Retirement Planning on the Cheap

But working with a financial adviser isn't cheap. Fee-only financial planners — those who are not paid a commission for the investment products they sell — can charge between $150 and $300 an hour, according to Dennis Houlihan, a fee-only Certified Financial Planner (CFP) in Fort Wayne, Ind. Having a comprehensive plan drawn up and followed through, he says, adds up to $2,500 at the bare minimum.

What if you can't spend that much? Over the past few years, large mutual-fund companies like Fidelity, Vanguard and T. Rowe Price have developed services that, for a small one-time fee or even no fee at all, will create a retirement saving and management plan. Lately, they've enhanced these services with a human touch: They now offer consultations with a personal advisor and annual follow-up conversations to tweak your retirement plan as needed.

T. Rowe Price launched its revamped advisory services earlier this month, following a similar move by Vanguard this April. Fidelity, which currently offers to its investors a suite of online retirement planning tools, plans to make those tools available to non-Fidelity customers by the end of the month.

These services aim to come as close to having your personal advisor as possible, at a fraction of the cost. Vanguard charges a one-time $1,000 fee, while at T. Rowe Price you'll pay $250. Both companies waive the fee for clients who bring $100,000 or more to the company or already have invested at least $500,000 (with T. Rowe) or $250,000 (with Vanguard). Fidelity's services are entirely free. (For more details, see the table below.)

How the services work: Investors provide detailed information on their financial situation online or by mail. A financial advisor at the fund company reviews it and puts together a retirement plan. Once the investor receives the plan, he or she gets a call from the advisor to talk about it and make changes, if necessary. (At Fidelity, the plan is created automatically by a set of interactive tools. For live help, investors can call a toll-free number to speak with an investment advisor.)

Once the plan is ready, the advisor can execute the parts that involve the company's own products. He or she can adjust your asset allocation by selling or buying mutual funds for you, for example, as long as they're the company's own funds.

But are these services as good as the impartial advice of an independent financial planner? The answer depends on whom you ask. The fund families say their planners are qualified: Vanguard's advisors all have a CFP designation, while T. Rowe's work under the supervision of CFPs.