Products November 16, 2016

RiXtrema Releases Fee Compliance Tool Ahead of DOL Fiduciary Rule

The RiXtrema database will allow advisers to benchmark fee structures against others based on several factors, including account size, geography and services offered, to prove they’re working in clients’ best interests.
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Financial-technology company RiXtrema has launched FeeComp, a proprietary database of advisery fees based on form ADV Part 2 data gathered by the Securities and Exchange Commission (SEC) and other sources. The service will allow advisers to structure data using statistical analysis, and parse complex text since form ADV Part 2 is produced as a free-form essay. They will also have access to image-recognition technology.

FeeComp will allow clients to analyze fees within RiXtrema’s IRAFiduciaryOptimizer and 401kFiduciaryOptimizer platforms.

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The database was designed to help advisers access, document, and defend the fees they charge—a priority that will become even more pressing as the Department of Labor (DOL)’s Conflict of Interest rule comes into effect in April 2017.

“Our clients always want to know where they stand in relation to their competition. In addition, the DOL Fiduciary Rule requires advisers to charge no more than reasonable compensation,” explains 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 advisers 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 advisers.”

Satchkov adds, “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. All advisers 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 is the latest in a string of firms that has rolled out digital tools designed to help those in the retirement-services space comply with the DOL’s fiduciary rule, which is scheduled to be fully implemented by January 2018. Others include fi360, AssetMark, Impact Financial Systems, and PCS.

Products November 16, 2016

Capital One Eliminates Commission-Based IRAs

As the implementation date for the Department of Labor (DOL)’s Conflict of Interest rule approaches, Capital One Investing will be moving away from commission-based products within its retirement-account services.
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Capital One Investing announced that it will apply a level-fee pricing model to all its customers’ retirement accounts, while also eliminating commissions within advised independent retirement accounts (IRAs). Capital One plans to complete this transition by April 10, the date the Conflict of Interest or fiduciary rule goes into effect.

“We’re focused on building a business that puts our clients’ interests first, and embracing commission-free retirement accounts was a natural decision for us,” says Yvette Butler, president of Capital One Investing. “We’re committed to providing today’s investors a goals-based investment planning experience, while striving to take an open and transparent approach to pricing, and empowering investors to plan for the future on their terms.” 

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Capital One Investing launched in 2015 with a mission to offer a customer-centric investing experience. It recently launched Advisor Connect, a phone-based service offering customers unbiased advice, the firm says. It also established Fund Evaluator, a free digital tool designed to help investors determine which mutual funds and exchange-traded funds (ETFs) sold on its online platform can best fit their individual investment objectives.

“Many investors lack confidence and trust, which can prompt them to sit on the sidelines,” says Butler. “In fact, our recent Financial Freedom survey found 41% of investors say a lack of transparency in pricing causes them to lack confidence. We’re hopeful this level-fee pricing model will empower our customers to be more confident investors.”

Capital One Investing is the latest firm to announce it would be moving its retirement account offerings away from commission-based models, in some way, in order to avoid potential conflicts of interest. Others include JP Morgan Chase, Merrill Lynch, Cambridge Investment Group, and the Commonwealth Financial Network.

The DOL Conflict of Interest rule essentially extends fiduciary responsibility as defined by the Employment Retirement Income Security Act (ERISA) to virtually anyone advising retirement accounts. 

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