I believe that to truly safeguard your long-term financial well-being, Canadian investors must look beyond short-term control and recognize the value of a planner—particularly for retirement planning.
Do-it-yourself investing: Is it better?
Many Canadian DIY investors take pride in being able to manage their portfolios, believing that lower account costs and direct control mean better results. However, in practice, DIYers may overlook crucial risk factors:
- Making decisions based on emotions,
- lack of diversification in their portfolio and
- failure to adapt asset allocation to the complex and ever-evolving economy.
Volatile markets, like what’s happening now with a low Canadian dollar and the U.S. trade war, mean that decisions can become stressful and emotional, which can often override a long-term planning strategy for those managing their own investments. With inflation, policy shifts and geopolitical tensions, these times demand the experience and foresight that many DIYers don’t have.
I often get requests from Canadians asking me to look at their DIY plans. But my advice is always the same: Without the disciplined approach from an independent financial planner, it’s too easy to misstep, particularly when managing a transition into retirement. Relinquishing some control and partnering with a qualified financial planner is not a sign of weakness. It is a strategic decision to help ensure that your retirement years are not left to chance.
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Can you save money managing your own investments?
Another common misconception among DIY investors is that self-management eliminates unnecessary fees. While it is true that investment products, like mutual funds and exchange-traded funds (ETFs), can come at a relatively low cost, there are still fees. Some are visible, some are hidden. For example, mutual funds often carry management expense ratios (MERs) ranging from 1% to 2.5%, and ETFs may offer MERs between 0.05% to 0.75%, but they also include hidden costs, like bid-ask spreads, foreign exchange charges and poorly timed trades.
Unfortunately, though, there’s also the greatest cost of all: missed opportunities. Without professional guidance, many DIY investors in Canada fail to structure their portfolios in a way that supports sustainability through retirement, maximizes tax efficiency and works for the long term.
A good independent financial planner can team up with a portfolio manager to create customized, cost-efficient portfolios, and together work toward a client’s pre- and post-retirement goals. They can tailor a strategy to an individual’s life stage, goals and risk tolerance. It’s not always about the fleeting market trends. The cost of hiring a financial planner, in many cases, can be much lower than what the investors are already paying. I’ve seen it first-hand.
What a planner really does
Qualified advisors do more than stock picking; they offer wealth management. We take a nuanced approach to planning that aligns assets directly with life goals—most critically, your strategy for retirement.
