Case Study: Trimming Fees, Boosting Returns

For $1M+ investors and NIL athletes, portfolio fees—from advisor commissions to fund expense ratios—are a silent wealth killer, siphoning 1–2% annually, or $100K–$200K on a $10M portfolio. In a low-return environment, where equities yielded 6–8% in 2023, these costs can halve investment returns.

Taxes on realized gains (20% federal, 3.8% NIIT, up to 13.3% state) and market volatility (15% swings in 2023) compound the damage. Trimming fees while optimizing allocations is a precision art that boosts alpha and preserves capital.

With over 40 years of fiduciary mastery, navigating chaos from Black Monday to 2008, the Freedom Capital Playbook demands surgical efficiency: slash fees to dominate your portfolio’s performance. This case study explores how a $1M+ investor trimmed fees and boosted returns, unveiling five elite strategies for investors and athletes.

The Cost of High Portfolio Fees

Portfolio fees include advisor fees (0.5–2% AUM), fund expense ratios (0.1–1.5%), and transaction costs (0.1–0.5% per trade). A 2024 Morningstar study found that high-fee portfolios (1.5% AUM) underperform low-fee ones (0.3%) by 1.2% annually, costing $120K on $10M over a decade.

Non-fiduciary advisors, driven by commissions, often push high-cost funds, with 60% of $1M+ investors overpaying $50K yearly (Forbes, 2024). Tax inefficiencies—capital gains (20%) and NIIT (3.8%)—exacerbate losses when rebalancing high-fee portfolios.

For NIL athletes, with 3–5 year earning windows, fees can devour post-career wealth. A 2024 Vanguard report shows low-fee portfolios retain 90–95% of returns versus 70–80% for high-fee ones. These fiduciary strategies, rooted in decades of cost-cutting, use low-cost platforms, tax efficiency, and strategic allocations to streamline performance.

Case Study: The $10M Portfolio Fee Overhaul

A 53-year-old fintech founder held a $10M portfolio in 2023: $5M in actively managed funds (1.2% expense ratio), $3M in equities, $1.5M in bonds, and $500K in cash. Their non-fiduciary advisor charged 1.5% AUM ($150K annually), totaling $270K in fees with fund costs.

A 2023 market dip (15%) cut returns to 4%, netting $130K after fees. A fiduciary advisor intervened, conducting a fee-trimming overhaul. They switched $5M to low-cost ETFs (Vanguard VTI, 0.03% expense ratio), saving $59K yearly.

The advisor, charging 0.3% AUM ($30K), cut total fees to $34K. Tax-loss harvesting offset $200K in gains, saving $30K (15% federal, 3.8% NIIT). They allocated $3M to dividend aristocrats (NOBL, 2.5% yield) and $2M to municipal bonds (3.5% yield). By 2025, fees dropped to $35K, the portfolio grew to $11.2M, and returns hit 7.5%, yielding $400K annually—a $236K annual saving.

Five Elite Strategies for Trimming Fees and Boosting Returns

Investors must trim fees with precision to enhance $1M+ portfolio performance. Here are five strategies to streamline efficiency:

1. Switch to Low-Cost ETFs: Replace high-fee funds (1–1.5% expense ratio) with ETFs like VTI or VXUS (0.03–0.07%), saving 1–1.4% annually ($100K–$140K on $10M).
   
   
2. Hire Fiduciary Advisors: Engage SEC-registered CFPs or RIAs charging 0.2–0.5% AUM, avoiding 1–2% non-fiduciary fees ($100K annually on $5M).
   
   
3. Automate Tax-Loss Harvesting: Use robo-advisors like Betterment to harvest $3,000 in annual losses (IRS limit), reducing gains taxes by 15–20% and reinvesting savings.
   
   
4. Allocate to Tax-Efficient Assets: Invest 20–30% ($500K–$1.5M) in munis or low-turnover ETFs (3–4% yield) to minimize NIIT and state taxes, boosting after-tax returns.
   
   
5. Minimize Trading Costs: Limit trades to 0.1–0.2% costs via platforms like Schwab, executing rebalancing within tax-advantaged accounts (e.g., Roth IRAs) to avoid gains taxes.

Actionable Tips for Investors

• Audit Fees Quarterly: Use Morningstar or YCharts to track expense ratios and AUM fees, targeting <0.3% total costs. The advisor warns: “Fees are a leak—plug them fast.”
  
  
• Automate Low-Cost Rebalancing: Deploy Wealthfront or Schwab (0.25–0.28% AUM) to execute trades, saving 0.5–1% versus manual rebalancing ($50K–$100K on $10M).
  
  
• Engage a Fiduciary CFP: Partner with a CFP or RIA with SEC fiduciary status, ensuring no commission conflicts, unlike 60% of brokers (Forbes, 2024).
  
  
• Monitor Tax Efficiency: Track AGI via TurboTax to stay below NIIT ($250,000) or 20% gains ($553,850 MFJ), using munis to cut taxable income.
  
  
• Reinvest Fee Savings: Channel savings ($50K–$200K annually) into growth ETFs or real estate, as a 2024 investor achieved, compounding at 6–8%.

Challenges and Considerations

Trimming fees is a high-stakes endeavor. Fee opacity—hidden fund costs (0.5–1%)—requires diligent auditing; 50% of investors overpay unknowingly (Morningstar, 2024). Tax complexity—20% gains, 3.8% NIIT, and state taxes—demands harvesting; 15% of trades faced wash-sale audits in 2023 (IRS, 2025). Market volatility—2023’s 15% swings—disrupts low-cost rebalancing (Morningstar, 2024).

NIL athlete constraints, with 3–5 year horizons, prioritize fee reduction for post-career wealth. Performance trade-offs—low-fee ETFs may lag high-fee funds in bull markets by 0.5% (BlackRock, 2024). These strategies counter with low-cost ETFs, tax optimization, and automated tools. Behavioral traps—sticking with high-fee advisors or ignoring taxes—threaten returns. The advisor’s antidote: “Cut fees with a scalpel, or they cut your wealth.”

Conclusion

High portfolio fees are a wealth-draining scourge, but trimming them unlocks $1M+ investment returns. With 40+ years of fiduciary mastery, these strategies—outsmarting fees and taxes—prove it’s about precision, not passivity.

The fintech founder’s $236K savings and $11.2M portfolio showcase the power of low-cost ETFs, fiduciary advisors, and harvesting. By automating tax efficiency, minimizing trades, and reinvesting savings, you can dominate performance. Don’t let fees bleed your empire. Book a free Strategy Call at freedomcapitaladvisors.com to streamline your portfolio. As the advisor says, “Your wealth is your engine—run it lean and mean.”

Sources

1. Morningstar. (2024). The Impact of Fees on Portfolio Performance. https://www.morningstar.com/insights/fees-portfolio-performance
2. Vanguard. (2024). Low-Cost Investing for High-Net-Worth Portfolios. https://www.vanguard.com/insights/low-cost-investing
3. IRS. (2025). Publication 550: Investment Income and Expenses. https://www.irs.gov/publications/p550
4. Forbes. (2024). Hidden Costs of Non-Fiduciary Advisors. https://www.forbes.com/sites/wealth/2024/02/15/non-fiduciary-costs/