"For others, the MER is a small price to pay for the benefits of owning a diversified portfolio that doesn't require a lot of monitoring."

I suppose I fall into this category.  The vast majority of my investments are ETFs (80-85%) the remaining amount is my 'trading' money.  I concentrate on a very small number of stocks (1-3) and trade them.  I do not have the time nor inclination to monitor 25-30 stocks.

I addition, owning individual stocks for most people consists of predominately Canadian and US equities.  This introduces risk in that you are over-concentrated and miss out on the other 45% of the world, especially those in emerging markets where growth is expected but individual companies are difficult to buy and/or research.