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more likely to retire at age 72 or 75 than at age 67 (as seems likely, given the country’s larger demographic and fiscal trends). Right now, you can’t make adjustments like that without starting from scratch. But Roy says a “sandbox” feature, allowing members to explore alternative scenarios, is on the company’s product development roadmap.
Personal Capital, based in Redwood City, CA, offers services similar to Jemstep’s, one difference being that you can use it to track your whole net worth, including your banking and credit-card accounts, rather than just your investments. Also, Personal Capital offers smartphone and tablet apps in addition to its Web interface, while Jemstep is currently Web-only. I found that connecting my investment accounts was more seamless and trouble-free on Personal Capital than it was on Jemstep. But in the end, both services reported the same account balances, which was reassuring.
There’s a free “Investment Checkup” feature on Personal Capital that offers a rebalanced portfolio allocation based on your risk tolerance. In my case, Personal Capital said that my portfolio was a little too conservative, and that I should increase my exposure to international stocks—just as Jemstep suggested. But interestingly, Personal Capital said I should take the money from my bond and real estate accounts rather than my U.S. stock accounts. I can only guess that the two startups’ models and simulations are based on different assumptions about the prospects for the U.S. stock market.
What Personal Capital doesn’t provide—at the free level, anyway—is specific recommendations about which funds you should invest in to rebalance your portfolio. The startup monetizes its service by encouraging you to hire one of its on-staff financial advisors for that kind of help. Personal Capital can also manage your whole portfolio; fees start at 0.95 percent per year, for users with up to $250,000 to invest, and decrease to 0.75 percent per year, for people with $4 million or more. Yet another Silicon Valley financial-tech firm, FutureAdvisor, also offers portfolio management services, for a flat 0.5 percent per year.
Roy says Jemstep takes pride in not being a broker or money manager, and earning money purely based on its data services. “It’s hard to believe that, systemically, these active managers are going to outperform the market by more than their fees,” he says.
But whatever you believe about the value of professional help, you’re likely to get a better deal—and deeper data—from one of the new online services than you will from the old-line investment management firms. “Unfortunately, too many Americans have been left to their own devices” when it comes to long-term investment planning. Roy says. “And we are talking about their retirement, not a small thing like whether they will buy a Toyota or a Honda.” But that’s now changing—and with today’s tools, there are fewer excuses for not getting a handle on your own financial future.
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