Specific Investment Advice

Question: Is there someplace on the Internet where I can pay for specific investment advice regarding my asset allocation?

Answer:  Yes, there are a couple of different places on the World Wide Web where you can do planning and even pay for specific asset allocation advice: (1) Financial Engines and (2) Morningstar's ClearFuture (401k Advice). Your employer has not reviewed these sites and is not commenting on or endorsing the services.

Financial Engines: Nobel-prize winning economist Bill Sharpe has developed a very interesting computer model for giving investment advice.  You have to input quite a bit of data about yourself and your current investments and you have to input a list of all of the investment options available in your retirement plan.  Based upon your input, the Web site will make a specific asset allocation recommendation.

This would be something you would choose to utilize on your own.  There is a fee if you decide to avail yourself of the investment advice.  A reporter for the Wall Street Journal wrote a review of the Financial Engines Web site in August, 1999.  Click here if you would like to read the Review.

We have reviewed the Financial Engines process ourselves here at Plan Design Consultants, Inc. and we have some reservations about it.  We feel many people will not understand the way in which the results are presented.  The software comes up with the probability that you will meet a specific retirement goal.  We are also concerned that a very small change in the input of the user results in a dramatically different asset allocation advice.  In addition we are concerned that the software recommends the use of only one investment option in certain circumstances.  We feel there should always be some level of diversification. 

On the other hand, many others feel that this is a great program that should be helpful to participants.  So, we are not endorsing this program, but we are also not saying that you should not use it.  You might find it very helpful. 

www.financialengines.com

Another tool for getting specific investment advice can be found at www.morningstar.com.  If you want to use the advice part of this planning service, there is a modest quarterly fee (approximately $8 per quarter last time we checked).   This service is also available to people who have registered to be subscribers to the "Premium" service from Morningstar.  The premium services costs approximately $10 per month.  The advisory service is called ClearFuture and it can be found on Morningstar's Home Page in the menu bar - it is labeled "401(k) Advice".

www.morningstar.com