Episode 252: DIY Investing vs. Financial Advisor: What’s Really Costing You More?

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Is paying 1% for investment management a waste of money—or the exact support that could protect your wealth?

If you’ve ever wondered whether you should keep investing on your own or hand the reins to an advisor, this episode gets right to the heart of that tension. It speaks to the very real struggle between wanting to minimize fees and wanting more confidence, better decision-making, and less stress when markets get shaky. Whether you’re early in your investing journey or getting closer to financial freedom, this conversation helps you think beyond simple math and make a choice that actually fits how you operate.

You’ll walk away with:

• A clearer way to decide whether DIY investing or professional management fits your personality, habits, and goals
• A better understanding of what you’re really paying for with a 1% fee, including coaching, accountability, peace of mind, and complexity management
• A practical lens for comparing options using time, behavior, and risk-adjusted returns—not just headline performance numbers

Press play now to figure out whether paying for investment management is costing you too much—or saving you from bigger mistakes.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX.
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

In this episode of Canadian Wealth Secrets, we break down the real trade-offs between investment management and DIY investing, helping listeners build a smarter Canadian wealth plan around financial planning, risk management, and long-term wealth management. You’ll learn how portfolio diversification, fee-based investing, and risk-adjusted returns can affect your path to financial independence, while also exploring what a financial advisor can offer beyond basic market access. For Canadian families and business owners, this conversation connects directly to financial freedom Canada, financial independence Canada, and building long-term wealth Canada through practical wealth building strategies Canada. We also touch on the bigger picture of corporate wealth planning, tax-efficient investing, Canadian entrepreneur finance, personal vs corporate tax planning, business owner tax savings, and corporation investment strategies, along with topics like RRSP optimization, optimizing RRSP room, salary vs dividends Canada, capital gains strategy, and Canadian tax strategies. Whether you’re comparing real estate investing Canada with stock market strategies, weighing real estate vs renting, designing financial buckets and an investment bucket strategy, or mapping out passive income planning, legacy planning Canada, estate planning Canada, and retirement planning tools, this episode offers a clear framework for financial vision setting, financial systems for entrepreneurs, corporate structure optimization, and a sustainable early retirement strategy built around a modest lifestyle wealth mindset and stronger financial diversification Canada. 

Transcript:

Jon Orr: Today we’re gonna tackle a topic that gets people fired up. People get a lot of opinions on this and Kyle’s already fired up because we were fired up here just before we hit record. But basically here is the prompt that we’re gonna kind of discuss here today, which is basically like, is paying 1 % for investment management a complete ripoff or can that fee be worth every single penny?

On one side, the argument sounds pretty compelling. You can open an account, you can buy globally diversified basket of low cost index funds and rebalance once a year and be done. Like that doesn’t cost you the 1 % of all of your entire net worth that’s under management. For a lot of people that, know, that this is good news.

Like it has never been easier to invest on your own, but on the other side, there’s risk involved there. And do you want that risk? And so, The other side is, should we have our assets under management? And should we be paying that percentage or a flat fee if we’re looking at a flat fee advisor? That’s what we’re discussing today.

What are the moves, how to think about choosing that advisor or what are the upsides and the downsides and which one is the best or which one is what you wanna do? here’s a snort, a snort, a short glimpse to the answer is there isn’t one right answer.

Kyle Pearce: Yeah, yeah, you blew it. It’s like at the end, we were going to reveal exactly what we thought. But the reality is, is, yeah, and you know, you’re 100 % right. Like there is no right answer. And here’s the thing, though, is like, it wasn’t that long ago. It wasn’t that long ago that I was way and you’ll probably find this theme throughout the podcast is Kyle used to think blank, and then recognize that he was wrong. Okay. And the reality is I used to be

Jon Orr: Let’s get into it, Kyle. Let’s get into it. Well, everybody knows that everybody knows.

Kyle Pearce: all in on real estate. And then after a while, you start to realize it’s like, you know what real estate is kind of hard, like I spent a lot of time on on real estate, and I’ve got a lot of equity, but I don’t have a lot of cash flow. It’s like, shoot, maybe I need to expand what I know, expand my universe, right.

And as we go down this rabbit hole, and for us, it’s, you know, a few decades of going down this rabbit rabbit hole, trying to figure this all out for ourselves, selfishly, we’re now able to help clients with that. And when it comes to paper assets, public markets, for example, you know, we look at the market, and I used to be on the side of low fees, you know, like, do it yourself.

You know, how do we pay as little money, you know, me, I’m arbitrage. I love to try to optimize. And it seems obvious, like, I mean, the math is obvious. But you’ll notice again, in the theme of this podcast, sometimes it’s not just the math. that’s gonna impact what you could or should do for your own specific scenario.

And I’ve since recognized that that approach is actually a very narrow approach and is actually only a really logical approach for those who fit quote unquote that mold. You know, the psychology of money, we talk about that book quite a bit or Ramit Sethi, I Will Teach You to Be Rich, you know, the millionaire next door, like they’re all talking about this idea of just like index investing, put money in, shut your eyes and wake up 30 years later.

And when I say put money in, like constantly putting money in over that 30 year period. And the reality is the math works on that. You know, the problem is, like, why aren’t more people doing it? And I would argue that there’s a lot of people out there that either are ignorant or maybe aren’t built for that.

type of system. And I would argue I started to recognize this about myself as I got more and more into the markets over time as I transitioned from only real estate to recognizing that that’s a very narrow, very undiversified approach that I started shifting into the public markets. And I started to quickly recognize that I don’t do well with managing myself and like doing the quote unquote set and forget like I’m an optimizer.

So I’m like always like, shoot, like if we are going to go down by 10%, I would like to sideline I was talking to a client the other day, back in November. He’s like, this is getting, you know, frothy. So he put money on the sideline. It went back up to new all time highs. He was like, shoot, and then he put money back in.

Well, guess where we are now in March. Now we’re down again. And now you know, like, so I don’t I haven’t spoken to him since but like, for folks like that, doing the Ramit Seti approach, I would argue is not the right move, because I think what it leads to is some of us that don’t fit that mold actually end up investing less because they’re like, I’m worried, I’m scared, I’m gonna put more on the sideline and just let it sit there and lose, you know, value to inflation.

So there’s a lot to unpack here. So we definitely want to dig into like, what could or should I be getting if I’m going to have an advisor and that advisor is going to manage my money at sometimes it’s not as easy as just saying, I’m paying more for the exact same thing I could have on my own because I would say that’s actually not accurate and likely not true in many cases.

Jon Orr: Yeah, sometimes like the one way I tend to think about this is when someone asks like, should I get an advisor or get my assets under management? And I tend to think about like, what are you really looking for? Because if you are just looking for someone to structure a portfolio where you can just go, hey, I just wanna set and forget, I just wanna dump my money into this like fund every month and I’m not gonna touch it for so long and don’t even think about it, then.

and that’s all you need. You don’t need to talk to anybody. You don’t need any sort of special care. And you don’t maybe have any sort of special conditions because as you have say more and more and more assets, you have say more and more complexity, you have businesses, have say trusts, you’ve got special accounting, like all of a sudden it becomes more complex.

And then there’s also tax advantages for doing certain things. Like if you don’t have a complex situation and you’re just looking to say dollar cost average into the market and you already have an advisor who is just say structuring a portfolio but then that’s all you’re really getting, you have to ask yourself is the 1 % then worth it?

Because I could just be doing that and if I’m okay with the long-term approach of just putting money in and not. thinking about it, then you’re right. Let them meet SETI, which is invest in index funds. You pick a couple index funds, you put a couple bond funds and you just pump. Then that is a good move for you.

But as you generate complexity and as you generate, again, if you’re not say, if you are a tinkerer or you are looking at your markets every day, then maybe that, and you have a risk, like the risk is scary for you and you’re gonna sleep better at night, then maybe going with the advisor is the better move and it becomes worthwhile. because you’re not just buying a portfolio, right?

You’re not just buying access to the markets anymore. And that’s the way I think you wanna look at it. It’s like, what is your 1 % really getting you? Is it getting you a coach? Is it getting you complexity? Is it getting you sleep better at night? Is it getting you less risk? Right, so like, if you don’t wanna do all of that, and if you’re not just gonna say, I’m just gonna dump in the S &P 500 index funds and let them set and forget.

Kyle Pearce: Mm. Yeah, diversification, you know, like.

Jon Orr: then you have to say, what am I really paying for? Because, you know, if a person said like, well, I don’t talk to my advisor throughout the year, I know that they’re just putting the money into the market, then you have to say like, why am I paying 1 % then? Because you could just do that and not think about it.

And therefore that would be a good recommendation. So when you think complexity though, I sometimes think about it like this, like, if you have an accountant, Or do you just like, when you go into taxes every year and you have to like, okay, I’ve got to pay my taxes. Do I just go and grab TurboTax or do I have an accountant because it’s complex?

And it’s like, I have Turbo, setting and forgetting the Ramit Seti and the simple path to wealth, JL Collins, like just dump and don’t think about it is like getting TurboTax. You know, like you just have to like. pump the file, move on, you get this refund. There’s no complexity here. But sure, right, it’s price of the game.

Kyle Pearce: Be okay for the big drawdowns like they are gonna happen. And again, we’re not suggesting you don’t do that. I just know that I don’t sleep well at night when it does happen, even though I’ve done all the math. And I know it’s gonna be okay. But I somehow it’s still like even right now I don’t like the way the the markets are behaving.

I’m just say it openly. I don’t like it. You know, I wish the markets were just doing better. I well and here’s the thing is I like looking at it, which is why I’ve transitioned

Jon Orr: Don’t look at it.

Kyle Pearce: some of my paper assets to other managers, you know, and this is like, some people might find that shocking, you know, they look and they go, wait, Kyle’s not DIYing his own portfolio. And I’m like, sure, I’m always gonna do that with a good chunk of that portion, you know, but I also want diversification.

I want other people’s perspectives. And I want people that, let’s be honest, I’m working with clients all day. I’m not able to sit and watch markets all day. If my full time job is managing the money, which I don’t do for our company, I don’t actually manage the money for Canadian Well Secrets clients, our wealth advisors do, they manage the money, they’re there doing the work on the back end.

That’s what their job is. And if they’re doing that, you know, an extra five hours a day than I am, I still watch the market all day, but I can’t act on things and therefore you know, that to me is is more than worth the price of admission that’s on my you know, on my own assets and the way I do things as well.

Jon Orr: you Right. Yeah. Like you’re bringing up a, an important point because it’s, it’s, it’s, it’s like, if you’re running your business and you’re deciding on what hat to wear in your business, you’re saying like, am I the chief sales, you know, am I chief chief of, of acquisition, you know, in my business?

Like am I in charge of bringing in sales? Am I in charge of the sales calls? Like that’s where my zone of genius lies. And I do a really good job there and I help the business generate more money because of that zone of genius. Then does it make sense for you to also be the chief technology officer? and fixing all the tech bugs.

You pay for someone to do that because your return on time and your return on investment is better suited to do the zone of genius move because it makes you more money when you do that. So you pay for someone else to do another job. Managing your money is the same thing, because we’ve had this debate a few years ago, which is like, you could be your own manager of your portfolio for like, Think about charging you 1%.

Is the 1 % worth it for you to do it or is your zone of genius just to go and make more money in your business? Because your return on investment and your turn on time is actually higher there in the short term. And maybe, maybe down the road, makes more money, it makes more of a difference because you’re not, say, generating income anymore and maybe you’re in your retirement age to be like, you know what, now I do have time to like, I myself the 1 % and then manage that portfolio and go ahead and manage it then.

But right now it might not make sense because your perspective is where is my best return on time? Because you might spend three hours a week or maybe it’s two hours a day trying to manage your own portfolio and is that really worth it at this point in your career?

Kyle Pearce: And you’re 100 % true. Because it takes away time from not only your own career and the things you’re trying to do in your own business, or, you know, in your t4 job, you’re on your break, and you’re trying to look, you know, at the markets. Or, again, if we go all the way to the beginning of the episode, if you’re a DIYer, and you’re just like, Hey, every week, I buy this much of you know, these ETFs and you know, and you don’t look at it again, carry on.

Like we’re not suggesting you don’t do that if you’re able and you’re comfortable and you’re not going to make the bump. This is the part that Nobody knows until they have a huge drawdown, but like you got to make sure that you’re just not going to do the bonehead move when we do get the next big drawdown, right?

So if you can do those things, you feel confident, keep rolling along, you know, you’re going to be fine. But if you’re someone more like me, where I actually want like risk adjusted returns, like this is something that I wanted to make sure we talked about on this episode. A lot of people forget that all I say all you know, never is it all it many of the stats out there are comparing returns of advisors to a benchmark.

So they go like, okay, this asset manager didn’t perform or outperform the S &P 500. You know, every year for the past five years or 10 years or whatever, like there’s tons of stats. Exactly.

Jon Orr: That’s what all the books say too, right? It’s like, well, why would you pay them if you can just put your money in the market and it does better over time?

Kyle Pearce: And I would argue that it that’s 100 % logical, but the part that they don’t go into in the weeds is saying, if your manager is truly doing what you were going to do anyway, then you probably shouldn’t be paying that fee, right? If the the manager is basically like, hey, I’m going to be your DIY investor for you, and I’m going to set and forget and not do anything, there’s no thinking no adjustments.

There’s no discretionary moves being made. then like that does not make sense that fee, you know, if you’re comparing apples to apples, if they’re like, hey, I’m 100 % in the S &P 500, and you are going to be 100 % the S &P 500, it doesn’t make sense. But most, and I’m gonna say, I don’t want to say most, that’s the wrong word.

Good advisors, good wealth managers are actually looking for the arbitrage in the risk adjusted return. And what that means is if we compared what you were doing now, let’s say, or a balanced portfolio, right, if we look at the dimensional balance portfolio, it comes up in research all the time, like you could just take the dimensional balance portfolio and just invest in that, you know, it’s like a 6040 ish portfolio, and it does a thing, it does a thing.

But if your advisors able to actually outperform the balanced portfolio, because remember, now we’re talking about a portfolio, not just the S &P or not just the TSX or not just, you know, whatever global fund. If you’re able to outperform that with a lower risk, or sorry, I should say a higher risk adjusted return, meaning when we actually look at all the risk in the portfolio and we assess the risk, that the risk is actually lower while the returns are actually higher, you are in a sense, winning in all the areas because you have reduced risk, but you’ve actually outperformed a balanced portfolio, which is designed to try to reduce risk instead of just being 100 % say SMP or equities.

Jon Orr: So, if what you’re saying is, in order for you to effectively compare whether it’s worth it, you have to take the risk associated with that portfolio and then use that to compare to the returns and the cost of those returns. Because it’s unfair for us to say, I could put all my money into the S &P 500 or the SPY index.

and someone who’s doing a managed portfolio because there’s less risk over there than over here. Well, this over here cost me nothing, but over here cost me more, but I’m buying risk. And so if we compare the same risk profiles, then now I have to look at the costs. I’m equalizing the risk to make an accurate prediction of whether this is worth it or not. That’s what you’re saying. So how do we do that?

Kyle Pearce: Right, exactly. And a great example of this would be, you know, S &P 500, right, let’s say average 10 ish percent per year on average over, you know, like historically, right. And let’s say that an advisor gets you 9%, you go, haha, there’s that 1%. That 1%. That’s why I got nine, you know, 9%. But then you actually look under the hood and you go, you know, the beta of the S &P is like one, you know, that’s what they call it when we’re talking about like the risk.

profile. And if yours is actually less than one, and if it’s significantly less than one, and you’re getting 9%, if we actually put them on the same playing field in terms of risk reward, your portfolio is actually doing better. And then the question you have to ask is you go, well, listen, if I don’t like seeing nine, right, the one question you have to ask is, am I okay with seeing minus five, or minus 10?

And if the S &P goes down, say 10%, and your portfolio only goes down 5%, that’s actually a massive win as well. Like, you know, when we actually start running these numbers, you go, maybe there’s more to this story than I realized about DIY versus my actual wealth manager. So these are big things here that are worth considering.

if you’re going to go down that path. So something that you could do if you are looking at and maybe you’ve been shopping around for wealth managers, or, you know, you’ve gone to the big bank or you know, whoever wherever you’re at, something that you could do, especially if you are a DIY investor, is you could ask them to essentially do a comparison and show like, what is the risk adjusted return?

Here’s what I’m doing now. And what are you planning to do? in order to improve my risk adjusted return. And you know, now here’s the nuance though is like they might run the risk profile on you and they might say, you know, you kind of fall in like a lower than risk profile than what you’re doing right now that might lower your expected return.

Now, most wealth advisors aren’t going to promise you anything nor should they nor you know, are they allowed to really promise you a return but they can show you like, here’s what happened. with your portfolio, here’s what happened with a portfolio that would have been similar to your risk profile, what you’re doing now.

And if you’re able to get that arbitrage there, like to me, I go, that’s a huge deal. know, for someone like myself, I go, it’s great to know somebody’s in the back, kind of like pulling the gears in order to try to keep my risk profile or my risk lower while my actual. returns may also be slightly lower, but my drawdowns are likely going to be significantly significantly less than if I was say DIYing blindly.

Again, if you don’t open your pro, you know, don’t open your account, especially when you see the news and there’s just nothing but blood red on the screen when you watch CNBC, you know, rock and roll like it doesn’t matter as long as your runways long enough. But a lot of the people listening to the show, here’s the thing, they want financial freedom in the next five or 10 years.

Like that complicates things because if that drawdown happens at exactly the wrong time, sequence of return risk, right? How are you going to behave as a DIY investor? I think you will behave different or you’ll feel different. If you’re 49 and you plan to retire at 50, or you’re 59 and plan to retire at 60, then if you were 25 and you’re like, I don’t even think about retirement right now, right?

And and remember, how big is the pile when you’re 25 compared to when you’re 49 right about to retire or 59 or whatever that number is for you, the pile is likely significantly larger. And therefore the emotions are likely significantly higher if and when we see something like that taking place. And if I’m in full control.

Jon Orr: So I think when you think about it in somewhat of a summary here, what we’ve been riffing on is that when we think about a fee-based advisor or do-it-yourself investment portfolio, it really comes down to just saying, and this might be all of sudden common sense that someone’s like, guys, this is no-brainer. You just have to decide what you want to pay for.

And if you are going to make that decision, put them on the same playing field. Look right down, what is it worth to you? And what is your time worth to you? Because we talked about thinking about whether you’re paying for a coach, you’re paying for accountability, paying for information, paying for learning.

Because that’s another aspect of, say, finding the right advisor. That if you want to meet with your advisor on a regular basis, because what you’re really doing is you’re paying your 1%, not only to get a managed portfolio, but also to learn alongside that accountability partner can be worth your 1%.

So it’s about deciding what are you really paying for and what is it really worth paying for? And if you can get clear on that, like write it down, like make a list. It does sound like a no brainer to say that, but it can be worth it for you to say, what am I really paying for here? Am I paying for peace of mind?

Is that worth it? Is that all that’s worth it? Is it paying for like, I don’t have to do anything. But then if I’m not enough to do anything, then which two methods do I really wanna pay? Like, do I just wanna like invest and not think about it and I’m okay with the drawdowns and not the drawdowns because I’m okay with averages over time?

Or do I wanna have the advisor because I can sleep better at night or I can learn along the way? So in a way, you just wanna go, what am I really paying for? And what is it worth to me to pay for that? And I feel like that can help you make your decision and. And I think that’s my big takeaway here for today.

Kyle Pearce: Yeah, like my big takeaway too, like your accounting comment, turbo tax kind of is like a big takeaway for me because as we were chatting, I also recognized, guess what? Hey, is it a surprise to anyone? I used to do all my own taxes. I would file in Canada and the US, you know, and now we don’t and we used to do our own bookkeeping, you know, and now we don’t, we pay someone to do the bookkeeping for us and it’s actually every time I see the bill, I go, wow, that’s a lot of money. I’m like,

Jon Orr: Now we don’t. It’s not worth our time. It’s complex.

Kyle Pearce: Should we? I remind myself it doesn’t make sense for us to do that type of work. And, you know, the reality is, is that as you progress, and I would argue that, you know, if you’re early in the journey, I would probably encourage you to DIY, you know, and I had a call recently with someone who, you know, they were just kind of like beginning and it was like great to hear like they’ve they’re doing all the learning, reading the books and all of the stuff.

I’m like, build the pile. It’s a volume game. Get the volume going. The most important thing you can do when you start is pump as much money in there as you possibly can. And a DIY approach is gonna be great. And guess what? It’s probably not gonna affect you as emotionally when the pile is smaller and time is on your side.

But as that pile gets larger, you have to start thinking like I did when I was doing my own accounting. I did my own Canadian T1s. I did my US taxes because I have property in the US. I still do. And eventually, my time was worth more than doing that accounting. And it was interesting because on LinkedIn, there was an accountant who shared it was hilarious.

He said, you know, I was on a discovery call with a potential prospect who said, Wow, you want to charge me 1500 or $1,200 for my tax return. But my current accountant is $400. And he goes, Yeah, there’s a difference. And he goes, and yet you’re still here. So then the question was is Why are you here again.

He said this is wow $400 a great deal. Why are you here? You know, like and it’s like, oh, I know why you’re here, right? Because it wasn’t done well. And the reality is, is that you do have to think about these things. So we’re not here to tell you what you should do or what you shouldn’t do. But to make sure that you’re fully informed that every decision we make

Jon Orr: Service.

Kyle Pearce: It always comes down to this. And this is a theme that I want to bring up on every podcast episode. If I can remember is that everything we do in this world in this wealth building world is all about give and take. And we have to decide is like sometimes things are more money. Some things are time things are less money.

Sometimes more complexity means saving more tax. Sometimes more simplicity means paying more tax like all of these things have consequences. There’s no easy answer but As long as you are informed and we continue to work with you to educate yourself, you can at least figure out like what makes sense for me, my situation so that I can build that nest egg for myself and my family down the road.

Jon Orr: And if you’re looking to have someone to provide some insight into your portfolio, into whether you should do it yourself, whether it could be beneficial to have an advisor, we encourage you to reach out to us. Head on over to CanadianWealthSecrets.com, force us discovery, book a call with us, and we can be talking about what your portfolio could look like, what your wealth strategies can be looking like.

we do with all of our clients as we holistically help them plan out a healthy financial planning system. Again, head to CanadianWellSecrets.com forward slash discovery.

Kyle Pearce: Awesome, awesome. And just remember my friends, we here are an education first company. So that means we’re here to help you learn, understand, and then help you plan your holistic plan. And if that means involving us along the way, we are so happy and honored to do so. As a reminder, we are licensed in insurance across many different provinces here in Canada.

We also have a wealth management team that could be your right fit. if you are looking for a managed portfolio.

Jon Orr: Just a reminder of the content you heard here today is from Financial Purpose of Nation, access to any of this information is legal tax investment or financial advice. CalPERS’s Licensed Life and Next in Sickness Insurance agent and the president of corporate wealth management, Canadian Wealth Secrets.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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