A chunk of Hewlett's 401(k) clients work for AT&T, which gives the firm scale. Such plan participants, whose employers are not clients, pay a flat fee of $500 a year. The advice is based on age and risk tolerance. EZ-Advisor sends an e-mail to a plan participant every time there is a recommendation for a change in the plan's allocation.
"Our recommendations will outperform the S&P in a bad market and underperform in a good market," he says. About 80% of his clients have only their 401(k) assets with the firm; 20% have wealth management services as well as the 401(k).
When I began researching this column, I was looking for advisors who focused their practices on 401(k) participant advice. I had never heard of Dorsey Wright. Certainly it's not a coincidence that three of the four advisors I spoke with use this firm. Not until I spoke with Lager, who does seminars for other advisors to teach them how to use the firm's tools, did the name of the company even come up.
I don't believe for a moment that technical analysis is a necessary element of managing a 401(k) plan. Still, I wonder how significant that company's technical analysis is to these advisors' success-if at all. I'm going to find out about Dorsey Wright myself and report on it in my next column.
Mary Rowland can be reached at [email protected]. She has been a business and personal finance journalist for 30 years and has written two books for financial advisors: Best Practices and In Search of the Perfect Model.