF — Observatoire, Letter #61: https://www.amf-france.org/fr/actualites-publications/publications/observatoire-de-lepargne/lettres-de-lobservatoire-de-lepargne/lettre-de-lobservatoire-de-lepargne-de-lamf-ndeg61-mai-2025
Fed of St. Louis — The Anchoring Effect (general audience): https://files.stlouisfed.org/files/htdocs/publications/page1-econ/2021/04/01/the-anchoring-effect_SE.pdf
Wikipedia — List of cognitive biases: https://en.wikipedia.org/wiki/Listofcognitive_biases
Nalo — Pricing: https://www.nalo.fr/notre-tarif
Yomoni — Official site: https://www.yomoni.fr/
Definitions (Appendix)
Volatility drag : the negative gap between arithmetic average return and actual compounded (geometric) return in a fluctuating portfolio. Because losses weigh more than symmetric gains, back‑and‑forth moves (+x%, −x%) reduce value. Simple example: −10% then +10% on 100 ends at 99, not 100; −20% then +20% ends at 96. All else equal, higher volatility pushes the geometric return further below the arithmetic average.
Arithmetic vs geometric return : the arithmetic return is the simple average of period returns; the geometric (compounded) return is the constant rate that would reproduce the observed terminal value. With volatility, geometric ≤ arithmetic.
Salience bias : our tendency to overweight visible, immediate information (e.g., “0% entry fee”) and underweight discrete, recurring, less visible costs (e.g., 1%/yr on assets).
Anchoring bias : our tendency to latch onto a first number (“1%”, “0.85%”) as a reference point even when long‑horizon compounding contradicts the initial intuition.
Present bias : our tendency to overweight today’s convenience and underweight slow, certain long‑run costs, systematically underestimating recurring fees.
All‑in fee vs layered fees : an “all‑in fee” bundles management, custody, and transaction charges into a single number. Layered fees add multiple lines (mandate, wrapper, fund ERs, transactions), making true cost harder to see and compare.
