Some people might not withdraw their assets from exchanges because of the fees but that shouldn't be a problem if the person isn't using those funds daily. If you have extra funds in your exchange wallet, and you are not using them for trading or staking purposes, then it is better to simply withdraw them and keep them in a non-custodial wallet.
Will you prefer to lose the entire portfolio to exchange than to lose some cent-few dollars to some random group of people you know nothing about? I understand how some people think, they don't really understand how Bitcoin actually works under the hood, they just hear about it and want to hold it but know noting about how it operate, this is why scams looks easy to pass through them as they don't even know how to smell some dangers and what's is wrong from what is right.
A few months ago, I heard or read somewhere over the internet that some institutional investors keep their funds in the exchange where they buy them, I think the reason was that they believe exchanges are safer than wallets but that isn't true in all cases because exchanges have higher odds of getting attacked by hackers so there can be negative consequences of doing that.
Only a lazy person that is used to how the banking system works will believe an exchange is a safe haven to keep coins, some people don't even know that doing this is selling privacy plus security. Only if it's mandatory for people to learn how Bitcoin works before they are allowed to buy them but the marketing push of centralized exchanges precede any knowledge been push for new people that are new to crypto.