Why Your Bank Doesn’t Want You to Buy XEQT (And What They’d Rather Sell You)

I walked into my bank branch a few years ago to ask about investing. I had about $30,000 sitting in a savings account earning basically nothing, and I knew I should be doing something smarter with it. So I booked an appointment with a “financial advisor” at my bank, sat down in a glass-walled office with motivational posters about “growing your future,” and asked a simple question: “What should I invest in?”

The advisor – a friendly, well-dressed guy who seemed genuinely enthusiastic about helping – pulled up a screen and walked me through three mutual fund options. All of them were managed by the bank’s own fund company. All of them had glossy names like “Canadian Dividend Growth Fund” and “Balanced Income Portfolio.” All of them had MERs north of 2%.

At no point did he mention ETFs. At no point did he mention XEQT. At no point did he explain that a product existed that would give me broader global diversification at one-tenth the cost. Not because he was a bad person – he was perfectly nice – but because recommending XEQT would have meant zero revenue for the bank. And that’s the quiet part nobody says out loud.

This post is about what I learned after that meeting, why the Canadian banking system is set up to steer you away from low-cost investing, and what you can do about it.

1. How Canadian Bank Advisors Actually Get Paid

Here’s the thing most Canadians don’t realize: the person sitting across from you at the bank is not an independent financial advisor. They are a salesperson. A licensed, regulated, well-intentioned salesperson – but a salesperson nonetheless.

Their compensation is tied, directly or indirectly, to the financial products they sell you. Here’s how the money flows:

Trailing commissions (trailer fees)

When your bank advisor puts you into a mutual fund, the fund company pays the advisor (and their firm) an ongoing trailing commission – typically 0.50% to 1.00% of your invested balance every year. This comes out of the fund’s MER, so you never see a separate bill. It just silently erodes your returns.

On a $100,000 portfolio, a 1% trailer means the advisor’s branch earns $1,000 per year from your account, every year, whether they talk to you or not.

Deferred sales charges (DSCs)

Although regulators banned new DSC sales in 2022, many Canadians still hold older mutual funds purchased under the DSC structure. Here’s how it worked: the advisor got a fat upfront commission (typically 5% of your investment) when they sold you the fund. In exchange, you were locked in – if you tried to sell within 5-7 years, you’d pay a hefty redemption penalty.

This created an obvious incentive: sell the client a product that locks them in, collect the commission, and move on to the next sale. If you still hold DSC funds, check your statements carefully.

Fund quotas and sales targets

Bank branch advisors often have sales targets tied to proprietary fund families. An RBC advisor has targets for RBC mutual funds. A TD advisor pushes TD funds. A BMO advisor recommends BMO funds. This isn’t speculation – it’s how the business model works. The bank manufactures the product, distributes it through its branch network, and profits at every step.

What they earn from XEQT: nothing

If a bank advisor tells you to go buy XEQT on Wealthsimple, here’s what happens to the bank’s revenue:

• Trailing commissions: $0
• Upfront commissions: $0
• Fund management fees: $0 (XEQT is managed by iShares/BlackRock, not the bank)
• Account fees: $0 (you’ve moved to another platform)

Why would any rational business direct its customers toward a product that generates zero revenue? It wouldn’t. And it doesn’t.

2. The Mutual Fund Industrial Complex in Canada

Canada has one of the most expensive mutual fund industries in the world. This isn’t an opinion – it’s well-documented. Study after study shows Canadian mutual fund fees rank among the highest globally. Here’s why:

• Oligopoly structure: Five banks (RBC, TD, BMO, Scotiabank, CIBC) dominate investing in Canada. They each run their own fund companies and sell primarily through their own branch networks.
• Captive distribution: Walk into a TD branch, and you’re offered TD funds. Not Vanguard. Not iShares. The bank is manufacturer, distributor, and advisor all in one.
• Bundled fees: The MER on a typical Canadian bank mutual fund is 1.80% to 2.50%. That single number bundles fund management costs, advisor compensation, distribution fees, and the bank’s profit margin into one opaque percentage.
• Low financial literacy: Most Canadians don’t understand what an MER is, let alone how to compare across products. The industry has benefited from this knowledge gap for decades.

The result: billions of dollars flow from Canadian retail investors into bank mutual funds every year, and a significant chunk goes to fees that could be avoided entirely.

Compare a typical bank mutual fund to XEQT’s MER of 0.20%. That’s a 10x difference. Over a career of investing, it translates to a staggering amount of lost wealth.

3. The Math: What Bank Mutual Fund Fees Actually Cost You

Let’s make this concrete. Here’s what happens to $100,000 invested over 25 years, assuming a 7% gross annual return, comparing various fee levels:

Read that last column. On a single $100,000 investment, choosing a 2.00% MER bank mutual fund over XEQT costs you approximately $169,000 over 25 years. At 2.50%, it’s over $209,000.

That’s not your advisor’s fee. That’s your retirement. That’s your kid’s education. That’s years of financial freedom, quietly transferred from your pocket to the bank’s bottom line.

But most people contribute monthly, not as a lump sum

Here’s the same comparison for someone investing $500 per month over 25 years at 7% gross return:

Over $100,000 gone to fees. On the exact same $500/month contribution. Same markets. Same discipline. The only difference is what you bought and where.

When I first ran these numbers, I felt genuinely angry. Not at my advisor personally – he was just doing his job within the system – but at the system itself, which is designed to extract maximum fees from people who trust their bank to act in their best interest.

4. What Banks Won’t Tell You About ETFs Like XEQT

When I asked my bank advisor about ETFs, he didn’t say they were bad. He just made them sound… inconvenient. Complex. Not quite right for someone like me. Here are the things banks conveniently leave out of the conversation:

“You need a lot of money to invest properly”

This used to be partially true. Years ago, buying ETFs meant paying $9.99 per trade, which made small frequent purchases expensive. Today, platforms like Wealthsimple let you buy XEQT with zero commissions and support fractional shares – meaning you can invest any amount, even $25 or $50 at a time.

“ETFs are complicated and risky”

XEQT is literally one ticker that holds over 9,000 stocks across 40+ countries. You buy one thing. It rebalances itself. It’s arguably the simplest investment product available – simpler than the three-fund mutual fund portfolio your bank advisor would construct for you.

For a full breakdown of what’s inside, see our guide on what XEQT actually is.

“You won’t have anyone to guide you”

This is the emotional hook. Banks know that many Canadians feel nervous about investing on their own. But “guidance” from a bank advisor typically means being steered into whatever proprietary mutual fund generates the most revenue for the branch. That’s not guidance – it’s a sales funnel.

“Our funds have professional managers who beat the market”

This is the big one, and it falls apart completely under scrutiny. We’ll tackle it in the next section.

“You’ll need to do your own rebalancing”

XEQT is an all-in-one ETF. iShares handles the rebalancing for you inside the fund. You literally buy XEQT and do nothing else. There’s nothing to rebalance.

The reality is that XEQT is one of the simplest, most effective investment products ever created for Canadian retail investors. Banks don’t tell you about it because it eliminates their revenue stream entirely.

5. “But My Advisor Beat the Market” – And Other Myths

Every time I talk to someone about switching from mutual funds to XEQT, I hear the same objections. Let’s address them honestly.

“My advisor’s fund has done really well”

Maybe it has – over the last year, or two, or three. But the data on long-term active management performance is devastating. According to the SPIVA Canada Scorecard, which is published independently by S&P Dow Jones Indices:

• Over 1 year: ~60% of actively managed Canadian equity funds underperform their benchmark index
• Over 5 years: ~80% underperform
• Over 10 years: ~85% underperform
• Over 15+ years: ~90% or more underperform

These numbers already account for survivorship bias – the tendency for poorly performing funds to be quietly merged or shut down so they disappear from the record.

Your fund might be in the 10-15% that outperforms over a decade. But you’re essentially betting on being in a small minority, while paying 10x more in fees for the privilege. The odds are not in your favor.

“My advisor provides personalized advice”

Does he, though? Ask yourself: did your advisor build a genuinely customized portfolio based on a deep analysis of your tax situation, risk tolerance, insurance needs, and long-term goals? Or did he put you in the same two or three funds he recommends to everyone?

In my experience – and I’ve heard this from dozens of readers – most bank advisor “advice” consists of a brief risk tolerance questionnaire followed by a recommendation for the bank’s own balanced or growth fund. That’s not personalized advice. That’s a menu with three options.

“Switching is too complicated”

Switching from bank mutual funds to XEQT is straightforward. Within registered accounts (TFSA, RRSP, FHSA), you can sell your mutual funds and buy XEQT with zero tax consequences. In non-registered accounts, selling does trigger capital gains, but the long-term savings from lower fees almost always outweigh the one-time tax hit.

We have a step-by-step guide to making the switch if you want the full walkthrough.

“I don’t have time to manage my own investments”

This is my favorite objection, because it reveals a misconception about what “managing” a portfolio of XEQT actually involves. Here’s the complete management process:

1. Set up automatic deposits into your Wealthsimple account
2. Set up recurring buys of XEQT
3. There is no step 3

Total time spent per month: approximately zero minutes. XEQT requires less management than a bank mutual fund, because you don’t even have to book annual review meetings with an advisor who will try to upsell you on new products.

6. The Emotional Manipulation Playbook

I don’t use the word “manipulation” lightly. But the tactics Canadian banks use to keep you in expensive mutual funds follow a recognizable pattern that’s worth understanding.

Fear: “What if the market crashes?”

Bank advisors know that fear is the most powerful motivator. By emphasizing market volatility and risk, they position themselves as the safety net you need. “You don’t want to be out there on your own when things get rough,” is the subtext of every conversation.

The truth? XEQT holds the same stocks – often the very same stocks – as the bank’s mutual funds. If the market crashes, your bank mutual fund drops just as much as XEQT. The difference is that you’re paying 2% for the privilege of holding essentially the same thing, plus the comfort of having someone who probably won’t call you anyway.

Complexity: “Investing is really complicated”

Banks benefit enormously from the perception that investing requires expert knowledge. The more complex it seems, the more you need them. So they layer on jargon – “asset allocation,” “risk-adjusted returns,” “sector rotation,” “tactical tilts” – until your eyes glaze over and you just sign wherever they point.

The reality: for the vast majority of Canadians, investing well requires doing exactly one thing – buying a globally diversified, low-cost index fund like XEQT regularly and not selling it. That’s it. Everything else is noise.

Authority: “We’re the experts”

Banks have massive marketing budgets, imposing buildings, and an air of institutional authority. When a person in a suit behind a mahogany desk tells you to buy Fund X, it feels like expert advice. But remember: that person likely has a mutual fund license (not a CFP designation), gets paid based on what they sell you, and went through a training program designed by the bank to sell the bank’s products.

Guilt: “We’ve been taking care of your family’s finances for years”

This is the relationship card. Your family has banked here for decades. Your parents trust this bank. Leaving feels like a betrayal. Banks absolutely leverage this emotional connection, because loyalty is profitable – for them.

Your loyalty to a bank should be exactly proportional to the value they provide you. If they’re charging you $2,000+ per year in embedded mutual fund fees for a portfolio you could replicate for a fraction of the cost, loyalty is costing you a fortune.

Inertia: “Just leave everything where it is”

The most effective tactic of all is simply making it easy to do nothing. Moving your money requires paperwork. It requires learning something new. It requires making a decision. Banks know that most people will choose inaction, even when action would save them tens of thousands of dollars.

Don’t let inertia win. The cost of doing nothing is real, and it compounds every single year.

7. How to Break Free: A Step-by-Step Guide to Self-Directed Investing

If you’ve read this far and you’re feeling motivated to make a change, here’s exactly how to do it. The process is simpler than you think.

Step 1: Find out what you’re currently paying

Log into your bank’s investment portal and look up the MER on every mutual fund you own. If you can’t find it online, call and ask: “What is the management expense ratio on each of my holdings?” Write the numbers down. If they’re above 1%, you’re almost certainly overpaying.

Step 2: Check for deferred sales charges

If you bought mutual funds before 2022, you might still be in DSC funds with early redemption penalties. Check your statements or call your bank to ask. If you’re past the DSC schedule (typically 5-7 years), you’re free to sell without penalty. If you’re still within the schedule, calculate whether the penalty is less than what you’d save in fees by switching – it often is.

Step 3: Open a self-directed brokerage account

Open a free account at a low-cost platform. I use and recommend Wealthsimple – zero commissions on ETF purchases, no account minimums, free transfers for accounts over $5,000, and a clean, simple interface.

Open the same account types you currently hold at your bank: TFSA, RRSP, FHSA, non-registered, whatever applies.

Step 4: Transfer your accounts (don’t withdraw)

This is critical. Do not withdraw money from your bank accounts and re-deposit at Wealthsimple. Withdrawing from a TFSA temporarily reduces your contribution room. Withdrawing from an RRSP triggers immediate income tax and you lose the room permanently.

Instead, initiate a direct account transfer through Wealthsimple’s app. They’ll handle the paperwork, and your holdings transfer seamlessly. The process typically takes 1-4 weeks.

Step 5: Sell your mutual funds and buy XEQT

Once your accounts have transferred (in-cash is simplest – the bank sells your mutual funds and sends the cash), use the proceeds to buy XEQT. In registered accounts (TFSA, RRSP, FHSA, RESP), this has zero tax implications. In non-registered accounts, selling will trigger capital gains or losses – plan accordingly.

Step 6: Set up automatic contributions and recurring buys

This is where the real magic happens. Set up automatic deposits from your bank account into Wealthsimple on your payday, and configure recurring XEQT purchases. Now your investing happens automatically, with no decisions required, no advisor meetings, and no emotional interference.

Step 7: Stop checking your portfolio constantly

Seriously. Set it up, automate it, and go live your life. The less you look at your portfolio, the better you’ll do. XEQT doesn’t need monitoring – it’s designed to be held for decades.

8. When a Financial Advisor IS Worth It

I’ve spent most of this post explaining why bank advisors are a bad deal for most Canadians. But I want to be fair: there are genuine situations where professional financial advice is worth paying for.

You probably benefit from a qualified advisor if:

• You own a business or are incorporated. Corporate investing, salary vs. dividend decisions, individual pension plans, and holding company structures involve real complexity where mistakes are costly.
• You’re within 5 years of retirement. The transition from saving to spending is the hardest part of financial planning. Withdrawal sequencing, OAS clawback optimization, pension decisions, and tax-efficient decumulation strategies genuinely benefit from professional guidance.
• You’ve received a large inheritance or windfall. Having $200,000+ suddenly land in your account creates tax implications and planning decisions that benefit from expert input.
• You’re going through a divorce. Splitting assets, pension division, and recalculating your financial plan are not DIY territory.
• You have a complex estate situation. Blended families, properties in multiple provinces, trusts, or significant charitable giving plans.
• You have cross-border tax issues. US-Canada dual citizens or Canadians with US income face unique tax obligations that can trip up even experienced investors.

If any of these apply, here’s the key distinction: hire a fee-only financial planner, not a bank advisor.

A fee-only planner charges you a flat fee or hourly rate for advice and has no financial incentive to sell you any particular product. They’ll often tell you to buy XEQT and manage it yourself – because that’s genuinely the best advice for most people.

A bank advisor is compensated through product sales. Their “advice” is inseparable from their sales function. These are fundamentally different services, even though both use the word “advisor.”

A comprehensive financial plan from a fee-only CFP costs $1,500 to $4,000 as a one-time fee. Compare that to paying 2% annually on your portfolio – on a $200,000 portfolio, that’s $4,000 every single year. One planning session could replace decades of embedded advisory fees.

For a deeper dive into this question, read our full analysis: Can XEQT Replace Your Financial Advisor?

9. Your Money, Your Choice

Here’s what it comes down to. Canadian banks are not charities. They’re publicly traded corporations with shareholders who expect profits. There’s nothing inherently wrong with that – but you should understand that their interests and your interests are not aligned when it comes to investment product recommendations.

When your bank advisor recommends a mutual fund with a 2% MER, they’re not making a mistake. They’re doing exactly what the system incentivizes them to do. The fund generates revenue for the bank. The trailer fee compensates the advisor. The DSC (historically) locked you in. Every piece of the machine is designed to maximize how much of your money ends up in the bank’s pocket rather than compounding in yours.

XEQT breaks that machine. It’s a single ETF that gives you global diversification across 9,000+ stocks in 40+ countries, with automatic rebalancing, at a cost of 0.20% per year. No trailing commissions. No sales charges. No advisor middleman. No bank profit margin layered on top.

The Canadian mutual fund industry has thrived for decades on the gap between what investors know and what they should know. Every year, that gap narrows. More Canadians are discovering index investing, low-cost ETFs, and platforms like Wealthsimple that make self-directed investing accessible to everyone.

I’m not going to tell you what to do with your money. But I will tell you this: the information is out there, the tools are free, and the math is unambiguous. The only thing standing between you and keeping an extra six figures over your investing lifetime is the decision to stop doing what your bank wants and start doing what’s actually best for you.

The next time you sit down in that glass-walled office at the bank, you’ll know something the advisor won’t expect you to know: exactly how much their advice is really costing you.

Related Reading

• What Is XEQT? A Complete Beginner’s Guide
• XEQT MER Explained: What You’re Actually Paying
• Wealthsimple Fees Explained for Canadian Investors
• XEQT vs Mutual Funds: Why Canadians Are Making the Switch
• Switching From Mutual Funds to XEQT in Canada
• Can XEQT Replace Your Financial Advisor?
• The One Percent Rule: How Fees Destroy Wealth