A robo-advisor’s management fee buys convenience: it invests your deposits, rebalances and reinvests dividends so you never place a trade. The alternative is to buy an all-in-one ETF at a commission-free broker and hold it yourself, paying only the ETF’s management expense ratio (MER). This page puts a dollar figure on that difference and sets out who gets the most from paying it. To compare the robo-advisors themselves, see the Canadian robo-advisor comparison; for the full range of self-directed brokers, see the online broker comparison.
What the management fee costs
The DIY investor and the robo-advisor client both pay the ETFs’ own fees. The difference is the robo-advisor’s management fee, charged every year on the whole managed balance.
| Balance | Questwealth fee (0.25%) | Wealthsimple Core fee (0.5%) |
|---|---|---|
| $10,000 | $25 | $50 |
| $25,000 | $63 | $125 |
| $50,000 | $125 | $250 |
Both providers also set a separate rate for larger balances: Questwealth 0.20% from $100,000, and Wealthsimple 0.4% once your total Wealthsimple assets reach $100,000. The robo-advisor fee comparison shows every provider’s cost at balances up to $500,000.
How a fee gap compounds
A fee comes out of the balance every year, so the money it removes also stops growing. The table uses illustrative assumptions, not any provider’s actual fees: $100,000 invested once, a 6% return before fees every year, fees deducted annually and no further contributions.
| All-in annual cost (fees plus ETF MER) | Value after 20 years | Lost to fees and forgone growth |
|---|---|---|
| 0.20% (typical one-fund DIY portfolio) | $308,826 | $11,888 |
| 0.45% | $294,554 | $26,160 |
| 0.70% | $280,910 | $39,803 |
| 2.00% (typical bank mutual fund) | $219,112 | $101,601 |
With no fees at all, the same $100,000 would grow to $320,714. Real returns vary from year to year, so treat these as a way to size the gap, not a forecast. The MER calculator runs the same arithmetic with your own numbers.
What the fee pays for
| Feature | DIY all-in-one ETF | Robo-advisor |
|---|---|---|
| Choosing the portfolio | You pick one ETF matching your risk level | Assigned from a questionnaire |
| Investing each deposit | You place the buy order (some brokers automate recurring purchases) | Automatic |
| Rebalancing | Done inside the all-in-one ETF | Automatic |
| Reinvesting dividends | Automatic with a DRIP, or by hand | Automatic |
| Tax-loss harvesting | By hand, in non-registered accounts | Offered by some providers |
| Someone to ask | No | Some providers include a portfolio manager |
| Ongoing time | An hour or two a year | Close to none |
An all-in-one ETF such as those compared in the all-in-one ETF guide holds thousands of stocks and bonds and rebalances to its target mix on its own. That removes most of the work a robo-advisor does for a single-account investor, which is why the fee buys less for someone who would hold one ETF than for someone juggling several funds and accounts.
The behaviour question
The fee matters less than what an investor does in a market drop. Someone who sells after a 30% fall, or stops contributing until prices recover, can lose far more than a decade of management fees. A robo-advisor does not stop you from selling, but automatic deposits and an app that is not built around trading make it less tempting. The decision mostly comes down to an honest answer about your own habits.
| A robo-advisor tends to suit someone who | Doing it yourself tends to suit someone who |
|---|---|
| Has sold investments in a downturn before | Held on through past downturns |
| Finds choosing investments stressful | Is comfortable picking one all-in-one ETF |
| Wants deposits invested with no action at all | Will place a buy order each month or automate it |
| Holds a small balance, where the dollar fee is small | Holds a larger balance, where the fee is hundreds of dollars a year |
| Wants RESP portfolios that de-risk as a child ages | Wants full control over holdings and costs |
Setting up a DIY ETF portfolio
- Open a TFSA, RRSP, FHSA or non-registered account at a commission-free broker (the online broker comparison lists them).
- Fund it by bank transfer.
- Choose one all-in-one ETF whose stock-to-bond mix matches your risk tolerance.
- Buy it, and set up recurring contributions if the broker offers them.
- Review once a year. With a single all-in-one ETF there is nothing to rebalance.
How to buy ETFs in Canada covers the order types and trading steps. If you want a human advisor in the mix as well, robo-advisor vs financial advisor vs DIY compares all three.
Sources
The figures and rules on this page come from these sources. How we check facts.
- questrade.com: Questwealth Portfolios | Questrade
- wealthsimple.com: Compare Generation, Premium, and Core Plans & Fees | Wealthsimple