Free investment advice for small investors

For many years, the Big 3 discount investing houses — Fidelity, Schwab and Vanguard — operated on a simple full service vs. self service model. You could either pay them to handle your investments or you could do it yourself.

But now most of those companies offer an in-between option that’s like limited service.

Check out these options for free robo-advising

Of course, you could have knocked me over with a feather when Vanguard began offering some level of advice and charging you for it. That’s never been their modus operandi, but that option became available in 2008 for a charge of less than 1% for those with $500K. It’s like the whole investing world turned on its axis!

Charles Schwab has since followed course with a free online robo-advising service called Intelligent Portfolios that you can use at no cost.

Now the next big change has been announced: Free online investment advice for the small investor.

Jason Zweig of The Wall Street Journal  talks about WiseBanyan.con, the first free online-based financial advisor. You have to register and wait for an invitation for this service. But once you’re in, they will build a financial plan for you for free. The portfolios they recommend are ultra low-cost exchange traded-funds that I love.

The free financial planning is offered hoping you’ll buy other services from them — no obligation of course.

WiseBanyan is just one of a number of several organizations trying this kind of thing. WealthFront.com is specifically set up to offer free guidance to those with portfolios of less than $10,000. Once you’re beyond that, they charge a quarter of a percent per year.

Betterment.com charges fees on a scale, but they’re generally about one-eighth of a percent per year of the money you have on hand.

Over time, I’ll play with all these and let you know if Internet-based artificial intelligence type advice is a reasonable compromise for you to get financial guidance and direction.

But note this well: This is all about asset allocation when you’re growing money. Later in life, there’s no substitute for a well trained and educated human being like a fee-only financial planner. Such a person can be invaluable for guiding you when you’ve built up a pile of money and it’s getting closer to when you’re going to spend it.