Web sites help do-it-yourself investors manage portfolios with financial adviser savvy

When it comes to picking stocks Jim Gutman turns to The Fool rather than a financial planner.

But Gutman is no fool. The Motley Fool is one of many established online investing sites attracting an increasing number of financially savvy investors who prefer to research, trade and grade their portfolios on their own.

“When I get an idea about a company that I want to invest in, I’ll go online,” Gutman said. “I’ll Google it, use a Quicken.com quote and get a lot of news and information on the stock.” When he’s ready to buy or sell, Gutman stays online and uses WellsTrade, the online brokerage division of Wells Fargo Bank.

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“Investing is a fun thing to do, and I’ve done well enough, so I’m willing to keep doing it on my own.”

The Denver resident controls about half of his investments, and he leaves the other half – mutual funds and bonds – to a financial planner. He said he has been satisfied with both results.

Online brokerage sites like Ameritrade.com and E*Trade.com have been around for awhile, but lately more financial Web sites are popping up that allow investors to rate, recommend and diversify their portfolios much like a financial planner would.

In some cases, the online financial tools are free, even for nonpaying customers.

RiskGrades.com, for example, lets users plug in their investments to determine how risky their portfolio is. Morningstar.com offers a free service it calls Instant X-Ray, which helps investors examine their mutual funds’ individual stock holdings and points out if there is significant duplication of investments.

Other sites offer stock screeners and financial calculators, which can help investors choose where to put their money. The services are usually located in the “tools” section of a financial Web site.

Local wealth manager Robert Pyle said he sees more clients seeking out online tools to help with their investments, but only as an initial aid. His Web site for Boulder-based Diversified Asset Management Inc. has numerous online tools from tax calculators to retirement planners.

“My feeling is that they are good as a first pass to look at your investments or retirement, but I don’t think the online tools are as good as having a professional adviser,” he said.
“The adviser can provide the education and make sense of all the information that’s out there.”

Financial planners and wealth managers have access to certain institutional funds, which online brokerages don’t offer.

For local investors who want to bridge the gap between a full financial planner and controlling their assets online, there are helping hands such as Shannon Lunsford in Louisville.

Lunsford Financial Planning Inc. charges clients by the hour, rather than a percent of their investment returns.

“My primary focus is to give people financial advice, but not to manage their money,” Lunsford said.

Lunsford works within clients’ existing online brokers, or recommends Vanguard or Fidelity if they don’t already have one.

“There are a lot of middle-income folks who are making good money at local tech firms. They don’t feel they have enough financial education to pick all their stocks and mutual funds, but they know enough that they want to retain control of their money,” Lunsford said.

Costs for Lunsford’s services depend on the person’s portfolio and how much work is needed. The average investor with $200,000 to $500,000 and five to 10 holdings will spend about $350 to $750, he said. There are additional per-hour costs if clients need more advice along the way.

Beyond setting up investment accounts, Lunsford said clients usually need help with diversification, taxes and trading discipline.

Diversification and taxes are fundamental issues pretty easily applied to a person’s portfolio, Lunsford said. But trading discipline – that can be a personal issue.
“There’s a lot education in why you want to consistently keep your money invested, and not to move it around a lot. I tell them ‘you don’t need to watch it daily, or it will drive you nuts.'”

Contact David Clucas at 303-440-4950 or e-mail dclucas@bcbr.com.

Online investing toolbox

Online brokerage sites like Ameritrade.com and E*Trade.com have been around for awhile, but lately more financial Web sites are popping up that allow investors to rate, recommend and diversify their portfolios much like a financial planner would. Some of the sites’ tools are free:

_ Fidelity.com – Use Fidelity’s Portfolio Analyzer to evaluate investing style and compare it to broader markets.

_ Fool.com – Home of The Motley Fool, an online investing advice site.

_ Morningstar.com – Evaluate your mutual fund holdings with a variety of rating and risk analysis tools.

_ MSNMoney.com – Use stock and mutual fund screeners to narrow investments to choose from.

_ RiskGrades.com – Find out how risky your investment portfolio is.

_ Finance.yahoo.com – Track investments and what others are saying about them on one of the Internet’s most active message board sites for individual stocks.