INVESTING

When it comes to managing money, Canadians face a key choice: financial advisor vs DIY. Both approaches offer different advantages, costs, and responsibilities. Understanding how each fits into personal circumstances, risk tolerance, and financial goals can help individuals make informed decisions about managing their investment portfolio, retirement planning, and overall financial life.

The Real Question: What Problem Are Canadians Trying to Solve?

Instead of framing the decision as financial advisor vs DIY investing, it can be helpful to think in terms of outcomes versus tasks. The focus shifts from who executes to what you want to achieve.

Common Problems Canadians Are Trying to Solve

• Building a simple, low-cost portfolio without overcomplicating asset allocation
• Reducing emotional decision-making during market swings
• Optimizing taxes and account usage across Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), First Home Savings Account (FHSA), and Registered Education Savings Plan (RESP)
• Planning retirement income including Registered Retirement Income Fund (RRIF) withdrawals and Canada Pension Plan (CPP)/Old Age Security (OAS) timing
• Navigating major life events such as inheritance, divorce, or a business sale

Three General Paths

• Full DIY: Investors handle all investment decisions, account management, and planning tasks
• Advisor-led: A financial advisor or planner manages both planning and implementation
• Hybrid: DIY investors handle day-to-day investing but check in with a professional periodically for guidance

Setting Expectations

• The "right" approach can change depending on life stage, financial goals, and portfolio size
• Focusing solely on paying lower fees may overlook the potential cost of mistakes or missed opportunities
• Understanding what problems you want to solve helps clarify whether full control, professional guidance, or a combination is most aligned with your situation

Reframing the choice this way emphasizes matching your approach to your financial life rather than labeling one path as superior.

Service Scope: What Financial Advisors Actually Do vs DIY Investing Tasks

What A Full-Service Financial Planner Typically Cover

Full-service financial advisors often handle a broad range of tasks that extend beyond simply managing investments.

Planning scope:

• Retirement income design: Guidance on transitioning RRSPs to RRIFs, withdrawal sequencing, and income timing considerations
• Tax planning concepts: High-level advice on income splitting and tax-efficient account use
• Insurance needs analysis: Assessing life, disability, and critical illness coverage
• Estate planning coordination: Reviewing beneficiaries, coordinating with lawyers on wills and trusts
• Education planning: RESP contribution strategies and timing

Portfolio scope:

• Asset allocation and product selection: Choosing a mix of equities, bonds, and other investments aligned with client goals
• Rebalancing and monitoring: Adjusting allocations to maintain intended risk levels
• Behavioural coaching: Helping clients avoid emotional reactions during market volatility

Administrative scope:

• Account opening, transfers, and paperwork
• Updating beneficiaries and maintaining coordination across accounts
• Managing ongoing documentation

What DIY Investors Must Own

Investors taking the DIY route need to manage all aspects of their financial life.

Investing tasks:

• Selecting an asset mix based on risk tolerance and time horizon
• Implementing investments using exchange-traded funds (ETFs) or index funds
• Maintaining rebalance discipline

Tax and account tasks:

• Understanding asset location (registered vs taxable accounts)
• Tracking adjusted cost base (ACB) for non-registered holdings
• Monitoring contribution room for TFSA, RRSP, FHSA, and RESP

Planning touchpoints:

• Identifying insurance gaps
• Ensuring estate basics and beneficiary updates are current

Operational tasks:

• Keeping organized records, statements, and tax slips
• Staying up-to-date on rules and regulatory changes

DIY pitfalls:

• Overcomplicating holdings or using too many products
• Setting up investments and forgetting to review them periodically
• Reacting impulsively to market headlines without a broader context

Understanding these scopes highlights the difference between the comprehensive service of an advisor and the full responsibility a DIY investor assumes. It also shows why many Canadians consider a hybrid approach to balance control and professional guidance.

Financial Advisor vs DIY Fees & Total Cost of Ownership in Canada

Fee Models You'll See in Canada

Canadians encounter several compensation structures when working with financial advisors or investment platforms. Understanding these models can help clarify total cost of ownership (TCO) over time.

Advisor compensation types:

• Fee-only: Charged as an hourly rate or flat project fee with no commissions tied to products
• Fee-based (AUM %): Ongoing percentage of assets under management; includes both planning and implementation
• Commission-based: Embedded commissions for buying mutual funds, including deferred sales charge (DSC) legacy products

Robo advisors and hybrid models:

• Platform fees plus underlying ETF MERs
• Optional access to tiers of financial planning guidance

"Invisible" costs that can matter:

• Management expense ratios (MERs) and fund-level fees, even when using advisors
• Trading costs including bid-ask spreads and brokerage commissions
• Currency conversion costs for CAD/USD exposure

Comparing costs:

• Convert all fees into annual dollars or % of portfolio for meaningful comparison
• Separate the value of financial planning advice from the cost of investment implementation

Behavioural Alpha & Accountability

How Financial Advisors Can Add "Behavioural Alpha"

One way financial advisors can contribute beyond planning and investing is by helping clients avoid common behavioural pitfalls that can erode long-term results.

Common investor mistakes advisors may reduce:

• Panic selling during market drawdowns, which can lock in losses
• Performance chasing, switching funds or products after peaks rather than following a plan
• Holding excessive cash, creating "cash drag" that slows portfolio growth
• Overtrading and tinkering, which increases costs and introduces timing risk

Process advantages advisors provide:

• Forced discipline: Regular rebalancing and scheduled review meetings help maintain allocation
• Reframing volatility: Advisors can help clients see market swings as normal rather than threatening
• Goal-focused perspective: By keeping financial goals front-and-center, advisors reduce reactionary decisions based on market noise

DIY Guardrails That May Replicate the Best Parts

DIY investors can adopt practical systems to achieve similar behavioural benefits.

Create a simple Investment Policy Statement (IPS):

• Define target allocation, rebalancing rules, and risk limits
• Keep it accessible and concise for reference

Automation:

• Pre-authorized contributions into investment accounts
• Scheduled rebalancing checks to maintain allocation without overthinking

Review cadence:

• Quick quarterly check to monitor progress
• Annual deep review to adjust for life changes and goals

Decision rules:

• Implement rules like "no selling on headlines"
• Wait 72 hours before making significant portfolio changes

Behavioural tools:

• Some investors utilize one-fund solutions, such as asset-allocation ETFs, as a way to manage portfolio complexity
• Account separation for specific goals helps reduce mental friction and improves clarity

By combining process, rules, and automation, DIY investors can mimic many of the behavioural advantages advisors provide while maintaining full control over investment decisions.

Taxes, Accounts & Asset Location

Accounts 101 + Asset Location Basics

Understanding the Canadian account landscape and basic asset location principles helps investors manage taxes and preserve wealth over time.

TFSA (Tax-Free Savings Account):

• Offers tax-free growth and tax-free withdrawals
• Common mistakes include keeping only cash (low growth potential) and recontributing too early after a withdrawal, which can trigger penalties

RRSP (Registered Retirement Savings Plan):

• Provides tax deferral, with