58 KIPLINGER’S PERSONAL FINANCE^ 09/2017
INVESTING
financial planners, who are qualified
to give you investment advice and help
you with other aspects of your finan-
cial life, from banking and insurance
to when to claim Social Security bene-
fits. Such planners must pass a rigor-
ous seven-hour exam and complete
an apprenticeship before they earn
the CFP designation.
Other hybrids hire so-called invest-
ment adviser representatives, who
have passed tests, such as the Series 65
or Series 66, that show a command of
general investing topics, portfolio
strategies, taxes and regulations.
(Some have also passed the Series 7
exam, which allows them to serve
as brokers.) These reps can give you
investment guidance—say, walk you
through the differences between
two portfolios. They can even talk
you down from the ledge when you’re
panicking about market turmoil. But
they cannot advise you to choose one
course, or one investment, over an-
other. And they can’t help you with
broad financial-planning questions.
Finally, hybrid advisory services are
only as good as the advice they deliver.
And for now, that’s hard to measure.
Many offerings are new, and few have
records of as long as five years. Condor
Capital Management, a Martinsville,
N.J., adviser, has started to keep tabs.
The firm has opened a taxable account
and an IRA (where possible) using
real money at more than a dozen roboin the door, and you’ll pay more for
advisory services than you would for
a robo-only model. Betterment Pre-
mium, for example, offers unlimited
consultations with certified financial
planners for a $100,000 investment
minimum and charges 0.50% in an-
nual fees. That’s less than the typical
annual rate of 1% for a money man-
ager. But it’s more than Betterment’s
Digital service, which offers no con-
sultations, has a $0 minimum and
costs 0.25% per year.
And you won’t develop an ongoing
relationship with a dedicated adviser
with these hybrids, as you would at a
traditional money-management firm.
When you call, you’ll talk to the first
person available. The advice you get
won’t be customized, either. With
almost all hybrids, you’re stuck with
the model portfolios on offer.
What’s more, the advice itself can
be formulaic. Say you’re a 45-year-
old woman who will retire in 20-odd
years and has a host of career, family
and personal issues affecting your
financial life. “You’re going to get
generic advice for a generic 45-year-
old,” says McNeely, a certified finan-
cial planner in Spencer, Wis. The
hybrid won’t take into account
whether you have significant health
issues, for instance, or a job that gen-
erates uneven income.
The level of advisory expertise var-
ies, too. Some services hire certifiedsame technology behind Schwab’s
robo service, Intelligent Portfolios.
But Intelligent Advisory doesn’t gen-
erate a computer-prescribed portfolio
until after you have a consultation
with a financial planner. Every year,
you’ll get a “check-in and update”
with one of the 30 CFPs who work
exclusively for Schwab Intelligent
Advisory. And you can talk to a plan-
ner midyear if you need to.
Vanguard’s Personal Advisor Ser-
vices charges low fees, too—0.30% of
assets a year. You do need $50,000 to
start, but for that you get access to one
of the hundreds of certified financial
planners employed by Vanguard (by
phone, video or e-mail). The planners
can customize your portfolio, which
might include holding on to those
General Electric shares that Grandpa
gave you, for example, if that’s in your
best interest. And they can give you
planning advice on all aspects of your
financial life.
Once you throw a human into the
mix—even if you don’t ever meet with
one in person—the job of picking an
adviser becomes more about personal
preference than about fees or mini-
mums. And anyone evaluating a hy-
brid advice model should keep in mind
its limitations.Far from perfect. Hybrids come with
some downsides. For starters, there’s
a higher minimum investment to get CONEYL JAY/GETTY IMAGES; ISTOCKPHOTO.COM