There are numerous online portfolio advisory services available. They beckon with enticing advertisements promising performance beyond what you can do on your own. All the ones I have examined do make decent recommendations. They develop a diversified portfolio composed of index funds or Exchange Traded Funds (ETFs) that is tailored to your tolerance for risk. That is very good advice. They are not trying to make their money off front-end loaded funds.
They are not out to gouge you. They want you to do well and be with them a long time as they charge you a fixed amount per month based on the value of your portfolio.
So, what do you typically get for your monthly fee?
- A short quiz to determine your tolerance for risk.
- An analysis of your current portfolio.
- A recommendation of how to reconfigure your portfolio to match your risk profile.
- Quarterly buy/sell recommendations to keep your portfolio balanced
- Periodic recommendations to exit/enter a position in a security.
Why Not Use One Of The Customized Portfolio Manager?
- The portfolios they recommend are the diversified portfolios we have already examined and dismissed as being no better than DIA alone.
- The portfolios they recommend require significant quarterly tinkering with buy and sell recommendations; paying attention to emails and then DOING what you are told.
- There will be at least five funds in your portfolio. If you are investing monthly, the trading fees will eat up your monthly investment as illustrated earlier.
- There is no certainty that they will do any better than the MUCH SIMPLER PROCESS of investing in DIA alone.
- If you fail to adhere to every recommendation they make, you will be off their radar.
- They may not be around for the 47 years a 35 year old needs them.
- They are more expensive than The Plan … which is free.