They're Giving It Away!

If you've been putting off developing a retirement plan, how about letting Consumer Reports steer you to some good, free or low-cost financial advice? The magazine recently gave ten plans a try, sending in testers with different middle-class family situations. There was a couple with young children living on one salary,  someone in his 60's, almost ready to retire, as well as someone pushing 50 who is interested in an early rerirement. Then the magazine had an independent expert review the plans.

While the advice the testers received was generally sound, Consumer Reports found that you won't get a lot of hand-holding or specific stock advice from the freebie plans. So is it worth the time and energy? It's definitely worth it – especially if you choose one of the services where you'll end up with a written plan.

There's a real benefit to having something in writing. According to research by the Consumer Federation of America and NationsBank, people with written financial plans report having two times as much money as people without plans.

There were only two companies in Consumer Reports' investigation that suggested specific investments – and they recommended their own mutual funds. While these may be low-cost and well-run funds, Consumer Reports recommends that you only work with "fee-only" certified financial planners who have had at least five years of experience and will not personally benefit from their advice to you.

Interestingly, the magazine learned that there were issues with expensive plans as well as with the less expensive and free ones, leading it to conclude that you can't totally hand off the responsibility for managing your money and keeping your retirement plan on track, even if you pay a lot for the service.

Consumer Reports specifically recommends that you be cautious about the different assumptions planners can make. For example, if planners assume too low an inflation rate or too high a return rate on your nest egg – to say nothing of too short a lifespan -- a retirement plan can easily fall short of its mark.

The free services Consumer Reports tried were from Charles Schwab, Wachovia Bank, and Fidelity Investments. In the $100 to $250 range, the testers went to MyFinancialAdvice, T. Rowe Price, and FinancialEngines. T. Rowe Price, Alliance of Cambridge Advisors, and Garrett Planning Network plans cost between $500 and $650. The Vanguard Group and an independent, fee-only planner were the priciest services, at $1,500 and $3,000, respectively.

Get It Now!

You've seen all the stories about the importance of planning for retirement sooner rather than later, right? Consumer Reports' findings on "bargain financial advice," which includes tips on how to avoid rip-offs, can help, but it will only be available on the 'Net for free until April 10, 2006. After that, you'll have to subscribe to read this important article. So don’t procrastinate and get yourself some free help planning for your retirement.