Click Back And Plan Your Retirement

With 401(k) plans holding $1.5 trillion, money that we amateurs must manage ourselves, America is making a huge bet on our ability to invest wisely. How good are the odds, do you think? I suspect they're better than many experts believe. Yet I'm also happy to see more and better advisory tools now being offered to our nation of accidental investors.

Among these are several services that give interactive financial planning advice via computer, showing how best to split retirement savings among your plan's investment options. But most (including one from Standard & Poor's, which like Business Week is a unit of the McGraw-Hill Companies) are available only on company sites.

The latest entrant, though, can be used not just through employers but by anyone on the Internet. Financial Engines took an early lead in this arena. Now Morningstar is introducing ClearFuture, with lofty ambitions. "We want to be in the behavior-modification business," Morningstar Research Director John Rekenthaler told me. "If this is going to work, it has to become more a part of people's lives."

"WHAT IF?" In other words, running your 401(k) has to become, if not exactly fun, then far from the anxiety-ridden chore it is for so many of us. Curious to see how well ClearFuture meets that goal, I've been testing the service, which you can find at (Price: $99 a year after a free, 30-day trial. Morningstar says it'll soon offer a cut rate.) An expanded version, with education, research, and tracking modules, is being sold directly to 401(k) plans, as Financial Engines is doing, too.

What did I find? Right off, ClearFuture introduced a pair of Jetsonian cartoon characters, Jake Starlight and his tail-wagging mutt, Maggie, to guide me. It also estimated how much time I might spend--20 minutes for investors with basic portfolios. Next, ClearFuture took me through questionnaires on retirement goals, plus my current portfolio and savings plan, before crunching numbers and suggesting three strategies: smooth, moderate, or bumpy investment "flights" to retirement. I picked a moderate one and took off on a "test flight" that showed me via charts and dollar figures how my balance might plunge over three, 12, and 24 months. That gave me a chance to consider how well I could stomach that much portfolio volatility and, if I wanted, to adjust it. Finally, it picked the funds for me from choices I had entered, described them in detail, and told me how much money to put in each.

It was all swift and mostly painless. It also seems aimed directly at Financial Engines, which offers forecasts for free and advice for $14.95 a quarter. Founded by economist and Nobel laureate William Sharpe, Financial Engines' excellent tool comes across as decidedly more sober, if not geeky. It is complex. It's slow to load, and its type is often maddeningly tiny. ClearFuture is sprightly, saving details for long footnotes. And when it gives advice, I found it easier to follow. I especially liked its "What If?" function. It let me test changes in such variables as my retirement date, and was admirably compact yet explicit. Instead of forecasting a percentage probability of reaching my retirement income goal given my savings plan and investments, as Financial Engines does, it gave me a range of income that I would likely have given the same assumptions. That made more sense to me.

Where both tools need sharpening is in helping the many people who hold most retirement assets outside a 401(k). Perhaps they've switched jobs and rolled fat sums into IRAs, or they're already retired. If that's you, you can get advice from either service by simulating a 401(k) portfolio. Caution: If yours is even a bit complex, you could spend hours at it. Morningstar is working on this key job, but Financial Engines now does it better. It also wins at handling the many 401(k) plans with specialized accounts. If yours offers, say, a guaranteed investment contract, you can choose a generic GIC to mimic its role in your portfolio.

Employees using ClearFuture as part of their 401(k) won't need such workarounds. But if you want to get advice by yourself via the Net, you'll find Financial Engines the better choice.

For, go to or AOL keyword: BW Daily.

QUESTIONS? COMMENTS? E-mail or fax (321) 728-1711

Before it's here, it's on the Bloomberg Terminal.