If one of your new year’s resolutions is to manage your retirement investments, you may need some direction about where to start. No matter what your age, you’re not too young to start saving for retirement. The funds you invest for retirement at age 25 can be worth a lot more than the money you save at age 50. Whether looking to save enough to retire from your job or you’re dreaming of retiring to a tropical island, saving for retirement can determine how you spend your golden years.
Jemstep, a company I wrote about a year ago in Jemstep – Helping You Shape Up Your Investments!, has developed a retirement investment tool to help you manage your retirement funds. I recently spoke with Simon Roy, President of Jemstep, about their new Portfolio Manager service that launches today.
In December, Jemstep commissioned a Harris poll that surveyed over 2300 US adults aged 18 and over about their retirement investments. 53% of the respondents had retirement savings while 43% did not. Of those 53% who have retirement savings, 50% manage their accounts on their own. The survey also found that 70% of people had little or no idea about how to effectively manage a retirement portfolio.
“Most Americans are very concerned, and appropriately concerned, about whether they will have enough money for retirement,” said Roy. “Many of them find retirement planning intimidating, and complex.”
Roy explained that the Harris study found that most people want to take more control of their retirement investments to improve the outcome, but don’t feel confident in their ability to make those investment decisions. “Jemstep Portfolio Manager helps provide a path for these self-managed investors who want to manage to a better outcome.”
What Jemstep Portfolio Manager Does
Portfolio Manager is designed to help people manage their retirement investments even if they have little to no knowledge of the investment market. “We’ve built Portfolio Manager to be accessible and easy to use with the goal of helping individuals irrespective of their level of wealth or their level of sophistication. We’ve designed the service to provide them with very personal guidance that allows them to actually get on with their lives.” Roy explained that Portfolio Manager can be used for anyone from recent college grads to those who are nearing retirement.
Jemstep takes information provided by the investor, analyzes that information, and develops an action plan showing investments recommended based on risk tolerance, quality of funds and tax consequences. The action plan then shows predictions of how much money the investor would have for retirement following their current plan versus following the Jemstep action plan. ”The goal is to guide them to the right portfolio and then tell them exactly what to buy and what to sell in each of their accounts to achieve a better outcome in retirement,” said Roy.
The action plan divides investment accounts into different groups, depending on their tax status:
- tax-deferred – IRA or 401(k)
- taxable – regular brokerage account
- tax-free accounts – Roth IRA
The action plan evaluates the holdings in each account according to its tax status.
Jemstep has worked with an investment team to develop investment strategies that have been back-tested against the S&P 500 for the past 14 years and have outperformed the index each year. Jemstep has developed these strategies based upon Nobel Prize-winning economic research and portfolio modeling strategies, in consultation with veteran institutional money managers and investment experts.
Jemstep uses these strategies to figure out which investments are most likely to give you the best returns based upon your acceptable risk levels, your investment amounts and time until retirement. The program assesses 20,000 mutual funds and exchange-traded funds (ETFs), analyzing 50 or more attributes of each one, including the quality of the funds, the fees charged by the funds and risk level of the funds.
“We’re bringing the very best of personal wealth management and institutional expertise and using technology to make it accessible to the everyday investor.” Roy gave the example of going to an investment counselor and receiving a binder full of investment advice that you take home and put on your bookshelf. “The day it’s printed it’s out of date,” explained Roy. “We believe we provide a superior service using technology and superior investment advice.”
Jemstep offers its services in the US only.
Getting Started with Jemstep Portfolio Manager
If you don’t already have a Jemstep account, you can register for one at the Jemstep website. If you have a Jemstep account already, you can merge it with your Portfolio Manager account. “Anyone who’s currently using Jemstep can seamlessly move over to the Portfolio Manager service and link their retirement accounts,” said Roy.
Jemstep asks a few questions to learn about your situation in life, including age, marital status and age at which you would like to retire. You can enter information about your retirement accounts to link them with your Jemstep account.
Jemstep analyzes your retirement portfolio and shows you the monthly income you can expect to receive upon retirement based upon your current investments. Jemstep also shows you an action plan, predicting how much more you could receive if you followed Jemstep’s guidance. The action plan shows you what to buy, hold and sell in each of your accounts, taking into account risks, tax consequences, fund quality and fees.
“We analyze your current portfolio and we tell you exactly what you’re on track for and what you can expect if you stay on the current path. We then offer a recommended portfolio and asset allocation and try to make it very clear what the financial benefit is to you in dollars and cents each and every year of your retirement if you shift to this portfolio,” said Roy.
Once you have made the trades, Jemstep continues to monitor your portfolio while you get on with your life. Jemstep continues to check the market and the funds and gives you alerts when you should make adjustments to your portfolio.
Cost of Jemstep
This service is free to all users until March 1, 2013. After that date, the pricing is as follows for portfolio values:
Up to $25,000
$25,001 – $150,000
$150,001 – $300,000
$300,001 – $600,000
$600,001 and above
Jemstep gives a discount if you pay annually. Roy compared the monthly fees to the price of a pizza per month up to a dinner for two at a restaurant. “At those levels we are way below the fees of an investment advisor.”
Jemstep does not receive any payment from funds or brokers.
Original Jemstep vs. Jemstep Portfolio Manager
The original Jemstep is free of charge. When asked about the difference between the two programs, Roy said, “The original Jemstep was focused on investors looking to manage specific investments and asset classes and see all of their accounts in one place.” The Portfolio Manager builds on that and helps people specifically manage their retirement portfolio.
The original Jemstep fulfills a more narrow need, according to Roy. The original Jemstep can show you the best large cap fund to invest in, but won’t give you the overall best plan for retirement and shift between asset classes. The Portfolio Manager also gives you alerts when it’s time to adjust your investments.
If you’re looking for ways to plan for retirement, check out Jemstep Portfolio Manager. The service is free until March 1, so you can try it to see what suggestions Jemstep has for your retirement investments. While risk is involved in any investment, Portfolio Manager may be able to help you manage your risks. Portfolio Manager may give you some valuable guidance on how to plan for your retirement, making that tropical island seem closer than you thought.
Is one of your new year’s resolutions to manage your retirement savings? Do you find managing your retirement investments challenging? Do you dream of retiring to a tropical island ? Let us know in the Comments section below!
Wonder of Tech Interview
For more Wonder of Tech, check out my interview in Techwork DK by Thomas Nielsen: Interview with Carolyn Mohr from WonderOfTech.
* Tropical Beach image by Ed Yourdon