The Enemy of the Good?

Early on, most folks I spoke with were quite keen on what was being undertaken by the firm. 401(k) fees were, unfortunately, still “mystery meat” to many plan sponsors and, thus, a service that purported to help them make sense—not only of what they paid, but how it compared with other programs—looked to be a godsend.

As time has worn on, there have been questions and concerns. The data that underlay BrightScope’s computations was drawn from government files—and while that made it “official,” it apparently didn’t always mean it was accurate, and it surely didn’t make it timely (though the latter is getting better all the time). Moreover, BrightScope employs a proprietary methodology that relies on certain weightings and assumptions that not everyone would agree with—but then, it’s a proprietary methodology, after all. If you don’t like it, or don’t think it does a fair job of representing the real situation, you only have to say so.

What made them different, at least at the outset, was that they went public with that information—and by public, we mean all the way to retail participants—with data for a vast number of plans, and with a good deal of press coverage, to boot.

That created a modest amount of consternation for some plan sponsors and advisers, not because they had a problem (though some surely did), but because the data presented to the public about their plan and its competitiveness vis-à-vis other programs (particularly on the sensitive issue of fees) was, as noted above, incomplete, inaccurate, and/or out of date. None of which the BrightScope folks contested, by the way. But in the couple of conversations I have had with them on the subject, their response has been, “If our data is wrong, tell us and we’ll fix it.”    

Recently, BrightScope turned its attention to financial advisers with its BrightScope Advisor Pages; not to rank them or rate them (though who would be surprised to see that come to the fore one day—particularly since there are already placeholders for “qualifications,” “experience,” and “conduct” on the new adviser tool), but rather to provide information to the public. Information that, like the retirement plan information noted above, wasn’t in one place, wasn’t easy to find, and surely isn’t easy to understand for many. And then, as it had with the retirement plan analytics information that launched the firm, it rolled out its adviser database—to everyone.

Well, advisers are sensitive about such things (with good reason), and a number already have checked out the database and found “issues.” Mike Alfred, Co-Founder and CEO of BrightScope, told me recently that “many of the ‘errors’ we’re being accused of are really just issues with the adviser’s ADV or U-4, which they did not notice until it was published in this format.” And, as was the case with the retirement plan filings, Alfred noted, “Once we get the updated information from a public filing, we will always move quickly to have it updated on the site, because our foremost concern is having accurate data.”

Of course, I’m guessing that getting “updated information from a public filing” isn’t an overnight process, and Alfred acknowledged that the BrightScope team has been “slammed by a very large volume of incoming requests to claim the Advisor Pages profile as well as general messages of both support and dismay.” More troubling have been the published reports and e-mails from advisers who say they have been told they will have to pay to have their information corrected (or at least strongly encouraged to do so), though Alfred dismissed that as “totally untrue.”

Still, the public release of data that may be old, inaccurate, and/or outdated is surely cause for some concern, and hopefully speedy remediation by BrightScope. After all, Voltaire once famously said that the perfect is the enemy of the good but, IMHO, the enemy of the good is more often “not ready yet.”   

Nevin E. Adams is Dean of the PLANSPONSOR Institute, the education arm of ­PLANSPONSOR.  Nevin also is Editor-in-Chief of PLANSPONSOR magazine, and the creator, writer, and ­publisher of PLANSPONSOR.com’s NewsDash. A 30-year veteran of the retirement services industry, he graduated summa cum laude with a BS in Finance, and later received his JD from DePaul University in Chicago.