A while back I discussed trying a portfolio managing service through my 401k. Since they were giving me a 3-month free trial, I figured I’d try it out.
I had forgotten to write a review of the program until a friend of mine got a similar offer, and she wanted to hear what I thought of it. So, here we go!
When I signed up, I think I told them my age, and what my other retirement accounts looked like, and I told them to go ahead and do their thing. They changed the ratios of the funds that I’d “buy” each pay period. Then every month, they’d slightly re-balance my portfolio, so as to not change everything over all at once.
The first time I called to cancel (before the 3 month trial period ended), they offered to give me another 3 months, so I kept it. They hadn’t finished their re-balancing, so they wanted me to stay with the program to see if I’d like it more after they fully re-balanced my portfolio. The 3 months passed, my portfolio got a bit less lopsided, but then it got to be a little over 3 months, so I ended up getting charged for some of the portfolio management (whoops!). I paid a total of $9.25 in fees for my forgetfulness… not terrible, but annoying. ALWAYS set a reminder for when you want to cancel something so you don’t get charged!
What I liked: I got to be lazy, and let them make decisions for me. I knew that my portfolio was not set up very well, but I think I was a bit too chicken to actually change anything about it. Knowing these people have experience in portfolio management and that they would do it in a smart way was helpful. Because honestly, had I not signed up, my 401k would have remained very unbalanced and poorly planned. Let them worry, that’s their job!
What I didn’t like: I couldn’t change anything on my own; I basically had signed over all control to them, so I couldn’t change anything directly myself. So, if I wanted to change things, I’d probably have to call (which I didn’t). They basically had a plan, and worked towards that plan (certain diversification plan). Also, the way they do the reallocation, they do it bit by bit once a month, instead of all at once. Which felt a bit slow to me, but I guess that’s a safer way to do it?
Also, having my 401(k) on autopilot, I sort of ignored my other retirement funds (my Rollover and Roth IRAs), and then realized once I stopped using Financial Engines, that I really should have been paying attention to all my accounts!
I think this program is good for getting your funds on the right track, and they do provide advice for your other accounts (they had ideas on my IRA since you could import your accounts for them to evaluate), but sometimes the advice doesn’t work (like recommending a fund that was unavailable required a huge minimum)
If you get a free trial for a portfolio management service, I think you should try it out, as long as you set a reminder for yourself before the trial period ends. It’s a good way to make some changes to your portfolio that you may have been afraid to go ahead with, and if you don’t like it, you can cancel. Keep in mind that the amount of time it will take for their entire re-allocation plan might be longer than the trial period.
Have you ever paid someone to manage your portfolio? Or tried a program like Financial Engines? What did you think? If you haven’t, would you?