XEQT vs Robo-Advisors: Which is Better for Canadian Investors?

Should you invest in XEQT yourself, or use a robo-advisor like Wealthsimple Invest?

Both offer passive, diversified investing, but one approach can save you thousands in fees over your lifetime while the other provides additional services.

This guide compares XEQT to popular Canadian robo-advisors to help you make the right choice.

Quick Comparison: XEQT vs Robo-Advisors

Key difference: Robo-advisors charge 0.40-0.70% extra for convenience and tax optimization.

Total Cost Comparison

XEQT (Self-Directed):

Annual fees on $100,000:

• XEQT MER: 0.20%
• Platform fees: $0 (Wealthsimple Trade, Questrade)
• Total cost: $200/year

Wealthsimple Invest (Robo-Advisor):

Annual fees on $100,000:

• ETF MER: ~0.20%
• Wealthsimple fee: 0.50%
• Total cost: $700/year

Questwealth Portfolios:

Annual fees on $100,000:

• ETF MER: ~0.20%
• Questwealth fee: 0.25% (on $100k+)
• Total cost: $450/year

CI Direct Investing:

Annual fees on $100,000:

• ETF MER: ~0.20%
• CI fee: 0.35%
• Total cost: $550/year

Difference: XEQT saves $250-500/year compared to robo-advisors.

30-Year Cost Analysis

Scenario: Start with $10,000, contribute $500/month, 8% returns

XEQT (0.20% fees):

• After 30 years: $745,000
• Total fees paid: ~$37,000

Wealthsimple Invest (0.70% fees):

• After 30 years: $668,000
• Total fees paid: ~$114,000

Questwealth (0.45% fees):

• After 30 years: $706,000
• Total fees paid: ~$76,000

Difference: XEQT results in $39,000-77,000 more over 30 years compared to robo-advisors.

What You Get with Robo-Advisors

Services Included:

✅ Automated rebalancing - Adjusts your portfolio automatically ✅ Tax-loss harvesting - Sells losing positions to offset gains ✅ Dividend reinvestment - Automatically reinvests distributions ✅ Risk assessment - Questionnaire to determine your allocation ✅ Human support - Email/phone support for questions ✅ Automatic contributions - Set and forget investing ✅ Socially responsible options - SRI/ESG portfolios available ✅ Financial planning tools - Retirement calculators and goals

XEQT Offers:

✅ Automated rebalancing - Built into XEQT ✅ Dividend reinvestment - Set up DRIP yourself ✅ Automatic contributions - Set up yourself on platform

What XEQT doesn’t include: ❌ Tax-loss harvesting ❌ Human support ❌ Risk assessment ❌ Financial planning tools

Robo-Advisor Portfolios vs XEQT

Wealthsimple Invest “Growth” Portfolio:

Holdings:

• VCN (Canadian stocks): 20%
• VUN (US stocks): 40%
• XEF (International): 22%
• XEC (Emerging): 8%
• ZAG (Canadian bonds): 10%

Total allocation: 90% stocks, 10% bonds

XEQT Portfolio:

Holdings:

• 100% global stocks
• 0% bonds

Comparison: Similar equity holdings, but robo-advisor includes bonds (more conservative).

Note: You can choose “Growth” allocation on robo-advisors to get closer to XEQT’s 100% equity.

Tax-Loss Harvesting: Is It Worth It?

What is Tax-Loss Harvesting?

Robo-advisors automatically:

1. Sell losing investments
2. Use losses to offset capital gains
3. Immediately buy similar investments
4. Reduce your tax bill

Potential Tax Savings:

In non-registered accounts:

• Can save 0.10-0.50% annually in taxes
• More valuable in larger portfolios
• Only works in taxable accounts

In TFSA/RRSP:

• Zero benefit (tax-sheltered accounts)
• Tax-loss harvesting doesn’t apply

Is it worth 0.40-0.70% in fees?

If 100% in TFSA/RRSP: No - You’re paying for a service you can’t use

If mostly non-registered: Maybe - Tax savings might offset some fees

For most investors: No - The extra fees outweigh tax-loss harvesting benefits

When Robo-Advisors Make Sense

Choose a Robo-Advisor if:

✅ You’re completely new to investing (want hand-holding) ✅ You have a large non-registered portfolio (tax-loss harvesting valuable) ✅ You want human support available ✅ You value simplicity over fee optimization ✅ You’re nervous about doing it yourself ✅ You have less than $50,000 (fee impact is smaller) ✅ You want automatic rebalancing across multiple accounts

Example: Sarah, Complete Beginner

• Age: 26
• Portfolio: $15,000
• Experience: Zero investing knowledge
• Comfort level: Very nervous

Best choice: Robo-advisor

• Extra $120/year in fees is worth the peace of mind
• Can transition to XEQT later
• Human support reduces anxiety

When XEQT Makes More Sense

Choose XEQT if:

✅ You’re comfortable with basic investing ✅ You have over $50,000 (fees add up) ✅ You invest mostly in TFSA/RRSP (tax-loss harvesting useless) ✅ You want to maximize returns through fee reduction ✅ You don’t need human hand-holding ✅ You’re willing to spend 10 minutes learning ✅ You prefer full control

Example: Mike, Comfortable DIY Investor

• Age: 35
• Portfolio: $150,000
• Experience: Reads financial blogs
• Comfort level: Confident

Best choice: XEQT

• Saves $750/year compared to robo-advisor
• Over 30 years: $75,000+ extra
• Comfortable managing it himself

The Hybrid Approach: Start Robo, Move to XEQT

Many investors use this strategy:

Step 1: Start with Robo-Advisor (Year 1-2)

Benefits:

• Learn about investing with training wheels
• Build confidence
• Understand market volatility
• Establish consistent contributions

Step 2: Transition to XEQT (Year 3+)

When you’re ready:

• Comfortable with market volatility
• Understand basic investing
• Portfolio has grown
• Want to reduce fees

How to transition:

1. Stop robo-advisor contributions
2. Start buying XEQT in new account
3. Gradually sell robo-advisor holdings (tax-free in TFSA/RRSP)
4. Move funds to XEQT

Result: Best of both worlds - learned with support, now saving on fees.

Performance Comparison

Expected Returns (Both Similar):

XEQT: 8-10% annually (before 0.20% fees) = 7.8-9.8% net

Robo-Advisor: 8-10% annually (before 0.60-0.90% fees) = 7.1-9.4% net

Difference: 0.4-0.7% annually in favor of XEQT

Over 30 years on $100,000: $39,000-77,000 difference

Common Robo-Advisor Myths

Myth 1: “Robo-advisors beat DIY investing”

Reality: Both use similar ETFs. Robo-advisors typically underperform due to higher fees, though tax-loss harvesting can help offset this in non-registered accounts.

Myth 2: “Tax-loss harvesting justifies the fees”

Reality: Only valuable in non-registered accounts. Most Canadians invest in TFSA/RRSP where this doesn’t apply.

Myth 3: “Robo-advisors are safer”

Reality: Both invest in the same ETFs with similar risk. Human support doesn’t reduce market risk.

Myth 4: “XEQT is too complicated”

Reality: Buying XEQT is literally: Open account → Buy XEQT → Done. It’s one button.

Real-World Fee Impact

$50,000 Portfolio Over 20 Years:

XEQT (0.20%):

• Final value: $233,048
• Fees paid: $9,304

Robo-Advisor (0.70%):

• Final value: $216,590
• Fees paid: $33,410

Difference: $16,458 lost to extra fees

That’s a family vacation every year in retirement.

Platform Comparison

Wealthsimple Trade (for XEQT):

✅ Commission-free trading ✅ No minimum balance ✅ Simple interface ✅ Great for beginners ❌ No human support

Wealthsimple Invest (Robo-Advisor):

✅ Automated everything ✅ Human support ✅ Tax optimization ✅ Socially responsible options ❌ 0.50% management fee

Questrade (for XEQT):

✅ Free ETF purchases ✅ Advanced tools ✅ Lower forex fees ❌ $4.95-9.95 selling fee ❌ Steeper learning curve

Questwealth (Robo-Advisor):

✅ Lower fees (0.25% on $100k+) ✅ Automated management ✅ Tax optimization ❌ Still 0.45% total fees

The Bottom Line: Which Should You Choose?

For 90% of investors: XEQT wins

Why?

• Saves $250-500 annually on $100,000
• Same holdings as robo-advisors
• Built-in rebalancing
• Simple one-fund solution

The math is clear: Lower fees = more money in retirement.

For beginners or anxious investors: Robo-advisors are okay

Why?

• Human support reduces anxiety
• Easier onboarding
• Financial planning tools
• Worth it for peace of mind (temporarily)

Strategy: Start with robo-advisor, transition to XEQT once comfortable (within 1-2 years).

The Honest Truth:

If you’re reading this blog post, you’re already too sophisticated for a robo-advisor.

The fact that you’re researching investing options means you can handle buying XEQT yourself. Don’t pay 0.40-0.70% for services you don’t need.

Action Plan: Make Your Choice

Choose Robo-Advisor if:

• Total beginner (never invested before)
• Portfolio under $25,000
• Need human support
• Willing to pay for convenience

Recommended: Wealthsimple Invest or Questwealth

Choose XEQT if:

• Comfortable with basics
• Portfolio over $25,000
• Want maximum returns
• Don’t need hand-holding

Recommended: Buy XEQT on Wealthsimple Trade

Ready to Start Building Wealth?

Whether you choose XEQT or a robo-advisor, the most important thing is to start investing consistently. Don’t let perfect be the enemy of good.

Remember: The best investment strategy is the one you’ll actually stick with for decades.

Disclosure: This post contains referral links. Fee comparisons are approximate and may change. Both XEQT and robo-advisors are excellent options for passive investing.