** Special to the Just Word Blog from Robin Powell, the UK based editor of The Evidence-Based Investor and consultant to investors, planners & advisors **
In investing, staying the course is often the wisest thing you can do. But investor inertia (the tendency to leave an expensive arrangement unquestioned), year after year, can quietly cost tens of thousands of dollars. The bill never arrives.
Consider Sarah. She’s in her mid-40s, with two children and a combined $250,000 in RRSPs and RESPs at one of Canada’s Big Five banks. She’s not careless. She knows that fees matter, but she’s just never got around to checking.
The Ontario Securities Commission puts the typical cost of a retail Series A balanced or equity fund at roughly 2.0 per cent. A low-cost diversified alternative with a provider like Justwealth offers comparable exposure for roughly 0.70 per cent all-in. On Sarah’s portfolio, assuming a 6 per cent gross annual return, that 1.3 percentage point gap compounds to roughly $45,000–$50,000 over a decade. At current tuition rates, that’s roughly three years of undergraduate fees for each of her children.
That money didn’t vanish in a crash. It eroded, steadily, one year at a time.
Many Canadians who stay with expensive providers aren’t choosing to stay. If the cost is this clear, then why do so many intelligent, capable people never act upon it?
Knowing Isn’t the Same as Acting
The problem isn’t only ignorance. Knowing that fees matter is not the same as knowing how much you are paying, or acting on it. Canada’s average mutual fund MER, across all series, dropped from 2.06 per cent in 2013 to 1.47 per cent in 2023, according to a Conference Board of Canada report for the Investment Funds Institute of Canada. But that decline was driven largely by the growth of low-cost ETFs and fee-based accounts, not by dramatic fee compression in traditional retail funds. If you hold a standard Series A fund, the number on your statement has barely moved.
Yet the internal monologue persists. “I’ve been with them for years. It’s probably not worth the hassle. I’ll look into it later…”
Those phrases sound like reasons. They’re the raw material of investor inertia: habits of thought that, unlike decisions, don’t require weighing the evidence.
Why Investor Inertia Wins, Even When the Evidence is Clear
Staying in an expensive arrangement year after year isn’t a sign of poor judgment. Investor inertia is the predictable outcome of three forces, each reinforcing the others:
- The first is cognitive load. Switching providers isn’t a single action. It’s a sequence: auditing current fees, researching alternatives, understanding the tax implications, completing paperwork and anticipating what happens to your portfolio. Behavioural scientist Dilip Soman at the University of Toronto’s Rotman School calls this the ‘last mile‘ problem: good intentions defeated by complexity. When the effort to act is high, people default to the status quo. Not because they endorse it, but because the path away from it is exhausting.
- The second is system justification. Admitting you’ve been overpaying for a decade means confronting an uncomfortable mistake. It’s far easier to tell yourself the higher fee buys something valuable (‘quality’, ‘stability’, a trusted relationship) than to do the arithmetic.
- The third is present bias. The friction of switching is immediate. The benefit is abstract, spread across years you haven’t yet lived.
None of these forces require the investor to be foolish. Sarah, still at her big bank, still meaning to review her arrangement, is behaving exactly as the research predicts. It isn’t whether she’s making a mistake that should concern her, but whether she realizes it.
The Most Dangerous Costs Never Arrive as a Bill
And the system isn’t designed to help her find out. Market drops make headlines. Fee drag doesn’t.
Research suggests many Canadian investors do not fully understand the fees disclosed to them. If you can’t see the cost, you can’t weigh it against the effort of leaving. No alarm sounds. No statement line reads: ‘Your delay cost you $4,200 this year.’ The damage surfaces later: a thinner retirement fund, a postponed goal, fewer choices.
If your arrangement relies on actively managed funds beating their benchmarks, the historical odds are heavily against it. According to the SPIVA Canada Year-End 2025 Scorecard, 98.8 per cent of actively managed Canadian equity funds underperformed the S&P/TSX Composite over ten years.
Only 35 per cent of Canadians sought any financial advice in the preceding 12 months (Financial Consumer Agency of Canada, November 2025). And for those who do engage digitally, the Ontario Securities Commission has documented the use of ‘dark patterns’ — interface design choices that complicate withdrawals and exploit decision fatigue — on Canadian retail investing platforms (OSC, February 2024).
When Staying Put Makes Perfect Sense
None of which means every investor should rush for the exit. If your fees are reasonable, your portfolio is diversified, your strategy matches your goals and time horizon, and tax considerations are handled sensibly, doing nothing is exactly right.
I’m not arguing that you should switch. I am saying, though, that you should check. Sit down with your most recent statement and ask a few direct questions. What’s my all-in cost, including embedded fund fees? How has my portfolio performed against a simple benchmark over five years? Am I paying for advice I’m actually receiving? When did I last review this arrangement – not just think about it, but actually review it?
Loyalty earned by good service and fair pricing is worth protecting. Loyalty sustained by investor inertia alone is worth questioning.
The Question that Matters
Sarah doesn’t need to panic. She doesn’t need to move her portfolio tomorrow morning. She needs to ask one question and answer it honestly: when did she last check whether her current arrangement still earns her loyalty?
The real problem was never loyalty itself. It was unexamined loyalty, the kind that persists not because it was earned but because the question was never asked.
Total Cost Reporting, which begins appearing in annual cost-and-compensation reports from early 2027, should make embedded fund costs far more visible in dollar terms for most investors. But there’s no reason to wait for regulation to force a question you can ask right now. I would also recommend reviewing www.justwealth.com/banks to see the annualized after-fee returns for Justwealth relative to those of the Big Banks.
The most expensive financial decision most Canadians will ever make is a good question they never got around to asking.
Resources
- Ontario Securities Commission. (2024). Fee data for retail Series A equity funds. GetSmarterAboutMoney.ca.
- Investment Funds Institute of Canada / Conference Board of Canada. (2024). Funding the Future.
- Soman, D. (2015). The Last Mile: Creating Social and Economic Value from Behavioural Insights. University of Toronto Press.
- S&P Dow Jones Indices. (2026). SPIVA® Canada Year-End 2025 Scorecard.
- Financial Consumer Agency of Canada. (2025). Spotlight on Canadians’ use of financial advice.
- Ontario Securities Commission. (2024). Digital Engagement Practices: Dark Patterns in Retail Investing.
While Justwealth provided financial support for this article, the views and opinions expressed are those of the author and do not necessarily reflect the views of Justwealth, or its employees. The content of the article is provided solely for information purposes only and should not be construed as advice of any kind.
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