Calculate the all-in annual cost for an Rs 8 crore client paying a 0.75% advisory fee, fund expenses of 1.1% on Rs 5 crore, a PMS fee of 2% on Rs 2 crore and 0.1% in transaction costs on the whole.

The client pays about Rs 16.3 lakh a year, 2.04% of his Rs 8 crore, not the 0.75% on his statement. The advisory fee is Rs 6.0 lakh, fund expenses Rs 5.5 lakh, the PMS fee Rs 4.0 lakh and transaction costs Rs 0.8 lakh. At an illustrative 10% gross return, that drag costs him about Rs 3.5 crore over ten years. Present every layer together, in rupees first.

Each rate sits on a different base. A restaurant bill with a 10% service charge on food only and 5% tax on the whole bill cannot be summed as 15%; you work out each charge on its own base. Costs that apply to different slices of a portfolio must be turned into rupees first, and only then divided by the whole. 0.75% of Rs 8 crore is Rs 6.0 lakh; 1.1% of Rs 5 crore is Rs 5.5 lakh; 2% of Rs 2 crore is Rs 4.0 lakh; 0.1% of Rs 8 crore is Rs 0.8 lakh. The total is Rs 16.3 lakh, 2.04% of Rs 8 crore.

Cost differs sharply by sleeve, because the advisory fee sits on top of every product fee. The PMS money pays 2.85% a year all in, more than three times the 0.85% on the directly held bonds. That is the number to test against what each sleeve is for: a PMS at 2.85% has to earn its keep through returns a cheaper route cannot deliver.

At an illustrative 10% gross return, Rs 8 crore grows to Rs 20.75 crore in ten years with no costs, and to Rs 17.21 crore at 2.04% of costs a year. The drag is about Rs 3.5 crore, nearly half the money he started with, because every rupee of cost also loses its future growth. The return is an assumption, not a forecast, but the proportion holds at most plausible returns: a 2% annual cost takes roughly a sixth of the ending wealth over a decade.

All layers on one page, rupees first, then the percentage, then the ten-year figure. Then check each layer on its merits. If the mutual funds are regular plans, part of their 1.1% is distribution commission, which means paying for advice twice alongside the advisory fee; direct plans remove that layer, and the rules on advisers receiving commissions are worth confirming. Disclosing one fee at a time is how clients end up paying more than they would agree to if they saw the total. A client who sees the whole bill, and the reason for each line, is far less likely to leave when he finds it himself.