Investment Workshop 02: Self Manage or Robo-Advisor?

Hello and welcome back to the Millennial Revolution Investment Workshop!

Financial advisors have been getting a well-deserved bad rap lately. If it’s not smarmy slick-talking scammers like Bernie Madoff making the news, it’s spiky-haired lambo-sporting Bitcoin bros on Tiktok promising untold riches, only to be revealed to be clueless idiots at best, or worse, outright thieves.

And even if you find someone who’s not trying to rip you off, the financial incentives of the advisory industry encourage them to either churn your account to generate commissions, or load your portfolio up with high-fee actively managed funds that create a kickback for themselves.

Add it all up and we come to the inescapable truth that the financial advisory industry has failed us, and unlike Boomers, we just don’t trust financial advisors, and we probably never will.

So if we can’t get unbiased advice from bank shills, how do we invest our money in a safe way that still allows us to retire in our 30’s?

There are two basic strategies we can take: Robo-Advisors and Self-Managing.


In the early 2000’s, tech companies took a look at the financial advisory industry and concluded the same thing that I did: that it was an outdated dinosaur in need of some disrupting. So they did what tech companies do best: they made an app to replace it. And hence the Robo-Advisor was born.

Basically, Robo-Advisors automate the design and maintenance of an investment portfolio, replacing a highly-paid suit-wearing human with an algorithm. You log into the app, answer some basic questions about your finances and risk tolerance, and BOOM it creates a portfolio for you. And on top of that, by linking it to your bank account, this app could also automate the deposits, re-balancing, and maintenance of your portfolio. The idea was that once you set it up, saving up for retirement would be an automatic set-it-and-forget-it activity.

Fast forward to today and the Robo-Advisory industry has absolutely exploded in popularity. There are now over 100 Robo-Advisory firms out there, and even the big investment firms have been forced to offer Robo-Advisory services to stay competitive, which I find absolutely hilarious.

Today, Robo-Advisors have now matured from a fledgling idea being pioneered by a bunch of tech firms into a legitimate offering that has earned its place at the table in terms of ways to manage your investment portfolio.

How Do They Make Money?

Generally, Robo-Advisors operate under an Assets-Under-Management model, meaning they take a percentage of your portfolio as payment each and every year.

But wait! Isn’t this the same thing as those high-fee funds that suck you dry?

Well, sorta.

The fee IS charged the same way that a mutual fund does it, but it’s much, much lower. A really bad actively managed fund may charge 2%, and a human financial advisor may charge 1% to 2%, but a Robo-Advisor’s fees are typically in the 0.3% to 0.5% range. So yes, a Robo-Advisor’s fee will absolutely result in a long-term drag on your portfolio performance versus doing it all yourself.

However, depending on where you live that fee may be tax deductible. In Canada, the fee is directly deductible, so if you’re earning in a high tax bracket you’ll actually get some of that fee back as a tax break, making your effective fee in the 0.2%-0.4% range. In the US, advisory fees are no longer deductible under the Tax Cuts and Jobs Act. Sorry 🙁

Self Managing

Self Managing means, as the name implies, that you do manage everything yourself. You design your portfolio, you pick the funds, and you manage everything yourself with your own two hands.

This can be intimidating for a lot of people, especially as their portfolio grows in size, and that’s kind of intentional. By making the world of investing big and scary, the financial advisory industry hopes that you’ll just throw in the towel and hand your hard earned money over to them to manage.

But what my goal with this workshop is to break down all the pieces of managing your own portfolio and show you that it’s not that hard. Despite what the “professionals” would have you believe, it’s not a skill that requires years of schooling and a fancy degree to understand. Instead, it’s a series of maybe a dozen relatively simple concepts you need to learn, and I truly believe that anyone can do it.

The big advantage if you choose to go down this path is that nobody can scam you because nobody has control over your money. And by acquiring this skill, you will have mastery over your money and can use it to shape your life the way you see fit. Which at the end of the day, is the most powerful gift you can give yourself.

How Do They Make Money?

So how do brokerage firms make money for clients who self-manage their portfolio?

Generally, through transaction commissions.

Every time you place a trade, the brokerage firm charges a small fee, usually between $5 and $10. The hope, from the brokerage’s perspective, is that the client makes a lot of buys and sells, or uses margin (debt) to finance their trading. These activities can generate a lot of revenue for the company, and can create quite a drag on your long-term performance.

However, by picking the right brokerage with the most advantageous fee structure and structuring our transactions to avoid these fees, we can build and manage our portfolio while paying next to nothing! And every dollar you save in fees is another dollar that can go towards your early retirement. That’s exactly what this workshop will teach.

Which is Best For You?

So what will it be? Robo-advisor, or Self Managed? Both have pros and cons. Robo-advisors, for example, are simpler to understand and easier to get going quickly. Paying for convenience is usually not the best strategy for building wealth, but if it gets you into the market sooner, then it may be worth it. After all, time in the market is more important than timing the market.

Self managing, on the the other hand, does take some time to master, and you do have to expend time and effort to learn the skills yourself. However, managing your own money is one of the most important skills you can learn, and not only does it give you complete control over your money, it saves you money in fees and commissions. Money that you can use to buy back your time so you can do what you love.

Robo-Advisor+ Less work
+ More convenient
+ Faster to get started
– Ongoing maintenance fee of 0.3%-0.5%
– Less Control
Self Managed+ You control your own money
+ Can’t be scammed
+ Pay next to no fees
– More work to understand
– Can be intimidating

Here at the Investment Workshop, we’ll cover both approaches, so whichever one you pick, know that there’s a path to early retirement no matter what!

And also, don’t think that once you pick one approach that you’re locked in forever. It’s possible to pick one strategy, then change it years down the road. Your money’s never “locked in,” it just takes filling out some transfer paperwork later on if you decide to switch, so don’t stress out about your decision too much.

To learn more about each approach, click one the options below and we can get started!

I Want To Do it Myself!

Make The Robots Do It (Under Construction, Please check back later)

Go back to the previous section


How much does it cost to participate in the Investment Workshop? NOTHING. Because that's how we roll. All we ask is that you sign-up using the following affiliate links to keep it free forever:

For Canadians:

1) Questrade

2) Passiv

For Americans:

1) Vanguard

2) Empower

Disclaimer: The views expressed is provided as a general source of information only and should not be considered to be personal investment advice or solicitation to buy or sell securities. Investors considering any investment should consult with their investment advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decisions. The information contained in this blog was obtained from sources believe to be reliable, however, we cannot represent that it is accurate or complete.

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