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Comprehensive plans: What we got
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$3,000
Independent, fee-only planner
Price: $3,000 for the plan, plus annual management fee of between 0.5 and 1 percent of assets.
Service included: Comprehensive plan, including net-worth and cash-flow analyses, asset allocation for retirement and education goals, life-insurance
recommendations, advice on long-term-care insurance, and estate planning.
Experience: Adviser referred by friends. Three-month process with multiple hour-long meetings, e-mails, and phone calls.
Pros: Decent general fund allocation for retirement: 55% stocks, 45% bonds. Creative advice for short-term college funding (laddered
CDs). Good advice on converting some retirement funds to a Roth IRA. Detailed action plan tells clients exactly what to do
for the next 5 years, including how much to withdraw, shift around accounts, and contribute to new accounts.
Cons: Overweighted allocation of international funds (28% of stocks). Overly rosy projected inflation rate (3%). Recommended portfolio
weighted too heavily toward value and blend funds; no mid-cap or large-cap growth funds. Overly conservative $200,000 cash
cushion. Recommended, Qualified Terminable Interest Property (QTIP) Trust may not be the best available trust. Not enough
explanations or fact-based rationale.
Best if: You require face-to-face interaction, want more than investment advice, and have the knowledge and stamina to question the
planner’s assumptions.
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$1,000 or $1,500
The Vanguard Group
Personal Financial Report
www.vanguard.com
Price: $1,000 or $1,500 if nonclient ($500 if you have $250,000 to $1 million invested; $250 if you have $1 million plus; free if
committing at least $250,000 in new assets). If you want ongoing advice, management fee is 0.75 percent for assets between
$500,000 and $1 million, less as assets increase. Minimum fee is $4,500 a year.
Service included: Financial plan with net-worth and cash-flow analyses, asset allocation for retirement, specific fund recommendations, discussion
of tax implications of withdrawals during retirement.
Experience: Interactive online application didn’t work, so it had to be mailed, a time-waster. Vanguard requires payment in advance but
doesn’t accept credit cards, another negative. Planning process took about two months. Two detailed 45-minute interviews with
assigned planner, with at least one follow-up interview.
Pros: Decent, though conservative, mix for retirement: 50% stocks, 50% bonds. Excellent investment- and retirement-planning advice.
Good advice regarding which funds to liquidate in retirement to avoid taxes. Easy to understand. Good analytics. Fair and
balanced.
Cons: No specifics about additional insurance, or estate or college planning, which should be covered in a comprehensive plan.
Recommended only Vanguard funds.
Best if: You mainly want retirement advice and are willing to invest most of your money with Vanguard.
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Guide to the table
Three Consumers Union employees and their spouses had two comprehensive financial plans and nine retirement investment plans
created over a period of four months. For the comprehensive plans, they anticipated help in all major areas of personal finance,
including analyses of net worth and cash flow before and after retirement; investments; insurance; and education, estate,
and tax planning. For the retirement plans, they told planners they were seeking to accumulate enough money to retire comfortably
and ensure that the money lasts through their lifetimes. Whenever possible, they chose fee-only advisers with at least five
years’ experience and at least one professional certification. Advisers were not told they were preparing plans for this report.
We masked copies of the plans to eliminate names, logos, and other identifying signs, and sent them to an expert Certified
Financial Planner for review.
The Youngs, ages 42 and 36, tried Alliance of Cambridge Advisors, Garrett Planning Network, and T. Rowe Price. The Middles,
ages 47 and 48, tried Fidelity, Financial Engines, Charles Schwab, and Wachovia. The Readys, ages 55 and 63, tried the independent
financial planner, Vanguard, T. Rowe Price, and Myfinancialadvice.com. Price is what we paid, but it may vary.
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