Now, Financial Advice From the Government?

Recommendations for questions to ask your financial advisor. Advice about asset allocation. And suggestions on keeping spending in check...from the U.S. government?

The Securities and Exchange Commission is offering all that and more at a new web site, investor.gov. The site bills itself as the "first ever " dedicated only to educating investors.

Though much of the advice is relatively basic, it marks an unusual effort to instruct individual investors about topics that have otherwise been in the realm of professional advisors, authors, TV money pundits – and of course, web sites like SmartMoney.com.

It also adopts a tone that seems likely to raise hackles in at least some corners of the investment biz, with "Avoid Fraud" the most prominent section on the site after the home page in a navigation bar across the top.

For now, at least publicly, industry organizations say they welcome the site.

Given the SEC’s role as a regulator, it’s appropriate for the agency to focus on providing information about how to avoid fraud, says Bill Baldwin, the chair of the National Association of Personal Financial Advisors. The new site isn’t the most interactive or dynamic place to go for advice, Baldwin says. “It has a little bit of an institutional look,” he says. “It makes you feel kind of like you just walked into a government building.” Baldwin also says it is worth noting that the new site relies on Financial Industry Regulatory Authority’s tools and information, given that SEC Chairman Mary Schapiro is the former chief executive of that organization.

However, those issues may not matter to investors only seeking reliable information on how to protect their assets. “It doesn’t need to be pretty, it just needs to get people answers to those kinds of questions,” Baldwin says.

The new site is one of several ways the SEC is using social media to reach out to investors, says John Gannon, the senior vice president for investor education at the FINRA, which provided some of the content for Investor.gov. "Especially in the area of fraud, regulators are in the difficult position of picking up the pieces,” Gannon says. The more regulators “can protect investors by educating them so they don’t fall for a fraud, the better off we all are,” he says.

Much of the information on the site was available online already, but this new site “is a one stop shop,” says Lori Schock, the director of the SEC’s Office of Investor Education and Advocacy. A large portion of the content is intended to help investors avoid becoming victims of fraud, and much is directed particularly at seniors or people who care for seniors. Seniors are often targeted by fraudsters, Schock says. “Research has shown that seniors aren’t more susceptible to investment fraud, they’re just pitched more often,” she says.

The site drew mixed reviews from financial professionals and academics. Some are offering early praise. “It reminds me an awful lot of what we do in terms of fact sheets on various topics,” says Jonathan Fox, an associate professor of financial planning and personal finance at Ohio State University. “I was pretty impressed by that it did a comprehensive financial-planning structure in each area,” he says.

Brian Hellmer, who teaches applied investing and is the director of the Hawk Center for Applied Security Analysis at the University of Wisconsin’s School of Business, says the site has the potential to help investors avoid mistakes and better understand the risks and costs of their investments. “A lot of people even in their 40s or 50s who have been investing for a while wouldn’t necessarily know what red flags to look for when they talk to investment advisers,” he says.

But in some respects, Fox says the SEC may have gone too far in its effort to arm investors with as much information as possible: within two clicks of the home page, for example, is a link to the SEC’s EDGAR database of annual and quarterly reports and other regulatory findings. “What we’re not trying to do is train brokers here, we’re trying to train people to manage their finances,” Fox says. “I am much more comfortable with giving people advice on how to find a broker than on how to research companies yourself.”