The CEO of RBC Direct Investing on the biggest mistakes investors make

We're seeing a clear shift in investor behaviour. New and aspiring self-directed investors are starting earlier, investing smaller amounts, and prioritizing affordability and ease-of-use. While new options have emerged and succeeded with some self-directed investors, their appeal is far from universal. Many Canadians are still on the sidelines—they want to invest but face real obstacles: cost, complexity, and friction in getting started. 

As Canada's largest bank, RBC is uniquely positioned to address this gap in the market, creating a product that makes getting started easier for more Canadians. GoSmart was built to meet new and aspiring self-directed investors exactly where they are today - with no investing knowledge required. We're already seeing strong demand, which tells us we've gotten this right.

Cost is certainly an important factor for self-directed investors, which is why we’ve structured GoSmart to enable investors – especially those just getting started – to have the ability to trade at virtually no cost.

Having said that, a key question we believe new or aspiring investors should ask themselves when looking at all investment platforms out there, is whether or not they have a track record of helping investors succeed, and how that track record compares to others. RBC Direct Investing grew from $12B in the year 2000, to $230B in assets today. Over that same period, we grew our client count from 400,000 to 1.2 million, and what this means is that the average client’s portfolio grew from $30k to $191k or over 6x. We are quite proud of this success. 

It’s also important to note that in emphasizing low trading fees, some platforms may imply success in investing is tied to fee avoidance, and perhaps trading more frequently. That may not necessarily be true, as very few people end up trading frequently, and some of the most successful investors tend to buy and hold over longer periods of time. The other thing to watch out for is the direction of the model and whether it aligns to your objectives as an investor. 

It’s a great question. Indeed, like with many things, "free" does not mean zero cost. 

First, platforms that rely on no-fee pricing models are still making revenue on each transaction, albeit in smaller amounts. One interesting thing to note is that since the revenue per transaction is low, and costs still need to be covered, the platform has an inherent incentive to get you to transact more or to explore other products that earn them higher margins. That can be good or bad, but it does highlight the fact that the incentives between you and your broker are not necessarily aligned. 

Second, watch out for gamification and nudges towards riskier trading behaviour – we’ve seen rankings, hard sell on options, and borrowing to invest, to name a few. 

Third, look closely at the fees that are being charged, whether those are on “novel products being democratized” or even just traditional things like currency/crypto spreads. In the end, trade execution is not free for brokerages. Just like with social media and other things that are “free”– be wise to make sure that the company you deal with is really on your side – both today and in the future. 

We think age is an imperfect proxy. So many different types of self-directed investors today are looking for a mobile-first solution that meets them where they are. Stronger differences are between early-stage and established investors, which can happen at different ages. You can have a 30-year-old who has been in the market for a decade and a 35-year-old who is just getting started. Early-stage investors have shown a preference for ETFs and need cost efficiency – that’s a clear trend. They tend to be digitally-native, engaged, and expectation-heavy, demanding solutions that are intuitive and frictionless. This is the main reason why GoSmart features recurring investments into low-cost ETFs that are very easy to set up and manage. 

The three most common mistakes are, going all in on a speculative position, overtrading, and following hype. 

All-in: Back when I started, ETFs were less common, so I deployed the entirety of my money into a single speculative position. That was… not smart. Asymmetric bets can be great, but probably not with your first dollar. 

Overtrading: This does not get talked about enough. Chasing alpha (i.e., trying to beat the market) vs. focusing on beta (i.e., earning at the market rate) and sticking with it. Some people can be very successful getting to alpha, but it takes a lot of time, skill, and luck. This is why we kept GoSmart very simple and away from the distractions. 

Following the hype: The extent of influencing is reaching new heights, so getting this right is becoming harder. During protracted bull cycles this is less of an issue but in a down cycle this can be a real challenge. Whether it relates to platform or investment choice, be wary of spin, especially on social media. We see a surge of posts that appear organic but are in fact sponsored. Hint: Lots of activity from accounts with hidden or no posting history is a tell-tale sign of a purchased account. You can usually tell how much covert influence there is by looking at the rate of such posts, aligned to a specific platform. Make sure to do your own research, based on trusted sources. 

We lead with ETFs because it’s one of the best ways for new or early-stage investors to get started. And yes, when it comes to all things money, boring is often the best. Equity trading is available through GoSmart too and uses the same high-quality execution as our full-feature offering, delivered by RBC Capital Markets.

The ETF market has really matured, with many low-cost options available. The recent popularity of the all-in ETFs, such as XEQT, offer a great way to build a diversified portfolio. In a way, this evolution builds on some of the key benefits from the robo-investing era but sidesteps its complexity and cost. Interestingly, this extends to crypto investing with the emergence of low-cost dedicated ETFs. To have exposure you no longer need to pay the embedded 1-2% fee that most crypto trading platforms charge. And what’s more, crypto ETFs transfer cross-brokerage the same way any other traditional holdings do. 

That’s definitely something to watch out for if you are holding a lot of S&P500, the way Buffet recommended. The good news is that there are many other ETFs out there that can help you diversify and even hedge. I am taking a hard look at my own portfolio in this vein. It’s been interesting to see this play out on our platform at scale – there has been a noticeable pullback away from some of the hot names in the U.S. equity market. Another thing worth checking out – equal weight index ETFs as well as those that offer more global exposure.  You can stay invested in the leading names but without the concentration issue you mention. 

If you’re not investing yet, don’t wait too long. Starting early is a major advantage. We’ve had this on repeat when working on GoSmart: Start with as little as $10 a week. After 20 years, assuming a 7% return, it can grow to $22K+, with over half coming from investment gains. After 30 years, more than 70% of your portfolio is growth, not contributions. The real secret is consistency, not timing. Start with whatever amount feels manageable in your budget, automate it, and let compounding do the rest—an early start also gives you the time needed to ride out market fluctuations. Boring, but it works. 

If you are already investing – keep going. Ignore the noise and take a strategic approach to your portfolio.