If you’re perfectly capable of running your own retirement savings, selecting the right mix of low-cost investments, rebalancing at the right time, and not buying and selling out of fear or greed, then good for you.
But the majority of people — maybe the vast majority — are not like that. They may be smart enough to do the right thing, in theory, but they forget or slip up or are taken in by well-meaning friends bearing stock tips or annuity-peddling scoundrels who make nice to them over free steak dinners.
For people with more than $500,000 or so to invest, finding first-class help is hard but not impossible. If you have more than $1 million, you’ll have your choice of many of the best financial advisers in town. But until recently, it was tough for people with a few hundred thousand dollars or less to find reasonably priced assistance, especially if they were insistent on putting money in the kind of low-cost investments that would not pay a commission or other fee to the person helping them.
On Friday, the latest entrant in an increasingly crowded field of services trying to serve this customer is introducing its offering, which is called Rebalance IRA. As the name suggests, it exists only to help you with your individual retirement account.
Rebalance IRA representatives will talk with you about your goals, invest your money in a low-cost collection of index-fund-like exchange-traded funds that don’t try to make big bets on individual stocks, and rebalance the investments when necessary. In exchange, you agree to hand over half of 1 percent of your assets each year, with a minimum annual fee of $500.
The company’s single-minded focus on retirement savings is somewhat narrow, but it makes sense given how much is at stake and how badly many people mess things up when they do it on their own.
The man behind Rebalance IRA, Mitch Tuchman, started a service for do-it-yourself index investors called MarketRiders in 2008.
A former software entrepreneur, Tuchman had a midlife conversion to passive investing and not trying to beat the market, and he wanted to help others invest in the same way. ‘‘We thought we could build such great software that we could turn everyone into a do-it-yourselfer,’’ he said. ‘‘And people said they didn’t have time or they didn’t care to do it themselves.’’
So why would you let this guy handle your money? It’s a perfectly reasonable question, and plenty of start-ups in the money management space don’t do a particularly good job of answering it.
‘‘It’s surprising to me how many entrepreneurs go on and on about the lack of trust in big financial institutions,’’ said Grant Easterbrook, a senior research associate at Corporate Insight who published a guide this week to money management start-ups. ‘‘But they’re not putting forward the people behind the product who actually make the investment decision.”
Tuchman has anticipated this concern and he and his cofounder, Scott Puritz, rounded up an investment advisory board that includes Burton G. Malkiel, the emeritus Princeton economics professor who wrote ‘‘A Random Walk Down Wall Street’’ among other books; Charles D. Ellis, author of ‘‘Winning the Loser’s Game’’ and a former Vanguard board member; and Jay Vivian, who once ran IBM’s retirement plans.
The group has created a collection of investment portfolios, most of which have a slight tilt toward small stocks, which tend to outperform the overall stock market over time. Many of the portfolios are also currently spiced up with indexed investments in high-dividend stocks and emerging market bonds.
Besides the annual fee based on assets, there’s a $250 fee to get started, and you must move your IRA accounts to Schwab or Fidelity if they’re not already there.
There are other, cheaper ways to find someone to put your money in a portfolio like those at Rebalance IRA and run the money for you. A company called Wealthfront, which has also put Malkiel to work, will do something similar for about 0.25 percent annually.
Investors at Betterment, which slashed its prices last year, now pay about 0.30 percent on average, and the company has taken in nearly $100 million since it cut its fees. People with more than $100,000 invested there pay only 0.15 percent annually and can get advice from the founder himself, Jon Stein.
Still, he said that not many people had sought him out and even then it was usually just to make sure they were on track with their goals.
‘‘Most situations are well-handled by software,’’ he said. ‘‘In the long term, that’s going to be the way most people get their advice. We’re replacing the investment adviser with software.’’