Advisory services

Most mutual fund investors are self-directed: They educate themselves through books like this one, personal finance magazines and TV programs, and brochures and prospectuses offered by the fund companies. Then they make their fund selections and monitor the growth of their investments in order to make sure that they perform as expected. One reason for the popularity of mutual funds is that they lend themselves to just this kind of do-it-yourself investing. However, the bigger fund companies do offer free, personalized advisory services to their higher-dollar clients — especially those with assets of $500,000 or more. Most people who give advice are Certified Financial Planners (look for the CFP designation after their names). Their expertise covers asset allocation approaches, investment strategies, and economic and business trends, and they’re qualified to give specific recommendations on funds to consider. They may also talk about the tax implications of your investment.
If you are not (yet) a part of this investment stratosphere, you may be able to gain some of the same advice from a broker, accountant, insurance agent, or other professional. Be sure you understand exactly how your advisor derives his compensation. An advisor who receives a fee directly from you for his services — either in the form of a straight payment or as a percentage of the assets you invest — is likely to give relatively unbiased advice (how knowledgeable or helpful this guidance proves to be is another matter). On the other hand, advisors who receive all or part of their payments in the form of sales commissions may recommend that you buy the investment products from which they stand to benefit personally. A stockbroker may urge you to invest in stocks; an insurance agent may direct you toward insurance company products such as annuities. Before you buy into any sales pitch, carefully consider the source and what he or she has to gain from your investment.

Retirement-related services

Many fund firms offer retirement planning services. You may be able to consult a staff member who is familiar with retirement planning issues by telephone, or you may have access to retirement-planning brochures, worksheets, and other literature through the mail or online.
Typically, the retirement topics covered include the following:

• How to calculate the amount of money you can expect to require for a comfortable and secure retirement
• How much you need to save and invest each month in order to reach your retirement goals
• How your asset allocation should change over time as your investment time horizon and risk tolerance change
• The pros and cons of various kinds of tax-advantaged retirement accounts: IRAs, Roth IRAs, 401(k)s, Keogh plans, and so on
• Options for taking distributions from your retirement account

Social Security plays a role in retirement planning for most Americans. Despite concerns over the long-term viability of the government funding for Social Security, most people can expect to derive at least part of their retirement income from this source.
Your Social Security income will be based largely on how much money you’ve earned (and paid Social Security taxes on) throughout your life. To determine how much you’re probably going to receive from the government after retirement, request Form SSA-7004, the Personal Earnings and Benefit Estimate Statement, from the Social Security Administration, by calling toll-free 1-800-772-1213 or by logging onto their Web site at www.ssa.gov.
When you receive the statement (in four to six weeks), you can develop some perspective on your expected monthly Social Security payments — and how much more retirement income you’ll need to provide through your own savings and investments.

Check-writing

If you own shares in a bond fund, such as a money market fund, you probably have the option of writing checks against the money in your account on special checks from the fund company. (Check-writing is normally not an option with a stock fund.)
Most funds establish a minimum amount for the checks you write (typically $500), and you may have a small per-check charge. Writing a check can be a convenient way of redeeming shares.
When you write a check against a mutual fund, whether to raise some cash or to pay a bill, you are redeeming shares of your investment. Thus, you may be realizing capital gains or other profits, which subjects you to a tax liability at the end of the year. Don’t forget this potential for taxable profit when the time comes to perform your tax calculations.