Is a Web-based Money Management Firm Right for You?

Delivery of financial services over the internet continues to grow. Although financial advice has traditionally been delivered at a local advisor's office, internet-based financial advisory firms offer a compelling alternative.

Mar 21, 2011, 12:06 ET from InvestSimply

SAN FRANCISCO, March 21, 2011 /PRNewswire/ -- The internet has proven a brilliant enabler for delivering high-quality, low-cost services. Consumer examples include DVD rental firm Netflix and Apple's iTunes music platform. In financial services, we have seen individuals flock to online trading offered by Charles Schwab and E*Trade, not to mention the proliferation of internet banking.

Yet the business of financial advice remains largely delivered in-person. With people turning to the web for all types of services, it is no surprise the number of internet-based investment management firms continues to grow.

These web-based financial advisors can provide sound management of your personal investments and individual retirement accounts (IRA), generally for a fee below what a typical advisor charges. In addition, you get the convenience of managing your investments online.

Internet investment advisors may appeal primarily to younger, web-savvy investors with $500,000 or less to invest. According to John Furey, principal at Advisor Growth Strategies LLC, "Many sophisticated advisors have account minimums of $500,000 or more, often making it difficult for everyday investors to get good, conflict-free advice."

A quick comparison of three firms provides a glimpse of what is currently available.

Index Funds Advisors (

Approach: Diversified portfolio built using index-like mutual funds. Online "Risk Capacity Survey" helps you select a portfolio.

Account Minimum: $100,000

Cost (illustrative $200,000 account): 0.9% per year

Formula Investing (

Approach: Picks portfolio of individual stocks. Stocks selected based on Joel Greenblatt's value investing philosophy. They offer a U.S. and an international stock strategy.

Account Minimum: $100,000

Cost (illustrative $200,000 account): 1% per year (includes trading costs)

InvestSimply (

Approach: Diversified portfolio of stocks, bonds and alternative assets crafted using index mutual funds and exchange-traded funds (ETF). Online "Investor Profile Survey" guides you in selecting a portfolio.

Account Minimum: $50,000

Cost (illustrative $200,000 account): 0.8% per year

If you are considering hiring an internet financial advisor, be sure your money is held in your name at a well-known, third-party brokerage firm (a.k.a. "a custodian"). Firms listed above all allow clients to maintain accounts at third-party custodians. Custodians hold client assets, execute trades, and provide account statements.

Contact:  Steven Geri, InvestSimply, 800-928-6170

SOURCE InvestSimply