Should I become a DIY Investor even though I like my advisor?

Should I fire my advisor and invest by myself?

The value of an advisor can grow when you retire



Q. Bruce, I believe I am with a good and honest financial advisor.  On her recommendation, I hold low-cost mutual funds, with an MER below 1%.  My returns have averaged 6-8% annually over the past few years.  But I am wondering if I should consider moving into a self-directed investment account and selecting the very same low-cost mutual funds to avoid the 1% advisor fee? Is this a sound strategy? I am less than 3 years away from enjoying retirement. – Thanks, Janet C.

I am a big believer in making sure you get what you pay for, in all areas of life.  If you had told me you didn’t trust your financial advisor, were holding high-fee mutual funds and your returns were crumby, I’d be cheering you on as you made a change – either to a new advisor or a Do-It-Yourself approach.

But in your case, the opposite is true, making the question a more difficult one to answer.  The disadvantage to staying with your advisor is cost.  I’d look at your total portfolio size and calculate how much you’d save if you got rid of the 1% fee. Compare that to the advantages of staying:  Investment advice, administrative help, emotional support, a second eye on your overall financial picture, and of course, continuity.  You have someone you trust and that is worth a lot.

As well, the life stage in which financial advisors can be most helpful is during retirement, the stage you are heading into.  That’s because the decumulation phase can be complicated.  You have to convert your RRSP to a RRIF and determine how to withdraw income in the most tax efficient way possible.  And as you age you might have less interest in managing your money, or face a decline in physical or mental health that prevents you from keeping on top of it all.

This is a cost versus benefit calculation.  Consider the tangible factors, like dollars and cents.  But also the intangible factors such as confidence and peace of mind.  If it feels too close to call, I’d recommend that you simply maintain the status quo, and focus on the other exciting life changes ahead.