There are three ways to manage an investment portfolio: do it yourself at an online broker, use a robo-advisor, or work with a financial advisor. This page compares what each costs, what you get for it, and which situations each suits. For the providers themselves, see the robo-advisor comparison and the online broker comparison.
The three approaches at a glance
| DIY at an online broker | Robo-advisor | Financial advisor | |
|---|---|---|---|
| What you pay | ETF fees, plus any trading costs | Management fee plus ETF fees | Depends on how the advisor is paid (see below) |
| Who picks the investments | You | An algorithm, from your questionnaire | The advisor, with you |
| Rebalancing | You, or built into an all-in-one ETF | Automatic | The advisor |
| Planning beyond the portfolio | None | Limited | The main thing you are paying for |
| Time you spend | An hour or two a year for a one-ETF portfolio | Almost none | Meetings and reviews |
What each costs
DIY. At a $0-commission broker, a one-ETF portfolio costs only the ETF’s management expense ratio. Brokers are compared in the online broker comparison, and one-fund portfolios in the all-in-one ETF guide.
Robo-advisor. A management fee on top of the ETF fees: 0.25% at Questwealth, 0.5% at Wealthsimple’s Core tier, 0.50% in Justwealth’s published example and 0.60% on the first $150,000 at CI Direct Investing. The robo-advisor fee comparison converts these into dollars at each balance.
Financial advisor. Advisors are paid in one of several ways, and the method matters as much as the amount:
| How the advisor is paid | What you see |
|---|---|
| Commissions built into the funds sold | A higher fund MER, part of which pays the advisor and the dealer |
| Percentage of assets (fee-based) | A yearly fee on your balance, plus the fees of the funds held |
| Flat or hourly fee (fee-only planner) | A set price for a plan or advice, with no link to what you buy |
What these add up to varies widely by advisor and balance; how much a financial advisor costs covers typical fee levels.
How fees add up over time
Illustrative only: $100,000 invested once for 30 years, a 7% return before fees every year, fees deducted annually and no further contributions. The fee levels are assumptions for comparison, not any provider’s actual cost.
| All-in annual cost | Value after 30 years | Lost to fees and forgone growth |
|---|---|---|
| 0.20% | $719,677 | $41,549 |
| 0.70% | $625,170 | $136,056 |
| 1.50% | $498,395 | $262,830 |
| 2.20% | $408,168 | $353,058 |
With no fees, the same $100,000 would grow to $761,226. The gap widens every year because each fee also removes the growth that money would have earned.
Which suits which situation
| Situation | Approach that tends to fit |
|---|---|
| Comfortable choosing one ETF and holding it through downturns | DIY |
| Wants investing done automatically, with no decisions | Robo-advisor |
| Has sold in a market drop before, or finds investing stressful | Robo-advisor, or an advisor who will talk them through downturns |
| Needs tax, retirement income, estate or business planning | Financial advisor, or a fee-only planner alongside DIY or a robo-advisor |
| Holds a large, complex set of accounts | Financial advisor, or a fee-only plan plus DIY |
The DIY-versus-robo decision on its own is worked through in robo-advisor vs a DIY ETF portfolio.
Sources
The figures and rules on this page come from these sources. How we check facts.
- cifinancial.com: Investment Account Pricing | CI Direct Investing
- questrade.com: Trading Fees & Commissions | Questrade Pricing | Questrade: Tilt finance in your favour
- questrade.com: Questwealth Portfolios | Questrade
- wealthsimple.com: Compare Generation, Premium, and Core Plans & Fees | Wealthsimple