Good investment advice for the rest of us

Man lying on grass with arms behind head surrounded by money

If you have more than $1 million to invest, you'll find that many excellent financial advisers are eager to help you manage your retirement portfolio.

But if you're a midcareer worker with just a few hundred thousand dollars β€” or less β€” in investments, you'll find it difficult to get expert investment advice. It will be even more difficult to get good help if you insist on putting your money in the sort of low-fee investments (index funds, not annuities) that don't particularly reward the financial professional who sells them to you.

So, what's a time-strapped professional to do?

You could just take care of it yourself, muddling through the process as best you can.

But the numbers suggest that you won't do as well as you might with help.

The New York Times recently pointed out a Department of Labor statistic that professional pension fund managers earned 8.3% annually between 1991 and 2010. Workers who managed their own 401(k) plans earned 7.2%.

Why?

People make bad bets, putting most of their money in one thing instead of spreading their risks and chances for reward. And they have trouble selling things that have done well and buying assets that haven't performed well lately, which is counterintuitive and therefore difficult to do.

Biggest money mistakes

We think managing your own money is one of the biggest money mistakes people can make. You should seek help for investment matters, just as you seek a mechanic's help to keep your car running.

Says TIAA-CREF's Joe Wilson: "You have to ask yourself whether you have the time, skill and will to handle your finances. If not, it’s probably best to hire an expert."

If you don't want to figure it out on your own, you have choices.

You can go to a fee-only certified financial planner and pay that person to recommend the right funds and perhaps the right investment manager to do the work for you. That will cut into your net returns.

Or you can explore some of the other businesses that say they will help you do the right things with your money, guiding your modest portfolio for a modest fee.

These include:

Rebalance IRA (www.rebalance-ira.com), which looks to match market gains through investments in exchange-traded funds, similar to index funds. A company representative talks with you about your retirement and investment goals once a year, and then the firm invests and rebalances your account as necessary. You pay one half of one percent of your assets under management annually, or at least $500 a year.

MarketRiders (www.marketriders.com), which charges $150 a year for do-it-yourself instructions on how to adjust your index portfolio. But for $250 plus an annual, asset-based fee, the company will put your money in investment portfolios constructed by their big-name Wall Street advisers: author and Princeton University professor emeritus Burton J. Malkiel, former Vanguard board member Charles Ellis and Jay Vivian, who used to run IBM's retirement plans. The portfolios tend to favor small stocks and can also include indexed investments in emerging market bonds and high-dividend stocks. Participants, who also get regular portfolio rebalancing, must move their IRA assets to Schwab or Fidelity.

Wealthfront (www.wealthfront.com), which will put your money in allocated investments and rebalance them for less: about a quarter of a percent of annual assets under management. The company also uses Malkiel's advice.

Betterment (www.betterment.com), whose investors pay an average of around 0.3% of assets under management for investment fund placement and rebalancing. Let the company manage $100,000 or more, and you pay 0.15% annually and can get advice from company founder Jon Stein.

All these companies rely at least in part on software that guides them as they allocate and rebalance. They'd have to.

You can get genuinely customized financial advice, but you pay more for it than these companies are charging.

You'll also get some personal customer service; I suspect that the amount of time spent talking with a human will vary by company.

All the same, I'm going to check these out. You might want to, too.