Feature:Our 2004 Online Advice Buyer's Guide

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In the pages that follow, we present a sampling of the online advice provider tools available, as well as some of the providers who offer some of these advice tools. The list is not all-inclusive; nonetheless, it offers a concise snapshot of the current landscape.  

One may well wonder what different turns this market might have made had legislation emerged to offer plan sponsors solace or additional protection for making the choice to offer investment advice. Regardless, plan sponsors that choose to make such tools available to their participants will find a selection of tools and capabilities as wide and varied as ever. Furthermore, the absence of a comprehensive legislative sanction has been more than a little mitigated by the Department of Labor's so-called SunAmerica decision, which gave plan providers the green light to offer investment advice, even on their own investment products, as long as that advice is generated by an independent third-party vendor. Indeed, those independent third-party vendors are well represented in this year's Buyer's Guide.

We were impressed to find usage metrics and utilization statistics readily available for each offering, though interested plan sponsors still would be well-advised to inquire as to the specifics from any vendor offering. Simplistically, utilization suggests a single usage by participants—advice "tourists," if you will—and many never come back, or never finish, for a variety of reasons. What plan sponsors may want to be more focused on is what Financial Engines terms "adopters"—that is, participants who actually engage the service, and who actually seem to be taking advantage of the advice. To their credit, our Buyer's Guide entrants all appear to know and appreciate the difference. We also have noted for each core provider a category for how it measures success. Again, to their credit, providers appear to be focused on usage and response as key metrics to refine and improve their offerings.

With maturation of the services in this space, some items no longer appear in our table. Advice on non-retirement assets is largely standard now (though Morningstar says it does not make this available), as is the ability to offer a "managed" account, where the advice is transformed from a suggestion to an active role in implementing that guidance. The inclusion of company stock in the advice was, once upon a time, an anomaly—now, it is common. Similarly, the platforms now all seem to routinely accommodate "outside" funds, with the exception of Charles Schwab. Plan sponsors looking for multiple delivery media surely will find it here. Nearly everyone offers just about every medium one could desire.

One other sign of maturation: Fees have "evolved" from what had been a relatively straightforward per person/installation charge to "varies" in the vast majority of situations. With this much choice, we suppose that change also was inevitable.

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