Graduated Learning: Life after College

I got my degree, I got a job…now what?

Would you pay for someone to manage your portfolio? November 24, 2011

Filed under: Personal Finance — Stephanie @ 11:00 pm
Tags: , , , , ,

The other day I got an envelope in the mail.  It was an offer (through my 401(k)) to sign up with a retirement advice company.  My employer signed up through them to offer a retirement portfolio management service.

My first response was:  No Way.  I’m not paying some people to do something I could do for free!

But then I read the paperwork they sent me.  Apparently I have two options available to me.  I can use their site for free to continue to manage my 401(k) on my own.  Or I can pay a fee to have them plan out, monitor, and rebalance my portfolio. Of course, the paperwork tries to point out how much better things would be if I did pay them for help.  They included stats/graphs showing that if you get their help, you’re likely to improve your return over the long run.

So, will I sign up?  Turns out they’re offering a few free months to hook you onto the “paid” plan.  The fees actually aren’t horrible, and it’ll be nice to actually talk to someone about my fund selection.  Plus, I can import my other retirement accounts (like my Roth IRA and rollover IRA).  I’ve tried out their free program, and it has some decent advice (like how to reallocate my funds to have a slightly more aggressive portfolio) and what other funds I could invest in within my IRAs.  It also told me to increase my contributions from 5% to 7%.  So, I actually already changed the contribution amount.  It was an easy change that made sense.

As for the fund recommendations, they aren’t quite right.  For example, one of the funds they suggested I invest my Roth IRA in has a $1million minimum investment.  Um, no.  But it’s putting me on the right track, I guess.  I could look for similar funds that don’t have outrageous minimums or high fees.

I think I’ll try out the paid program, get my portfolio in order, then switch to the free advice system.  It sounds like Krystal is also thinking about briefly trying a financial advisor, then continuing to manage her portfolio herself.

So, like Krystal asked, would you pay for someone to manage your portfolio?  Would you pay for just advice?  I’ll admit, while I think I’ve got personal finance stuff covered, I’m not very confident about my investing skills.  So, trying this out to start, but then trying to learn more along the way (and shifting back to the free plan after the trial period is over) is the best way for me to approach this.


7 Responses to “Would you pay for someone to manage your portfolio?”

  1. Penny Says:

    I would consider it, but if I tried out the program and they were recommending things that weren’t actually available to me, I would turn and run. I think you’re probably doing the right thing by wringing as much information out of the trial period as possible and then going back to managing it on your own. If I were going to pay someone, I would also rather it be an individual (not random faceless customer service rep at a large company) that I picked out myself based on recommendations from people I trusted.


    • Stephanie Says:

      Yeah, it’ll be nice to be able to talk with someone about my portfolio; I feel like we’re all expected to have a 401(k) but then no one knows if they’re on the right track with their investment decisions! I posted feedback on their site about the whole “million dollar minimum” situation, so hopefully they modify their algorithm to make sure recommended funds are within the means of the investor. I’m not sure if the person I’ll talk to will just be using the same software available online, but I figure it’s worth a shot. Then, once my portfolio is fixed, and I’ve learned a bit more, I can go ahead and quit the fancy paid program.


  2. I agree with Penny; get all the free advice you can get. I have a financial planner whom I trust who helps me allocate my 401(k) monies. My boss has asked me if I would be interested in paying for this service as well. It never hurts to have someone take a 2nd look, but I wouldn’t pay for it. Also, make sure this financial planner is independent and not just selling his company’s commissioned funds.


    • Stephanie Says:

      It looks like they are just fee based. They will only recommend within the group you specify (the 401(k) funds, all Fidelity funds, etc.) so I don’t think they’ll be pushing funds on me just for money. But I’ll keep my eyes on what they recommend to make sure nothing’s up.


  3. Kristin Says:

    I have the same offer as you and I need to decide what to do. I’ve been working for the same company for almost 2.5 years and (not quite but almost) on day 1 I made my 401k contribution 10%, since I was living with my parents at the time and had very few expenses. I told myself that would at least get the money in the account and I could figure out what to do with it later, since I never changed the default investments. Well I missed the market upswing from Sept 2009 until this summer, but haven’t lost much with the recent downturn. But I know I need to start figuring out an actual plan for what to do with my investments so that I don’t lose everything to inflation.


    • Stephanie Says:

      Wow, 10%?! That’s awesome! Did you keep it at 10% when you moved out?

      Are you going to try out the program? I’ve so far tried out the online do-it-yourself version, I might need encouragement to put their recommendations into practice. But I also think I’m going to see what the paid version has to offer. Let me know what you end up doing with the offer.


      • Kristin Says:

        Yeah, it’s still at 10%. Kind of pinching right now at half salary while I’m in grad school, but I don’t have any debt that I need to pay off – I’ve never had student loans, car payments, or credit card balances. Which I feel a little guilty about sometimes, like I got out scott free of paying my “sucky financial 20s dues”, but mostly grateful. Most of my fellow grad students make a lot less than even my half-salary level or are living off student loans, and my expenses have gone down because I barely drive, so it’s reasonably doable and it doesn’t feel really right to be extravagant too much. Plus, I feel like I’d be losing some kind of internal battle if I reduced it. I think I can still fund my Roth for this year, but next year is iffy – will probably depend on whether I’m taking classes or working over the summer.

        I haven’t decided yet if I’m going to go for the program. That set of paperwork is sitting on the top of my “TO-DO” errands pile. Finals are going to end right at the same time as the due date, though, so I suppose I need to find some time to decide. I think I’ll consider it pretty seriously, though. I think I need someone holding my hand to get started learning how to invest, or I’ll never do it. My nightmare is that they tell me to drop all my cash from my money market into some fund that tanks as the euro blows up, though.


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