With their one child finished with college and hard at work on a job, Rich and Linda Wright of Kingsport, Tenn., are hurtling toward their next big goal, retirement. He's a market research analyst, trying to rebound from a layoff. Linda is a middle-school guidance counselor, whose school days are slated to end next June.
Just shy of his 64th birthday, Rich increasingly wonders how they will squeeze income from their portfolios, without risking a lot of volatility, for decades to come. He's wary of bonds' likely price erosion amid rising interest rates. One thing he is bullish about is the prospect that his online brokerage, Charles Schwab (SCHW), will help him solve this puzzle. "My parents lived into their nineties, so that's my general life expectancy," Wright said. "I know Schwab has some tools I can use."
Whether it's for retirement — like the Wrights — or other goals, investment and retirement planning tools are increasingly on the minds of Americans. Those tools were rated by investors as one of the 13 most important traits that an online brokerage can have in the 2017 edition of IBD's annual ranking of the Best Online Brokers.
And they were two of the most important traits for clients of Fidelity, Charles Schwab and TD Ameritrade — the three top-ranked brokerages in the category.
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Investor's Business Daily and its polling partner, TechnoMetrica Market Intelligence, survey thousands of investors each year to find out which online broker characteristics are most important to them and how well their own broker performs in each important performance area. The investors' ratings determine the Best Online Brokers in Overall Customer Experience and in each performance category. (See the full broker survey details.)
Investment and retirement planning tools qualified as a critical category for the first time this year.
Fidelity, Schwab and TD Ameritrade (AMTD) were the top three brokers in the category. The tools include online interactive retirement calculators, which can tell you things like whether you're on track to save enough to generate the income you'll need. You can also find a wide variety of tools to help you make long-term strategic decisions — figuring out how to get your finances from where they are today to where you want them to be for retirement or other key goals. Those differ from tactical one-time-only decisions about, say, which securities to buy or sell today.
Guiding Strategic Decisions
Strategic decisions include figuring out whether to roll over your 401(k) account balance into an IRA. TD Ameritrade has an interactive tool for that.
Other brokers offer tools that can knit together several related strategic decisions.
Fidelity's Planning & Guidance Center (P&GC) combines several tools into one package. One, called Retirement Preparedness Measurement, gives you a score that indicates whether you are on track to save enough. If you are falling short, the tool package suggests ways to bridge the gap. For example, it will point out if you are not kicking in enough to your 401(k) account to get the maximum company match. Or it might suggest changing your asset mix to boost your weighting in growth-oriented stocks and stock funds.
The package can even point out a timetable for maximizing your Social Security benefits, whether you are already receiving a check or have not filed a claim yet.
Now offered to Fidelity customers, in the next few months the online brokerage plans to debut a version with fewer bells and whistles for non-customers.
For Fidelity customers, the tool draws on data about assets in the Boston-based firm's care. You can enter information about assets that are in some other firm's custody, or you can give Fidelity permission to look inside those other accounts, without being able to touch the assets.
Another Fidelity tool, Guided Portfolio Summary (GPS), analyzes your portfolio and tells you how you're allocated among sectors, geographies and asset types, and how your weightings compare to various benchmarks. And GPS and P&GC can "talk" with each other, sharing information. "If a customer sets a retirement goal in Planning & Guidance Center, they can run a GPS analysis for that goal," said Jason Jagatic, vice president for product development, in the business group that oversees Fidelity's retail and defined contribution customers.
Senior Vice President Matt Borden, to whom Jagatic reports, said, "Our aim is to help people understand where they stand and then plan to look ahead, create an investment plan that works for their situation and implement it for their situation so they can achieve their goals and get a better outcome than they probably would without these tools."
Images More Than Numbers
Schwab offers a tool it calls Bubble Chart. It shows market performance of securities in your retirement or other account with images more than with words and numbers. The securities in your account are displayed on a grid. Each security is represented by a bubble.
The size of each bubble signals its dollar value. The color of a bubble — green or red — tells you whether it has gained or lost value in the time period displayed. Each bubble's height shows its percentage change in value. The taller a bubble is, the more its value has changed.
And each bubble's location on the grid signals its impact on your account. The further to the left it is, the less its impact is. The further to the right, the more its impact is. You can click or tap on each bubble to see additional data about the position.
"We're in a visual world," said Eliel Johnson, Schwab vice president of user experience and design. "It's a great way of conveying a lot of information in a small space. In other tools, it also helps you interact with the data — make changes to your account, change your contributions, and so on."
Said Fidelity's Borden, "We want to think about tools that bring together your different financial planning tasks. We want to give you a holistic view of your situation and of ways of reaching your goals."