Quick Comparison
| Factor | DIY Investing | Robo-Advisor | Financial Advisor |
|---|
| Total annual cost | 0.05-0.25% | 0.55-1.00% | 1.00-2.50% |
| Cost on $100K/year | $50-$250 | $550-$1,000 | $1,000-$2,500 |
| Cost on $500K/year | $250-$1,250 | $2,750-$5,000 | $5,000-$12,500 |
| Time required | 2-4 hours/year | 30 min/year | 0 hours |
| Knowledge needed | Moderate | Low | Low |
| Rebalancing | Manual | Automatic | Automatic |
| Tax-loss harvesting | Manual | Automatic (some) | Sometimes |
| Financial planning | No | Limited | Comprehensive |
| Best for | Cost-conscious, hands-on investors | Busy professionals, beginners | Complex situations, high net worth |
The True Cost of Fees Over 30 Years
Starting with $50,000, contributing $500/month, 7% gross return:
| Approach | Fee | Portfolio at 30 Years | Fee Drag (Lost) |
|---|
| DIY (index ETF, 0.20%) | 0.20% | $724,000 | $17,000 |
| Robo-advisor (0.70%) | 0.70% | $663,000 | $78,000 |
| Financial advisor (1.50%) | 1.50% | $579,000 | $162,000 |
| Mutual funds (2.20%) | 2.20% | $513,000 | $228,000 |
Fee drag = how much the fees cost versus a zero-fee scenario ($741,000).
DIY Investing
How It Works
| Step | Details |
|---|
| 1. Open account | Wealthsimple Trade, Questrade, or IBKR |
| 2. Choose ETFs | All-in-one ETFs (VBAL, VGRO, XGRO, XEQT) or build portfolio |
| 3. Contribute regularly | Monthly automated deposits |
| 4. Buy ETFs | Commission-free on most platforms |
| 5. Rebalance annually | 1-2 hours/year (all-in-one ETFs rebalance automatically) |
| Platform | Commission | Currency Conversion | Best For |
|---|
| Wealthsimple Trade | $0 (CAD), 1.5% fx (US) | Norbert’s Gambit not available | Beginners, Canadian ETFs |
| Questrade | $0 ETF buys, $4.95 sells | Norbert’s Gambit available | Cost-conscious, US stocks |
| Interactive Brokers | $0-$1/trade | Best fx rates (0.002%) | Advanced, large portfolios, US stocks |
| National Bank Direct | $0 all trades | Available | Quebec-based, simple needs |
Sample DIY Portfolio
| ETF | Allocation | MER | Description |
|---|
| XEQT | 100% | 0.20% | All-in-one, 100% global equity |
| XGRO | 100% | 0.20% | 80/20 equity/bond |
| VBAL | 100% | 0.24% | 60/40 equity/bond |
All-in-one ETFs are the simplest DIY approach. One fund, globally diversified, automatic rebalancing inside the ETF.
Robo-Advisors
How They Work
| Step | Details |
|---|
| 1. Answer risk questionnaire | Online, takes 5-10 minutes |
| 2. Algorithm builds portfolio | Based on your risk tolerance and goals |
| 3. Deposit money | One-time or automatic recurring |
| 4. Automatic rebalancing | Portfolio stays on target without your input |
| 5. Tax-loss harvesting | Some robo-advisors do this automatically |
Best Robo-Advisors in Canada
| Robo-Advisor | Management Fee | Total Cost (incl. ETF MER) | Min Investment | Special Features |
|---|
| Wealthsimple Invest | 0.40-0.50% | 0.60-0.70% | $1 | SRI portfolios, roundups, best app |
| Questwealth | 0.20-0.25% | 0.35-0.45% | $1,000 | Lowest cost, SRI option |
| RBC InvestEase | 0.50% | 0.65-0.75% | $100 | Bank integration, familiar brand |
| BMO SmartFolio | 0.40-0.70% | 0.55-0.90% | $1,000 | BMO integration |
| CI Direct Investing | 0.35-0.60% | 0.50-0.80% | $100 | Formerly WealthBar |
| Justwealth | 0.40-0.50% | 0.55-0.70% | $5,000 | Target-date RESP portfolios |
Robo-Advisor Pros and Cons
| Pros | Cons |
|---|
| Hands-off investing | Higher cost than DIY (0.4-0.7% more) |
| Automatic rebalancing | You don’t learn how to invest |
| Tax-loss harvesting (some) | Limited customization |
| Low barrier to entry | No financial planning (limited) |
| Better than mutual funds (cheaper) | Still has fees that compound |
| Prevents emotional mistakes | May not suit complex situations |
Financial Advisors
Types of Financial Advisors in Canada
| Type | How They’re Paid | Typical Cost | Best For |
|---|
| Fee-only financial planner | Flat fee for plan | $2,000-$6,000 (one-time) | Financial plan without product sales |
| Fee-based advisor (AUM) | % of assets under management | 0.75-1.50%/year | Ongoing management + planning |
| Commission-based (mutual funds) | Embedded fund commissions | 2.0-2.5%/year (via MER) | Avoid if possible (highest cost) |
| Fee-for-service planner | Hourly rate | $150-$350/hour | Specific questions, one-time advice |
| Insurance-based advisor | Insurance commissions | Paid by insurance companies | If you need insurance products |
| Private wealth manager (bank) | AUM fee | 0.50-1.25% (on $500K+) | High net worth, complex needs |
When You Need a Financial Advisor
| Situation | Advisor Type | Why |
|---|
| Retirement income planning | Fee-only planner | Optimize CPP, OAS, withdrawal order |
| Estate planning | Fee-only planner + lawyer | Minimize estate taxes, trusts |
| Business owner | Fee-only planner + CPA | Corporate structure, succession |
| Cross-border (US/Canada) | Specialist cross-border planner | Dual tax obligations |
| Sudden windfall ($500K+) | Fee-only planner | Avoid costly mistakes |
| Divorce financial settlement | Certified Divorce Financial Analyst | Equitable division |
| Simple TFSA/RRSP investing | You don’t need one | Use robo-advisor or DIY |
Decision Framework
By Portfolio Size
| Portfolio Size | Best Approach | Why |
|---|
| Under $10,000 | DIY (all-in-one ETF) or robo-advisor | Fees matter less at small amounts |
| $10,000-$100,000 | DIY or robo-advisor | Savings from DIY start to add up |
| $100,000-$500,000 | DIY is best; robo-advisor is fine | $700-$3,500/year saved vs advisor |
| $500,000-$1M | DIY + fee-only planner | $5,000-$12,500/year saved vs advisor |
| $1M+ | DIY + fee-only planner (or private wealth) | $10,000-$25,000+/year saved vs advisor |
By Investor Type
| Profile | Best Approach | Why |
|---|
| Complete beginner | Robo-advisor | Simple, automated, prevents mistakes |
| Wants to learn | DIY with all-in-one ETF | Simple enough, you learn by doing |
| Busy professional | Robo-advisor or DIY (all-in-one ETF) | Minimal time required |
| Financially complex (business, estate) | Fee-only planner + DIY/robo | Expert advice where needed, low cost elsewhere |
| Emotional investor | Robo-advisor | Removes temptation to panic sell |
| Cost-focused optimization | DIY | Savings compound significantly |
Hybrid Approach (Best of Both)
| Service | Provider | Cost |
|---|
| Day-to-day investing | DIY (XEQT in TFSA/RRSP) | 0.20% MER |
| Financial plan (every 3-5 years) | Fee-only planner | $2,000-$5,000 |
| Tax optimization | CPA | $200-$600/year |
| Insurance review | Insurance broker | $0 (paid by insurer) |
| Total annual cost on $500K | | ~$1,500-$3,000 |
| vs Financial advisor on $500K | | ~$5,000-$12,500/year |