Where to Find Cheap Investment Advice

The Experts from the Wall St Journal write: With so many investment services geared toward the wealthy, it can be tough for average investors to find decent investment advice.

So we asked The Experts: How can people with limited assets and income get good investment advice?

This discussion relates to a recent Journal Report article on using the internet to find good investment advice and formed the basis of a discussion on The Experts blog on Sept. 6.

Resources for Do-It-Yourself Investors

GUS SAUTER: There are a variety of ways to get good advice. It may not be customized, or tailored precisely for any particular individual, but as long as one's risk tolerance isn't either extremely conservative or extremely aggressive, an investor can assemble an effective investment strategy.

For investors who are self provisioners and want to create their own portfolio, there is a wealth of education available online. While many people think investing is hard, it doesn't have to be. Just remember three major principles—balance, diversification, low cost. And think long term. Many mutual-fund companies provide tremendous education on their websites for do-it-yourselfers.

For those who don't want to be actively engaged in creating an investment plan, there are a number of mutual funds that essentially provide advice in a product. These so called target retirement funds or target-date funds are designed to be one-stop shopping and represent the fund company's best thinking for asset allocation for an investor of a certain age. For example, a 2050 target retirement fund is designed for someone who will turn 65 in 2050, or a year close to that. Such a fund would likely have a pretty aggressive allocation today, reflecting the investor's young age (28). The fund will become more conservative as the investor ages, reflecting the investor's declining ability to take risk as she gets older. These funds can be very effective for investors that don't have large or complex portfolios.

George U. "Gus" Sauter is a senior consultant to Vanguard Group Inc. where he was chief investment officer from 2003 through 2012.

Learn These Basics

ALEXA VON TOBEL: While it can be hard to distill the "good" information, there is a wealth of investment guidance available online. I would advise people to start by learning the basics of investing. Investing is an industry crowded with complex lingo—often designed to be confusing. Before you dive into implementing any advice, it is key to understand the basics (e.g., discount vs. full-service brokerages, ETFs vs. mutual funds).

Next, it is critical (let me repeat, critical) to assess your overall financial situation to see whether you are even in a position to invest. Do you have any debt to tackle first? And do you have an emergency savings account set up with enough cash to cover your living expenses for six-plus months (or more if you have a family)? If your financial foundation is in check and you're looking to invest for the long term, then it makes sense to seek out more active support around investing.

With the rise of fintech companies, there are now affordable fee-only options for investment guidance, which make advice accessible to people at a wide range of asset and income levels. It's important to look for a service that is fee-only (instead of companies that charge for a percentage of assets‚ which skim a percentage of your potential earnings). It's also important to find an adviser who is not biased, someone whose salary is not tied to your ability to buy the products the adviser may be pushing.

Historically, investment advice has been reserved for the incredibly wealthy. But in order to amass wealth, access to that advice is critical. Average investors should take advantage of the innovation that technology is bringing to the space.

Alexa von Tobel (@alexavontobel) is the founder and CEO of LearnVest.com.

My Favorite Low-Cost Site for Investment Advice

MATT HOUGAN: The good news is you can get better advice and better portfolios at lower costs today than ever before.

My favorite solution? Wealthfront. It's a Silicon Valley startup that offers incredibly well-constructed portfolios through a technological interface at ridiculously low costs. It charges $0 for accounts less than $10,000 and 0.25% for accounts larger than that. For that, you get all-ETF portfolios based on the latest in modern portfolio theory, managed by investing legend Burton Malkiel (author of "A Random Walk Down Wall Street"). The service includes tax-loss harvesting and regular rebalancing, with zero commissions and zero custodial costs. The tax-loss harvesting alone will more than pay for the fee.

You could easily pay a financial adviser 2%, and in 99 out of 100 cases you would get worse portfolios, worse service and worse outcomes (assuming they would even take your call if you didn't have $250k to invest!).

Wealthfront is an incredibly good solution for people with normal bank accounts, and a good solution even for those who are quite wealthy.

(I am not in any way affiliated with Wealthfront—I'm just a big fan of what they do.)

Matt Hougan (@Matt_Hougan) is president of ETF analytics and global head of editorial for IndexUniverse LLC.

Financial Resources for New Investors

MICHAEL KITCES: When you are in the early years of beginning to save and invest, the simple mathematical reality is that the fact you are saving and investing is far more important than how in particular you invest it. In other words, if you've just managed to save your first $2,000 for retirement, the primary benefit is that you actually added a whopping $2,000 to your retirement account, and not trying to generate an extra 1% return (which in the end, will only add up to $20 of "excess" return for the coming year). As your savings and account balance grows, eventually this dynamic begins to shift, and by the final years leading up to retirement the results of your portfolio are dominated by the returns, such that any volatility in the markets can lead to significant "retirement date" risk.

Given this dynamic, then, the best course of action in the early years is actually to focus primarily on getting into the habit of saving, and how to boost your "human capital" by earning more (in fact, when you're young it's often better to invest in your career than your retirement account anyway!), and to maintain a relatively simple portfolio so you can begin to get accustomed to the experience (and volatility) of investing.

That being said, sometimes a little help would be helpful, and there are some resources out there to consider. A number of firms and organizations have personal financial advisers that are specifically targeted at helping newer investors, includingLearnVest and NestWise, and the financial planners available through the Garrett Planning Network. There are also a rising number of online tools that can help you get started building your first portfolio—one of the simplest and easiest solutions isBetterment.

As your savings and investments grow over time, it will become increasingly important to make sure that you're on track towards your goals, and you may wish to explore a broader range of investment solutions. When you're getting started, though, the real keys are just to keep it simple, keep it low cost, get the help that you want and need and remember that the fact you are saving—and continuing to build that habit—will be the biggest determinant of your long-term financial success!

Michael Kitces is a partner and the director of research for Pinnacle Advisory Groupand publisher of the financial-planning industry blog Nerd's Eye View. You can follow him on Twitter at @MichaelKitces, or connect with him on Google+.

Few Assets? Try These Investment Firms.

MICHELLE PERRY HIGGINS: Certainly The Wall Street Journal and The Experts panel are excellent sources. The Journal provides great financial information, and the investment advice given on this panel is appropriate for every income level and any size balance sheet. If an investor with limited resources came into my office and wasn't a perfect fit for me as a client, I would direct them to an investment firm such as Charles Schwab. These types of companies are easily accessible for most people with limited incomes and have capable financial consultants available to guide them with their investments.

Michelle Perry Higgins (@RetirementMPH) is a financial planner and principal at California Financial Advisors.

Two Good Books for Beginning Investors

MIKE PIPER: Naturally, it depends somewhat on how limited the assets and income are.

As a writer, I am of course thoroughly biased here, but I think books are a good place to look for guidance. The cost of reading a few books is minimal, but the rewards can be significant—especially for somebody who is just getting started and who can put the lessons to work over a very long period. If you compare two people at the beginning of their careers, one of whom takes the time to read and fully digest a few good books about investing and the other of whom does not, it's not at all unreasonable to think that the difference in their portfolio values by the time they retire would be a six-figure sum.

If you're looking for a good "getting started" book, you may want to consider "The Investor's Manifesto" by William Bernstein or "The Elements of Investing" by Burton Malkiel and Charles Ellis.

Of course, the drawback of books is that the advice they give is not in any way personalized, so at times it can be a challenge to figure out how to apply the generalized advice to your personal circumstances. If you're looking for personalized advice from a professional, I think one good place to look is the Garrett Planning Network—a group of financial planners who do hourly fee engagements and who make a point of striving to be accessible to the middle-income market.

Finally, I can't pass up an opportunity to recommend the Bogleheads investment forum (named after John C. Bogle, the founder of Vanguard). It's an active community of well-informed DIY investors who are happy to share their time and knowledge. Regardless of your income or asset level, this is one resource you don't want to miss.

Mike Piper (@michaelrpiper) is a Missouri-licensed CPA and the author of the blogObliviousInvestor.com. He is also the author of several personal-finance books, including his latest, "Social Security Made Simple."

Great Resources for Investors With Low Incomes

GEORGE PAPADOPOULOS: There are financial planners out there who specialize in working with people on an hourly consultation basis. Fellow WSJ Expert Sheryl Garrett's firm, Garrett Planning Network, has fiduciary fee-only planners all over the U.S. who do an excellent job, and I often recommend them. I know they put the client first and will not attempt to sell any products. No sales, just quality advice. Paying for a few hours for the help of a good financial planner every year can make a huge difference in financial success.

You can get your pressing finance questions answered by members of NAPFA (National Association of Personal Financial Advisers) during one of their monthly public-service online chats conducted in partnership with Kiplinger's Personal Finance magazine. These chats are always scheduled for every third Thursday of the month from 1 to 3 p.m. Eastern. The upcoming events are scheduled for:

Thursday, Sept. 19, 2013

Thursday, Oct. 17, 2013

Thursday, Nov. 14, 2013

Thursday, Dec. 19, 2013

You can access the chats by clicking here.

In addition, the CFP (Certified Financial Planner) Board conducts Financial Planning Days in many cities across the U.S. every October in cooperation with the Financial Planning Association, the Foundation for Financial Planning, and the U.S. Conference of Mayors.

Finally, some of us take pro bono cases. We don't mind answering a quick general question; just do not ask for a hot tip or where we see the market going next week! I don't mind giving people an hour of my time at no charge once in a while. Most of us got into this business to help people and we get a natural high doing so.

George Papadopoulos (@feeonlyplanner) is a fee-only wealth manager in Novi, Mich., serving affluent individuals and families.

Where to Start if You're Looking for Low-Cost Investment Tips

ELEANOR BLAYNEY: Just about anyone can afford an Internet connection these days. So it's no surprise that the Web is considered the best way for individuals without much money to get the information they need to start investing. Even those with significant income and wealth are attracted by the availability and low cost of financial websites as a primary source of guidance.

But while bursting with a gazillion bytes of information, the Internet cannot make individual eye contact or exercise judgment. For good investment advice, an expert is often needed by low-income, low-net-worth people, as much as by Bill Gates or Oprah.

Just an hour or two with a financial-planning professional can help an individual who is just starting out or has not accumulated significant wealth. With few resources, the individual does not need to consider a lot of investment choices or strategies. He needs advice that is simple, plain-vanilla, sturdy and reflective of his long-term goals. In fact, he may not need investment counsel at all to begin with, but advice on protecting the resources he has before he attempts to grow them.

The financial-planning profession is, I believe, changing to accommodate this need. There are professionals who are moving downstream to focus on those with limited financial means, including younger clients, certain minority groups and individuals in financial crisis, such as divorcées.

Eleanor Blayney (@EleanorBlayney) is consumer advocate of the Certified Financial Planner Board of Standards.

Three Investing Tips for People With Limited Assets

MANISHA THAKOR: "I don't have much money, how can I get help making what I do have grow?" Historically this has been the ultimate financial "chicken and the egg" conundrum. An adviser has only so many hours in a day to work. If utilizing a percent of assets under management fee structure, applying those hours to larger portfolios maximizes profitability. So larger portfolios are where the industry tended to focus. But thanks to technology and new ways of interacting with clients, there are firms that are cracking the code on how to provide solid investment advice to the mass market.

One of my favorite firms in this space is Betterment, which focuses on my preferred investment strategy—the use of low-cost index funds and ETFs. I'd liken this firm to the Southwest Airlines or Target of financial services—striving to provide a high-quality, low-cost customer-service-oriented experience to everyone.

In general, when it comes to getting financial advice when you have limited assets, the three things I'd suggest focusing on are: Identify the appropriate asset allocation for your situation, use low-cost investment solutions to implement that plan and, if needed, work with your adviser to adjust your budget to pay off any debt as fast as you can and rejigger your cash flow to live within your means and save for the future. Those three basic steps can go a long way towards putting you on the path to financial nirvana.

Manisha Thakor (@ManishaThakor) is founder and chief executive of Santa Fe, N.M.-based MoneyZen Wealth Management LLC.

Four Free Investment-Advice Sites to Check Out

CHARLES ROTBLUT: The smaller the amount of wealth, the more resourceful an investor needs to be. Every dollar of expenses accounts for a proportionately larger percentage of assets as the amount of wealth decreases in size. So, the lesser one's wealth is, the more important it becomes to ensure the maximum benefit is realized for every dollar spent on fees and expenses.

This said, a person with lower levels of wealth does have options. There are many websites with various useful free financial and portfolio planning tools. For example, AAII has asset-allocation suggestions, T. Rowe Price has a great simulator for determining when and how to take Social Security benefits, Yahoo has a retirement budget tool, and Mint.com can help you track your spending so you might be able to figure out ways to save more.

Depending on the type of benefits package, a person's employer might have some useful resources. Additionally, some financial planners will work on a fee basis, and it may be worth paying the consultation fee if to get a good long-term strategy.

Charles Rotblut (@charlesrotblut) is a vice president with the American Association of Individual Investors.

Free Tips from Bogleheads

RICK FERRI: Go to Bogleheads.org for advice. It's an online organization of knowledgeable investors who are ready to help anyone who asks. The site is operated by a nonprofit organization, so there is no commercialism and no hassles, and here is the best part—it's free. You can read without logging on, but if you wish to ask a questions, you'll have to log on.

The Bogleheads site consists of the wiki and the forum. Both were built by volunteers who are dedicated to helping people begin or improve their investing journey through the application of sound investing principles. These values come from the investing philosophy of Vanguard founder Jack Bogle, who strives "to give ordinary investors a fair shake."

You won't find a better investing site on the Internet than Bogleheads.org. I've been an active member of the community for more than a decade.

Rick Ferri is founder of Portfolio Solutions LLC and the author of six books on low-cost index-fund and ETF investing. His blog is RickFerri.com.

How to Find Cheap Investment Advice at Your Library

TOM BRAKKE: Generally, I think that "people with limited assets and income" need planning advice much more than investment advice. (That's true for almost everyone, actually.) Pay down debt as fast as you can, save as much as you can and resist pie-in-the-sky investment projections and "opportunities."

It is unfortunate that sound financial advice can be hard to find unless you have something more than "limited assets and income." Start at the library and focus on savings and planning books first, rather than investment ones. There may also be charitable and governmental organizations that provide services for free, and some financial planners do pro bono work for those in need.

Tom Brakke (@researchpuzzler) is a consultant, writer and investment adviser who specializes in the analysis of investment decision making and the communication of investment ideas.

Basic Investment Advice for People on a Budget

TERRANCE ODEAN: There are several online sources of basic investment advice as well as low-cost financial advisers. I don't know enough about any one of these to make recommendations. Good generic advice is to try to save 20% of your after-tax income, invest in low-cost, broad-based equity- and bond-index funds, such as total stock-market index funds or total bond-market index funds. The right mix of equities and bonds depends upon a person's goals, age, income, wealth and psychological ability to tolerate losses. Pay attention to fees. For U.S. equity- or bond-index funds, the expense ratios should 0.20% or less. If you are advised to pay higher fees, find better advice. If you are advised to buy Exchange Traded Funds (ETFs), make sure that these funds track broad-based indexes and that you don't pay high commissions when buying them.

Terrance Odean is the Rudd Family Foundation professor and chair of the Finance Group at the Haas School of Business at the University of California, Berkeley.