Play Video
Some advisers use F-class mutual funds with no ongoing trailer fee paid to them. But the adviser generally charges an incremental management fee equal to a percentage of the account value. So, investors should be aware that the fee they pay to their adviser may not tell the whole story of their investment fees. A common scenario might be a one per cent management fee to the adviser and a one per cent F-class MER fee within the mutual fund, for two per cent combined.
ETF fees generally range from only a couple hundredths of a per cent to about 0.75 per cent. Lower-fee ETF options tend to be simpler products that track a broad index, whereas higher-fee ETFs tend to have active management or a more complex screening method. So, although ETFs are associated with passive investing, more active ETFs are becoming available. Similarly, there are plenty of passive index mutual funds.
Robo-adviser fees generally range from 0.25 per cent to 0.75 per cent. But keep in mind this is their management fee and the underlying ETFs will have their own incremental fees. As a result, all-in fees may be 0.5 to one per cent. This is cheaper than most full-service advisers, but at the expense of time and access to a dedicated adviser.Article contentInvestors can buy stocks for free or close to it these days in a self-directed account.