Every product has a seller. Know how they earn from you before you sign.
Ask who gets paid.
Five ways to have €10,000 looked after for 20 years. Rank them by what they cost you. Most first.
A small yearly fee is someone’s large, steady pay, and it comes out of yours.
← Red LinesRed Line 22 of 48 The idea The numbers Ask this Where it bends This game’s numbersHow strong the proof isBGood proof, with limits Where it comes from
Banks, advisers and platforms earn from what you buy: fees to get in, yearly costs, commissions passed back to whoever sold it. None of it is secret, but it is rarely the first thing said.
€50,000 for 20 years growing 6% a year before costs. 2% a year in costs leaves 4%: about €110,000 instead of €160,000. Of everything it grew, almost half went to costs.
Before you sign: what do I pay to get in, every year, and to get out? And how is the person selling it paid?
Paying for honest work is fine when you know the price.
Worked out on this pageESMA, costs of EU retail investment productsEIOPA, costs and past performance of insurance products
Studies in the US and Italy, including advisers visited by test clients, show sellers steer people to what pays the seller, though not every adviser does.
- The Supply Side of Household Finance Gabriele Foà, Leonardo Gambacorta, Luigi Guiso & Paolo Emilio Mistrulli, Review of Financial Studies 32(10), 3762-3798, 2019
- Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry Daniel Bergstresser, John M. R. Chalmers & Peter Tufano, Review of Financial Studies 22(10), 4129-4156, 2009
- The Market for Financial Advice: An Audit Study Sendhil Mullainathan, Markus Noeth & Antoinette Schoar, NBER Working Paper 17929, 2012
Checked 2 Nov 2026 · How we grade
- A Strong proof: Many good studies or long official data, from different teams or countries, point the same way.
- B Good proof, with limits: Solid studies agree on the direction, but the size varies, or the data covers few places or few kinds of people.
- C Mixed proof: Some good studies for, some against, or the evidence covers only part of the line.
- D Thin proof: Mostly one book’s argument, one survey or stories. It may be wise, but it has not been tested well.
- = True by the sums: It follows from arithmetic, so no study can overturn it. We still show what real data says.
Fred Schwed Jr., Where Are the Customers’ Yachts? (1940). In our words, not quoted.
See it in numbers: Fees (From Zero)
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