In an effort to help advisors meet the new Department of Labor fiduciary rule for retirement accounts, technology company RiXtrema has developed a tool to allow advisors to compare their fees to their peers, RiXtrema announced.
The tool, FeeComp, is able to extract data points from the Securities and Exchange Commission ADV Part 2 form and other sources so that advisors can more easily find firms that are comparable in size and services and in the same geographic area, along with their fees. This allows an advisor to compare where he or she stands in relation to peers, says Daniel Satchkov, president of RiXtrema.
Such comparisons have been difficult because ADV Part 2 is an essay rather than a form that is filled out. FeeComp uses new proprietary technology that is capable of image recognition, parsing of complex text and structuring of complex data using statistical analysis, says Satchkov.
RiXtrema, a New York City-based company, provides risk management tools and analysis to the financial advisory and broker-dealer community. FeeComp can help advisors set fees to meet the DOL fiduciary requirements and can help them defend their fees if challenged, he says.
The FeeComp database is part of RiXtrema’s IRAFiduciaryOptimizer and 401Fiduciary Optimizer platforms, which were launched recently. It is also a standalone product.
"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," says Satchkov.
"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,” he adds.
Whether President-elect Trump reduces the scope of the DOL rule or even eliminates it, the tool is helpful in complying with the new demands for transparency and acting in the best interests of the client, Satchkov says.