Start Your Engines
Individual Investor (09/00) Vol. 19, No. 9 p.40; McReynolds, Rebecca

Financial Engines (financialengines.com) and 401k Forum (401kforum.com) were the first two financial planning engines on the Web and they still dominate the market. 401k Forum has since changed its name to mPower. Forrester Research projects that 16 million U.S. households will get their first professional investment advice through automated analysis online by the year 2005. During that same period, 7 million households with live financial advisers will supplement that advice with advice from an online service. Morningstar's ClearFuture (clearfuture.com) is a new online financial engine that provides customized asset-allocation and fund selection advice. Based on a form filled out by the user, a model will forecast the range of expected retirement income. Another new engine that provides free online guidance is Quicken.com. At the site, a series of questions is used to determine each user's risk tolerance, retirement goals, years to retirement, and other information. On the basis of this information, the site's personalized allocation plan provides asset allocation advice for specific funds offered by the user's 401(k). Thomson Financial's Wiesenberger division and Ibbotson have developed planning software, currently available to Cigna members, that can run through as many as 500 different scenarios to forecast the probability that users will reach their retirement goals. One advantage that Ibbotson's software has over its competitors is that it automatically adjusts recommended portfolio risk based on the age of the user, lowering the risk over time as retirement gets closer.


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