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Rating:Morningstar Evolves its Retirement Advice but is Still Doing Something Different than Fidelity Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, September 22, 2004

Morningstar Evolves its Retirement Advice but is Still Doing Something Different than Fidelity

by: Sean Hanna, Editor in Chief

Morningstar is getting attention for a new version of its advice product for retirement plan participants (WSJ: Morningstar Plans To Offer Retirement Advice, Move Challenges Fidelity). The paper is also spinning the new product as a challenge to Fidelity Investments, which is rolling out an advice-type product next month.

The Morningstar Retirement Manager product combines two existing offerings -- Morningstar Advice Online and Personal Advisor -- and throws in its managed accounts service and famous star ratings. It is scheduled to launch in October. The new twist on the service is that it will show workers a star rating grading their strategy. (Yes, it will provide advice on asset allocation and recommend specific funds but Morningstar has been doing for four years).

Eventually it will also allow employees to opt into Morningstar's managed account service, a service that Morningstar rolled out to the market roughly a year-and-half ago.

"To our knowledge, there's no other independent advice provider out there in this niche, and we hope to occupy it," John Rekenthaler, president of Morningstar Associates told the paper.

Yet, the paper contrasts the Morningstar service to Fidelity's Retirement Income Advantage service that was announced in June. Through that service Fidelity helps near-retirees build a retirement income management strategy from various pools of money, including 401(k) plans, brokerage accounts, mutual funds, bank accounts and other savings pools.

Really, the two products meet different needs and are not competitive in the way the paper implies. Morningstar's product -- which also includes a feature that automatically increases deferrals annually -- is about building retirement assets while Fidelity's is about managing spend down of the assets. Both products are needed and will surely be mimicked by others. 

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