Microsoft Offers Link to Financial Planning Services

Microsoft Corp. is taking its foray into personal finance beyond the do-it-yourself phase by offering to help investors find professional financial advisors via the Internet.

Microsoft’s new Advisor Finder is expected to pose a challenge to a comparable service offered by discount broker Charles Schwab & Co. But Advisor Finder, which started last week, has already been condemned as misleading by a fee-only planners group.

“It’s one giant Yellow Pages ad . . . they’ve set their filter so extraordinarily low,” said Gary Schatsky, chairman of the National Assn. of Personal Financial Advisors, which represents about 600 fee-only planners. “Is this something the public should rely on? Absolutely not.”

Microsoft and its partner in the venture, financial research company Dalbar Inc., defended the quality of its advisor database and said the service was an important first step in helping link investors to professional financial help.

“The vast majority of adults in the U.S. don’t believe they’re going to achieve their financial goals, and the main problem is that they don’t know where to start,” said Ed Graczyk, Microsoft’s lead product manager for the service. “We’re trying to help them narrow down the huge list [of planners] they’re finding in the phone book.”

The referral service at https://www.therightadvisor.com is part of Microsoft’s MSN MoneyCentral personal finance Web site, one of the Internet’s top financial destinations, with just under 5 million visitors each month.

Advisor Finder uses a database of 3,000 planners researched and screened by Dalbar. The planners must be full-time with at least 100 clients or $15 million under management, have at least five years’ experience and have no disciplinary action taken against them by regulators in the last five years. The planners can be paid by commission or fees or a combination of both.

Dalbar said it used the five-year limit for regulatory problems because too many qualified advisors would be eliminated had it required a clean regulatory history.

“We have some very successful, mature professional advisors who in their youth did something stupid,” said Dalbar President Louis Harvey. “But the published criteria are just starting guidelines. We are examining every one of these people [advisors] who come in.”

Microsoft’s Graczyk said the service was not intended to compete with AdvisorSource, the telephone-based referral service run by Schwab--which also happens to be a Microsoft partner in other MoneyCentral ventures.

Schwab’s AdvisorSource--available only to investors with more than $100,000--uses fee-only planners who have a college degree, 10 years’ experience or certification as a chartered financial analyst, one of the more difficult investment management designations to obtain. An advisor must already have a minimum of $25 million under management.

While advisors pay a fee of at least $8,000 a year to become part of Schwab’s network, Microsoft is charging $750 a year to be listed. Many of the planners in Microsoft’s database work for large companies, including American Express Financial Advisors, Prudential and Salomon Smith Barney, although some work for small firms or for themselves.

Schwab professes little concern about the Microsoft site.

“Anything that helps people find advisors is fine,” said Schwab spokesman Glen Mathison. “There’s plenty of room for others.”

Analyst Russell Keene said Schwab uses AdvisorSource largely as a tool to retain customers whose assets have grown beyond the do-it-yourself stage, while Microsoft’s aim is to generate traffic to its site.

Microsoft’s venture “looks like it could be a threat to Schwab for a certain segment of the population,” said Keene, an analyst with San Francisco-based Putnam, Lovell, de Guardiola & Thornton Inc. “But I don’t think people think of Microsoft as [a source of] financial planning expertise.”

Microsoft is attempting to change that by continually beefing up MoneyCentral with new features and information. That, in turn, gives the company a perfect opportunity to pitch its new service for users who are overwhelmed by the information available, said Alex Stein, executive vice president of Gomez Advisors, a Concord, Mass., financial services consulting firm.

“A good number of people are going to say, ‘There’s too much for me to do; I need some help,’ ” Stein said. “That’s the perfect opportunity for Microsoft to be the neutral referring party to connect that consumer with the need they’ve now identified.”

Stein dismisses criticism of the database’s quality, saying any screening criteria will prompt objections and that setting the barriers too high would simply result in consumer frustration.

“You’d get a situation almost like that at Priceline [a Web site at which buyers name their own price], where very few people are getting matches,” Stein said.