Financial advisors can now easily assess, document and defend the fees they charge in order to prove they are working in the client’s best interests. Financial technology company RiXtrema this week announced the launch of FeeComp, a proprietary database of advisory fees based on form ADV Part 2 data from the Securities and Exchange Commission (SEC) and other sources. The technological breakthroughs include image recognition, parsing of complex text (since form ADV Part 2 is a free form essay) and structuring of complex data using statistical analysis. Fee benchmarking can be done by account size, geography, services offered and other factors.
These advances are made possible through technological breakthroughs by the award-winning researchers and data scientists at RiXtrema, a company that provides risk management tools and analysis to the financial advisory and broker/dealer community to help ensure that clients get the analysis and advice they need.
The FeeComp database information will enable documentation of fee reasonableness within RiXtrema’s IRAFiduciaryOptimizer and 401kFiduciaryOptimizer platforms, two pioneering quantitative software solutions that empower financial advisors and plan advisors as they seek to grow their business and comply with DOL Fiduciary Rule requirements regarding retirement planning, client best interest documentation and reasonable fees.
“Our clients always want to know where they stand in relation to their competition. In addition, the DOL Fiduciary Rule requires advisors to charge no more than reasonable compensation,” said Daniel Satchkov, CFA®, president of RiXtrema. “Financial institutions are responsible for creating fee schedules that adhere to this requirement. Our novel technologies allow for systematic organization and retrieval of unstructured data that is reported by advisors in form ADV Part 2. FeeComp will be a tremendous help for financial institutions in determining their pricing schedule vis-à-vis the competition and defending their choice of reasonable compensation, especially since it is based on current data already reported by fiduciary advisors.”
COMPLEMENT TO OTHER RIXTREMA FIDUCIARY TOOLS
In July 2016, CEFEX (the Centre for Fiduciary Excellence), an fi360 company, announced its adoption of 401kFiduciaryOptimizer, a tool that enhanced its fiduciary assessment capability through a collaboration with RiXtrema. 401kFiduciaryOptimizer is successfully used by hundreds of plan advisors to grow their retirement plan business. On October 20, 2016, RiXtrema formally announced its IRA Fiduciary Optimizer tool to help financial advisors document clients’ best interests and ensure compliant rollovers.
“Fiduciary best practices are here to stay; this tide of putting client’s interest first is not going to be turned. Don’t become complacent due to the forthcoming Trump presidency,” Satchkov warned. “All advisors who manage clients’ retirement assets need to be prepared to demonstrate to their clients and document that the portfolios they recommend are constructed in the clients’ best interests. Our unique combination of analytics and benchmarking data will help you both beat your competition with fiduciary best practices and reduce your operational risks regardless of the path and timeline chosen by regulators.”
RiXtrema, founded in 2010, is a portfolio crash-testing company that helps advisors discuss risk with clients. Long used by fund managers, pensions plans and funds of funds, RiXtrema has introduced its risk management tools to the financial advisory and broker/dealer community to help ensure that clients get the analysis and advice they need. The RiXtrema research team received the 2015 Peter L. Bernstein award, one of the most prestigious awards in finance, for its article Risk Estimation and Hedging: A Reverse Stress Testing Approach, published in The Journal of Derivatives in April 2015. RiXtrema solutions include Portfolio Crash Testing; BioniX, the first robo platform for advisors that includes sophisticated risk modeling; IRAFiduciary Optimizer, and the related 401KFiduciary Optimizer geared for plan advisors. For more information, visit www.rixtrema.com.