Q. I retired in March 2000 and rolled my 401(k) plan into an individual retirement account that invested in, among other things, Alliance Technology “B” Shares. The value has gone down significantly since then. Was this a bad move?
K.K., via the Internet
A. No move into technology during that time period was successful, and a retiree probably should never have more than a small portion of holdings in anything so aggressive. As far as potential, some sort of tech rebound is expected by midyear.
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While this fund’s performance did take a whack out of your IRA, it did better than most other tech funds over the past year. It’s more conservative, sticking mostly with recognizable blue-chip names and keeping turnover low. It doesn’t do as well as some other funds in tech rallies, yet doesn’t drop as much when tech declines.
Portfolio managers Gerald Malone and Peter Anastos have run the fund since its inception in 1993.
The $3 billion Alliance Technology “B” (ATEBX) declined 29 percent the past 12 months to rank in the upper one-fourth of specialty technology funds. Its three-year annualized decline of 5.55 percent places it at the midpoint of its peers.
“While this seems like a safer bet than some other technology funds, investors have to be comfortable with seeing 25 percent losses in their portfolios in a given year and must be able to ride them out,” said Laura Pavlenko Lutton, fund analyst with the Morningstar research firm.
About 80 percent of the fund is in “pure” technology stocks; 20 percent is in services. Alliance Technology “B” has a 4 percent “load” (sales charge) and requires a minimum initial investment of $250.
Q. Where can I find certified financial planners (CFPs) in my area? What is the typical fee structure? Is the relationship between client and planner usually a one-time plan or is it ongoing?
D.C., Winthrop, Ill
A. The non-profit Certified Financial Planner Board of Standards (www.cfp.net) designates CFPs who have met its standards. The Financial Planning Association at www.fpanet.org can help you find planners near you.
The Board of Standards has an education requirement covering more than 100 topics, available through 200 colleges. There’s a two-day, 10-hour examination; a three-year experience requirement; and an ethics code.
Every two years, a CFP must disclose actions that may lead to board disciplinary action, such as complaints to the Securities and Exchange Commission.
A survey found 41 percent of CFPs receive both fees and commissions; 25 percent receive commissions only; 23 percent receive fees only; 9 percent receive a salary; and 2 percent had some other form of compensation. For those with an hourly rate, the average was $120 an hour. Your relationship can be either one-time or ongoing.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or by e-mail at [email protected].