You have $1m and on average it will earn 7% per year. The fee is 1% of the $1m ($10k), but it is 14% of your expected gains per year (1%/7%). After fees your portfolio will go up by 6% per year instead of 7%, which is a substantial reduction.

here's an example:

  say you have $100k invested
  the 1% fee for that will be $1k
  the earnings will be $7k

so the "1%" fee takes away 14% ($1k is 1/7th, or 14%, of $7k) of your earnings.