A home run for the do-it-yourself investors of mutual funds! Well, actually, more like a base hit.

Well, I'll start with the good news. Since July 3, 2007, RBC Direct Investing has been offering D-Series funds to its clients. Hmmmm...What does this mean exactly?

Investing in a mutual fund includes a trailer fee (ranging from 0.5% to 1.0%) paid to the brokerage, which is charged annually out of the fund's MER. As the fee is embedded, the client doesn't actually see it being charged (it comes out of the returns which are posted after these fees are deducted). The rationale behind this trailer fee is to pay the advisor for ongoing services rendered to the client. In the case of the client of a discount brokerage (a do-it-yourself investor), this fee has always applied regardless of the fact they don't use a financial advisor to pick their fund or, for that matter, an advisor to provide ongoing support and feedback.

These new D-series funds take into account the injustice of a do-it-yourselfer having to pay the same fees as somebody using a full-service advisor. With the condition of you being able to invest a minimum of $10,000 in the fund, these funds come with significantly lower MERs enabling these funds to outperform the other series of funds with the same money managers and portfolios. The concept of RBC D-Series funds is similar to the arrangement already in place by TD Asset Management, who offer a comparable arrangement to their do-it-yourselfers. Their Investor Series brings a larger selection of mutual funds to choose from with a significantly lower minimum investment requirement than RBC Direct Investing. However, their MERs are only slightly lower, if not the same, than their Advisor Series Funds.

These moves correct an anomaly that has existed in the industry for years. These changes have been slow for many reasons. Namely, the incredibly high profits this brings in for the discount firm coupled with the public's overall lack of knowledge of how fees work. To illustrate, with the D-Series funds available almost 5 months now, there hasn't exactly been an overwhelming stampede to what is clearly the more cost-effective option. There could be all sorts of suggestions put forward on how RBC Direct Investing could better do this, which has no doubt occurred to them. But, for now, as CIBC Investors Edge, BMO InvestorLine and Scotia McLeod Direct Investing are yet to follow, perhaps we should be grateful with the baby steps.

Point: If you are a do-it-yourself investor who invests $10,000 or more in a single fund, moving to RBC Discount is a credible option. Depending on the funds invested in (RBC currently has 45 D-Series funds), you could have dramatically lower fees without affecting the quality of your portfolio. A severe exodus of this sort to RBC Discount on these grounds will prove more than enough incentive for other discount brokerage firms to follow suit.