Weekend Reading: Pitfalls of Leaving Your Advisor Edition [Video]

A commonly held view in the do-it-yourself investing community is that to maximize returns one simply needs to cut ties with their expensive advisor and manage their own portfolio.

On the surface, this makes sense. Costs matter, so if you can slash your investment fees from 2% down to 0.5% or lower your returns will improve by the same measure.

Let’s say you’re one of the millions of Canadians invested in a typical bank branch balanced fund (ex. RBC Select Balanced fund, or TD Comfort Balanced fund). The management expense ratio (MER) on that fund is about 2%, and the fund itself is invested in 60% global stocks and 40% global bonds.

This fund isn’t trying to do anything special, so while it’s considered “actively managed” in reality it closely tracks its benchmark index (a global balanced fund). The returns will then equal the benchmark, minus the 2% fee.

Now …