Personal Service From Mass Merchants?

By Jeffrey R. Kosnett, Senior Editor

From Kiplinger's Personal Finance magazine, November 2008

Fidelity, T. Rowe Price and Vanguard are admired for their mutual funds, but not so much for their investment-advisory services. If you're going to pay for something this important, the criticism goes, why get it by phone or online from a mass merchant?

Aware of the criticism, the fund companies seem to be improving their offerings and making them more personal -- at least for larger investors -- by hiring more financial planners and matching them with customers. In addition, the companies have lowered their fees to as little as $250 for a one-time portfolio evaluation and planning consultation.

Vanguard has also responded to complaints that its financial-planning service has been a thinly disguised means to sell its own funds and annuities. Now the company recommends two fund portfolios to customers. With the "consolidated" portfolio, a planner mulls over your assets and suggests a redo centered on Vanguard funds. The "integrated" option keeps most of the assets you already have and uses Vanguard funds to plug holes or replace losers. You need to have $100,000 invested with Vanguard to qualify for investment advice; the service is free if your assets total $500,000.

T. Rowe Price's services are mostly aimed at people within five years of retirement. The company will give your portfolio a once-over for $250, as opposed to charging an ongoing fee based on the amount of your investments, if you have $100,000 in assets that can be invested. Fidelity offers an assortment of services for all investors but will link you to a "dedicated relationship officer" if you bring in $300,000 or more to be managed.

Charles Schwab and TD Ameritrade also manage accounts for a percentage fee. Schwab's system is based largely on its mathematical fund-selection method. In addition, both firms vet independent planners and advisers who operate under the companies' brand names -- sort of a matchmaking service, says a spokesman for TD Ameritrade.

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