Online investment adviser won’t deliver a sales pitch - it’s not even human
My investments need to be a lot more diversified, I was told. Within a split of 55 percent stocks and 45 percent bonds, I was presented a list of 10 mutual funds and exchange-traded funds to buy (plus 23 others as alternatives).
I won’t buy any because the suggestions were based on faulty assumptions. But I appreciated the concept of building a broadly diversified portfolio consisting of different asset classes, including growth and value stocks of large and small US companies and stocks from foreign companies.
And I relished the idea of keeping costs down by focusing on index mutual funds, exchange-traded funds, and low-cost actively managed funds with consistent performance.
I received these fund suggestions from Cake Financial (www.cakefinancial.com), an online computer-driven mutual fund “engine’’ that analyzes your investments and suggests and monitors a low-cost diversified portfolio appropriate for your age.
For $99.99 a year (there is a 30-day free trial) Cake Financial says it can save investors thousands of dollars in the long run by selecting lower-cost and less risky funds. The site also offers a more basic investment tracking service for free and a fund-comparison service for $29.99 a year.
In my case, the suggestions were based on the wrong assumption that all my money was in large-company stocks. That’s because Cake Financial can analyze only investments held in brokerage and fund accounts it can link to its site. (For a list, to which customers can recommend additions, go to www.cakefinancial.com/help/linking-a-brokerage.) More than half my assets are outside brokerage accounts.
For investors who have the bulk if not all of their retirement savings, including 401(k)s, with brokerage and fund providers, this online fund engine can provide a useful service that will add to diversification and keep costs down. The average Cake user is in his early 40s, with $150,000 to $200,000, mostly in mutual funds, said Steven Carpenter, founder and CEO.
Cake is not the only place you can get fund recommendations online. Several free sites, such as www.fundadvice.com, list model portfolios consisting mostly of index and other low-cost funds. Of course, the people running these sites are trying to sign you up as a client. The sites of many fund companies provide solid advice on asset allocation and sometimes suggest certain funds or combinations of funds (naturally, the funds they sell). By contrast, Cake is an independent information and screening service.
“We are not an adviser and we do not effect transactions,’’ Carpenter said, but simply base fund suggestions on computer models that look for strong consistent performance and incorporate fund fees in their calculations.
Humberto Cruz can be reached at AskHumberto@aol.com. 
