Self-Directed or Advised Portfolio: Compare Service and Cost
Define the decisions you want to delegate, then compare platform, fund and advice fees on that basis.
In this article
Between full self-direction, an online portfolio service and private management, the cost gap runs from 0.25% to over 1% a year. The service gap is hard to read on a rate card. To choose, start from the decisions you genuinely want to delegate: the rebalancing postponed for two years, tax placement across accounts and above all discipline in a falling market, if you have already sold at a bottom. Each price tier buys a different level of delegation, and paying for services you do not use amounts to a forgotten subscription. Spell out in writing, before signing, the frequency of contact, access to a person and responsibility for each task. This article inventories what each formula does and does not do, prices the gaps on a typical portfolio and identifies the life moments when the answer changes.
List what you genuinely want to delegate
The choice among self-direction, an online service and private management starts with a personal inventory: the decisions you genuinely want to hand to someone else. The typical list includes rebalancing, a mechanical task that many self-directed investors postpone indefinitely. It also includes tax placement across accounts, meaning what to hold where, investment selection and bear-market discipline, the most precious if you have already sold at a bottom. Every task you do not delegate comes back to you, with the time and consistency it demands. Make the inventory honestly, based on what you actually did rather than what you intended. It will indicate the service level you need. Some people need nobody, others need everything, and most sit somewhere in between.
Price the three cost tiers
The three formulas stack up by total annual cost, all-in. Full self-direction costs the held ETFs' fees plus the platform's commissions, often around a quarter point. The online portfolio service offers algorithmic management, rebalancing included, for around half to three quarters of a point, fund fees counted. Private management or full-service advice costs a point or more, planning and guidance included. On your real balance, these percentages become annual dollars. Then compare the gap between tiers with each one's additional services. The gap between self-direction and the online service buys automatic rebalancing and discipline. The next gap buys a person, their planning and their availability.
Verify the promised service's reality
At an equal price, offers differ in substance, and you should verify that before signing. Start with how often they contact you: an annual meeting, quarterly reviews, contact as needed? Then ask about access: a dedicated person who knows your file, a rotating team, a call centre? Above all, ask about availability at the critical moment: who answers during a market correction, and how fast? The answers will be contractual or evasive, which is information in itself. Ask how the advisor is paid too (salary, commissions, fees), because it steers the recommendations. Finally, judge the real service in use. A year in, count the promises kept. The gap between what was sold and what was delivered justifies a renegotiation or a departure.
Assign every responsibility in writing
Mixed arrangements and grey zones cause the quietest losses. Each party believes the other rebalances, and nobody does. Cross-account tax placement belongs to no one. Cash sits unassigned. The remedy is one page assigning each task (rebalancing, tax, plan review, fee monitoring) to a named owner, you or the service, with its frequency. Self-directed, everything falls to you and the page becomes your routine. With an online service, the algorithms cover the mechanics and you keep the overall tax picture. In private management, the page becomes the list of contractual expectations. Review the page every year, in ten minutes, to catch orphaned tasks before they cost you. Life stages, such as an inheritance or approaching retirement, also reopen the question of the tier itself.
Quebec scenario
At 45, a school principal in Victoriaville receives a private-management offer at 1.3% a year. She wonders what she already pays and what she would get in exchange. She starts by inventorying her three real options. The first is to continue alone on her brokerage platform, for roughly 0.25% all-in between ETF fees and commissions. The second is an online portfolio service at 0.7% with automatic rebalancing. The third is private management at 1.3% with a dedicated planner. Then she lists the decisions she genuinely wants to delegate: rebalancing, which she has postponed for two years, tax placement across her four accounts, and above all the calm voice on the phone when markets fall, she who sold at the bottom in 2020. The frequency of contact matters too. One annual meeting is not worth 1.3% to her, but direct access at any time, perhaps. She picks the online service, halfway on both cost and delegation. She writes the condition for a future change into her file: the day her situation demands real tax and estate planning, 1.3% could become an honest price again.
Checklist
- List the decisions to genuinely delegate
- Price each formula's annual cost
- Verify the offered contact frequency
- Assess access to a person in a crisis
- Review your own bear-market behaviour
- Clarify in writing who does what
- Avoid paying for unused services
- Choose the tier aligned with real needs
- Revisit the choice at life stages
The questions we get
A question about your situation?
A Quebec broker answers, with no commitment.
Read next
// Investments
Dividends or Total Return: Avoid an Incomplete Comparison
Add the dividend to the price movement: a high distribution is not a guaranteed return.
// Investments
Investment Account Transfer Fees: What to Check Before Moving
Ask the departing institution’s exit fees and check whether the receiving one reimburses them before moving an account.
// Investments
TFSA or RRSP: Choose by Goal and Tax Rate
Choose between TFSA and RRSP based on the goal, the withdrawal horizon and your current and future tax rates.