Taking a robo-adviser out for a spin
We're getting a crack at new technology: a retirement plan robo-adviser. My colleagues and I at Philadelphia Media Network have a 401(k) administered by Vanguard, the local mutual-fund giant. A few weeks ago, we got letters in the mail saying we're eligible to try out Financial Engines' "Retirement Evaluation" tool free for a few months.
We're getting a crack at new technology: a retirement plan robo-adviser.
My colleagues and I at Philadelphia Media Network have a 401(k) administered by Vanguard, the local mutual-fund giant. A few weeks ago, we got letters in the mail saying we're eligible to try out Financial Engines' "Retirement Evaluation" tool free for a few months.
If we sign on - and I'm going to road-test it - Vanguard charges 0.40 percent annually, more expensive than just indexing. (Currently, I have my Vanguard savings in one low-cost index fund). I'm not crazy about the extra fee, because it seems antithetical to Vanguard, but personal advice costs money.
Vanguard clients' uptake on the Financial Engines tool has been so-so (about 7 percent of all plan participants), but I'm willing to see what the tool suggests.
The evaluation includes a phone call, if desired, to go over other assets such as Roth IRAs, annuities, and the like.
I'll report back with results from Vanguard and Financial Engines in a few weeks. They're crunching my measly portfolio to see whether I'm on the right track, style-wise.
If I don't like the advice, I can quit the service before the deadline and pay nothing.
We're probably late to the robo-adviser party - Financial Engines partnered with Vanguard in 2001.
Like Vanguard, Financial Engines is a quiet giant. Founded in the 1990s, it boasted $104 billion under management in January, compared with $88 billion in January 2015 - an increase of 18 percent.
Vanguard's own hybrid robo-adviser, Personal Advisor Services, had $31 billion in January 2016. (It launched in 2015.)
Rivals include Charles Schwab's Intelligent Portfolios, launched in 2015. As of January, Schwab's robo-adviser assets stood at $5.3 billion.
Vanguard remains the juggernaut, attracting almost $29 billion to long-term mutual funds and exchange-traded funds as of March - more than all competitors combined, according to Morningstar. Having built its reputation on low fees, Vanguard was the leader in estimated flows to both actively managed funds as well as those that track indexes.
The shift toward passive investing has accelerated in bonds, too. Vanguard's collections in March represented 59 percent of the money the entire industry gathered during the month.
BlackRock's iShares unit attracted almost $15 billion to its ETFs. Losing firms included PIMCO and Franklin Resources, with net redemptions during the month, according to Morningstar.
Vanguard's $24.7 billion Intermediate-Term Investment Grade Fund had the largest inflow, more than $1.6 billion, to any active fund in March, Morningstar reported. About $1 trillion of the $3.2 trillion Vanguard oversees is in actively run funds.
April is Financial Literacy Month, and April 23 to 30 is Money Smart Week.
Public libraries are jumping into the fray with events such as "The Social Side of Retirement" at the Montgomery County-Norristown Public Library. The library's first Money Smart Week event takes place Saturday from 11 a.m. to 1 p.m., at 1001 Powell St., in Norristown. For information, contact Asha Verma at 610-278-5100, or visit http://www.moneysmartweek.org/findevents.
BetterInvesting.org, the nonprofit investment club, is hosting its annual Philadelphia chapter event 9 a.m. to 4:30 p.m. April 30 at the Super Giant Food Store, 315 York Rd., Willow Grove. It's a great way to learn about stocks and mutual funds without conflicts of interest from big banks or fund companies.
BetterInvesting.org has chapters in New Jersey, as well. With 45,000 members nationally, BetterInvesting clubs provide practical experience and organized seminars, computer events, and investor fairs.
The club's core principles: Invest a set amount regularly; reinvest earnings dividends and profits; find high-quality growth stocks and equity mutual funds; and diversify.
Rita Miller, president of the Philadelphia chapter, invites the public to BetterInvesting.org's regular meetings the second Saturday of every month.
But the April 30 event is special, she says, with speakers including Securities and Exchange Commission attorney Michael Novakovia. Francis Daly will speak on interpreting ValueLine reports on companies; Rajeev Vaidya, on market history; James Veal, on investment planning. Yours truly will also be on hand.
Cost is $20 and lunch is included. Register with Gloria Mankonen, 215-796-1214, or e-mail the group (firstname.lastname@example.org).