Road Test
For advisers who like using an unbundled provider in an open architecture environment, but find the selection and monitoring of investments and collecting of information from various providers in that environment labor-intensive and overly complex, Matrix Financial Solutions, Inc., this summer launched an advisory desktop product: RetireTool(k)it. The idea is to “make open architecture look like a bundled program,” says the company.
RetireTool(k)it, available through Matrix’s wholly owned subsidiary, MG Advisory Services, is intended for advisers, broker/dealers, and third-party administrators (TPAs). This Web-based application handles a variety of tasks for individual plans—everything from fund selection and monitoring, investment policy statement (IPS) preparation, and point-of-sale brochure design.
RetireTool(k)it can be customized at the broker/dealer level—and can be limited to the TPAs with which the B/D has a relationship, or it can only make available certain types of fee options, impose specific investment company restrictions, or conform to other high-level restraints, the company notes. At the adviser level, a nice feature, according to Steven Scudder, President of General Pension Planning Corp in Dayton, Ohio, is, “If you decide that you do not need or want use the full panoply of functions in a given instance, you can pick and choose.”
The process begins when the adviser adds a plan into the program. It asks for the plan name and demographic information, including plan size and number of participants, as well as the TPA and custodian and trading partner. Matrix does not require that advisers use Matrix as the custodian in order to use the RetireTool(k)it with their client plans.
The application sits in front of an investment research engine, powered by another Matrix affiliated company, Prima Capital. When used for a new plan, to begin the fund search, an adviser can choose from 41 criteria, each with drill down capabilities (i.e., fund platform, asset class, market cap, investment style, 12b-1 fees, redemption fee, expense ratio, etc). RetireTool(k)it produces a listing of investment products that meet those criteria from the available universe of funds, as well as an IPS based on the input. The process allows for significant customization, to the extent to which it might be overwhelming for an adviser, in that the program searches 18,000 CUSIPs. To use the RetireTool(k)it with an existing plan for monitoring and reporting, the adviser can populate the fund list by using fund tickers or CUSIPs.
The RetireTool(k)it also will generate quarterly fund and annual plan review reports for the adviser to deliver to their plan sponsor clients—due to the timing of the product’s entry in the market, the advisers we spoke to had only used the reporting in a beta version but were anticipating using it for third-quarter reports. The quarterly report, integrates data from Morningstar and has three sections: a capital market review, a core fund review, and a fund scorecard/fund factsheets. The annual plan review combines that information with plan design and plan demographic information taken by MG Advisory from the TPA or recordkeeper, putting together a matrix similar to what a plan might receive from a bundled provider, such as how many assets are in each fund, and what participants are investing in. Although the Morningstar-provided data is available in other places, the way in which the RetireTool(k)it combines the various data points may be appreciated by advisers who traditionally spent much of their own time compiling such reports. Advisers can also hire MG Advisory Services to fill a co-fiduciary role with the plan sponsor. If MG Trust is the co-fiduciary, the company says it will replace funds as needed when they do not meet the IPS. That might be frustrating for some advisers who will not feel comfortable with whatever MG Trust uses to replace the funds.
Overall, the product “goes a long way toward removing the additional labor and complexity, thereby making the open architecture environment much more accessible,” notes John Kopra, President of Brentwood, Tennessee-based The Retirement Plan Company.
If an adviser is looking for a single application that can help him merge the proposal, investment policy statement, search, monitoring, and reporting functions in an open-architecture environment, the RetireTool(k)it appears to be a viable option. However, for advisers not used to the unbundled environment, despite the ease of use of the program, the process and sheer volume of funds from which to choose still may be overwhelming.
Illustration by Adam Schmidt