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Dropped $1,400 on a TFSA robo advisor in 2023 and I'm still mad about the fees
I set up a robo advisor TFSA back in early 2023 with about $8,000 and just let it sit there thinking I was being smart. Over 18 months I paid close to $140 in management fees and my return was basically flat, meanwhile my buddy who just bought plain index ETFs at his bank paid maybe $50 total. Here's where I want people to weigh in though, because part of me thinks the auto rebalancing and not having to think about it was actually worth something. The other part of me looks at that fee drag over 20 years and wants to throw up. I'm not saying robo advisors are a scam, I'm saying nobody warned me the fees compound against you just like gains do. So which side are you on, is paying for convenience a dumb move when a couch potato portfolio takes ten minutes to set up, or is it fine for people who know they'll never log in otherwise?
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miles_burns9d ago
$140 over 18 months on 8 grand is about 1.2% a year, which doesn't sound like much until you run it out 20 years and realize you handed them a used car. The math isn't close, plain ETFs at a bank would've cost you maybe a third of that. The convenience thing is real though, some people will never rebalance on their own and a robo at least keeps them from doing something way dumber. But if you set a calendar reminder twice a year for 15 minutes you can do this yourself and keep the money. The fee drag is the whole ballgame, it's the one thing you actually control.
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