Getting good investment advice doesn't require millions in the
bank anymore. These days, an army of online advisers will offer
low-cost solutions to the age-old question: How do I invest my
money? Many will even do the trades for you, rebalance your
portfolio periodically and suggest ways to minimize your taxes,
Some firms are more like financial planners; others pick
investments for you. With help from Grant Easterbrook, an analyst
for the research firm Corporate Insight, we focused on seven
firms that offer specific investment advice online.
The diversified portfolios they recommend--typically after you
answer questions about your risk tolerance and time horizon--hold
only low-cost exchange-traded or mutual funds. Although many of
these firms don't have a long-term record, they list a lot of
information on their Web sites. On most, you can view the
recommended portfolios and see which funds they hold, along with
Annual fee on a $50,000 balance: $225 (0.45%)
How it works: AssetBuilder invests your money in a mix of U.S.
and foreign stocks, real estate stocks and bonds. The firm's
eight model portfolios each hold 11 to 14 funds managed by
Dimensional Fund Advisors (available only through DFA-approved
Pros: AssetBuilder suggests other portfolios you can invest in
on your own. Plus, you can talk to an adviser on the phone, if
necessary. Fees, as a percentage of assets, drop as portfolio
balances rise. AssetBuilder also offers 401(k) plan advice upon
Cons: The initial-balance requirement is high.
Annual fee on a $50,000 balance: $125 (0.25%)
How it works: Low-cost ETFs (with annual fees between 0.12%
and 0.16%) fill the portfolios that Betterment has created to
suit every goal and time horizon. Underlying funds include
Vanguard Total Stock Market ETF (
) and the small-company-oriented iShares Russell 2000 Value (
). Your money is held in an account at Betterment Securities, the
firm's brokerage division.
Pros: Advisory fees fall for balances above $100,000.
Cons: Betterment does not accept securities, so you may have
to sell current holdings to provide the cash to open an account.
If you want to hold on to a specific security, hold it in another
brokerage account. No 401(k) plan advice.
Annual fee on a $50,000 balance: $149.95 (if paid in advance)
or $191.40 (if paid monthly)
How it works: Link your investment accounts through Financial
Guard and the firm assesses your portfolio for diversification
and fund selection (grading it A through F). Then it tells you
what to buy, sell or hold, providing specific fund or ETF
selections for each asset class.
Pros: Financial Guard will offer fund-selection advice for
401(k) and 529 plans.
Cons: The firm doesn't execute the suggested moves for you
(but this service is in the works).
Minimum: $10,000 for the premium service
Annual fee on a $50,000 balance: $250 (0.5%)
How it works: You fill out a profile and the Web site spits out
an "action plan" that tells you how to achieve a suggested target
allocation--basically, it tells you to sell individual stocks and
mutual funds and replace them with the ETFs it recommends. (That
service is free.) If you pay for premium service and you have an
account at Fidelity or
, the firm will execute the trades for you, focusing on the ETFs
each firm lets its customers trade without commissions.
Cons: No advice on 401(k) funds unless you pay for premium
Annual fee on a $50,000 balance: $216 ($17.99 per month)
How it works: Patch into your investment accounts, or enter
holdings manually, on Jemstep's Web site. The firm's software
analyzes your holdings, including evaluating your mutual funds
and ETFs. After considering the fund evaluations and any tax
implications from selling specific securities, Jemstep tells you
what to buy and sell to bring your portfolio in line with an
asset-allocation plan tailored for you.
Pros: The service is free for clients with less than $25,000.
You can exclude holdings from the analysis if you're bent on
keeping them. It rates thousands of funds on at least 50
different factors, which means it can advise you on your 401(k)
Cons: You execute Jemstep's prescribed investment moves on
Annual fee on a $50,000 balance: $120 ($10 per month)
How it works: This Mint-like account aggregator started in
2011. It lets you view all your investments in one place and
appraises funds you own, including those in your 401(k) plan.
Plus, answer ten questions and you'll get a portfolio that's
suited to your goals and risk tolerance. The firm has 20
portfolios, which hold ETFs that invest in U.S. and foreign
stocks, bonds, and real estate. Until late 2013, the firm only
made trade recommendations. Now it will execute those trades for
you, using Fidelity, Schwab and TD Ameritrade as account
Pros: No commissions.
Cons: The firm's advisory services are relatively new.
Annual fee on a $50,000 balance: $100 (0.25% on assets over
How it works: Answer ten simple questions, and the Web site
kicks out two portfolios for you: one for your taxable account
and another for a tax-deferred retirement account. Using ETFs,
the portfolios hold a mix of assets that can include municipal
bonds, foreign and emerging-markets stocks, U.S. stocks, and even
a basket of commodities.
Pros: No commissions on trades. No fee on the first
Cons: The service doesn't provide advice on investments you
currently own, whether they are individual stocks or funds in
your 401(k) plan.