FINANCIAL PLANNING
The financial planning business is as much about holding clients' hands as dispensing dispassionate analysis. But traditionally those hands have to be carrying some serious dough - often $5 million or more. If that kind of money is out of reach, there's a less touchy-feely alternative: automated advice for $99 a year from AdviceAmerica.com.
"Our target is middle America," says CEO Purna Pareek. "That's where the service is needed most." Indeed, less than 7 percent of US households seek guidance from a certified financial adviser, according to Forrester Research senior analyst Jamie Punishill. "Most advisers are paid based on the size of a transaction or the amount of a customer's assets under management," Punishill says, "so they concentrate on serving only the wealthiest consumers."
Other sites target the same mass market - but, unlike those that proffer investment advice (DirectAdvice.com, ByAllAccounts.com) or focus on retirement (TeamVest, mPower), AdviceAmerica integrates these areas with insurance and tax, estate, and education planning. "You can see how one part of your portfolio affects the others," Pareek points out, "rather than having fragmented calculators for each one."
The catch? You've got to enter your financial particulars in mind-numbing detail - income, expenses, assets, liabilities, stock options, bequests, et cetera. Then you specify your goals - buying a house, vacationing in Bali - each with a cost, time frame, and priority. The site tries to make entering your data easy, but it's still a big job, and the prospect of keeping everything current is daunting.
When you're ready, you can generate a list of recommended actions. Use your home equity loan to pay off your car. Buy this type of bond and that kind of mutual fund. Push back your retirement age from 60 to 65. Why? Click the Rationale button. Don't like the recommendations? Modify your goals to generate a new set of suggestions.
AdviceAmerica may lack the human touch, but it does cut through the thicket of personal finances - and it'll be even better if Pareek can arrange to share data with financial institutions. With automatic access to the full range of personal financial information, AdviceAmerica could realize the promise of painless, inexpensive, and effective financial planning for the masses.
- Amanda Griscom (amanda@thenewgreen.com)
AdviceAmerica.com: www.adviceamerica.com.
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