RiXtrema will be revamping its FiduciaryOptimizer platform by utilizing retirement plan benchmarking, red flag data, and other features introduced through a partnership with Larkspur Data. RiXtrema in turn will provide Larkspur Data with value-added information about aggregate plan saving, annual percentage rate savings, and diversification ratings for complimentary use by Larkspur Data’s clients.
The IRA FiduciaryOptimizer is designed to help clients comply with the upcoming Department of Labor (DOL)’s Conflict of Interest rule by helping advisers servicing retirement plans to analyze clients’ best interests, as well as fee reasonableness. Also known as the fiduciary rule, the DOL policy goes into effect in April 2017.
Larkspur Data will supplement RiXtrema’s existing data sets. These currently consist of Plan Screener, based on the plan’s schedule of assets reported along with Form 5500; and FeeComp, a database of advisers’ fees based on their Form ADV Part 2.
“The Larkspur Data team is expert in retirement plan data, providing information on more than a million plans in the U.S.,” says RiXtrema President Daniel Satchkov, CFA. “Their database is a robust, value-added enhancement to our system, enabling advisers to pull in needed data with just a couple of clicks.”
Satchkov adds, “Plan advisers frequently find that participants could not, or would not, obtain required disclosures from plan sponsors. The recent DOL FAQ clarification on best interest documentation under the fiduciary rule explicitly states that if advisers cannot obtain the plan sponsor disclosure on current out-of-pocket retirement fees, then advisers can use the plan’s annual reporting and benchmarking data.”
The IRA FiduciaryOptimizer also produces a report summarizing why a rollover would be the best interest of the client. Reports can be generated by individual advisers, or by a home office compliance team using an administrator portal to manage outcomes for all advisers/representatives with the firm.
Larkspur Data will also power RiXtrema’s 401kFiduciaryOptimizer, a separate part of RiXtrema’s platform that is used to win business in the plan sponsor space.
“At Larkspur Data, we’ve analyzed every plan filing for the past 10 years (over 10 million in total) using 90 different ‘risk’ factors,” says Robert Morris, vice president of Operations. “Our research has revealed that roughly one-third of all retirement plans are either out of compliance or have significant operational flaws. With this integration, advisers will be able to quickly access data that will enable them to effectively leverage the power of RiXtrema. The quantitative data that RiXtrema will provide us will help our clients gauge whether the plans they are researching are following best fiduciary practices in their investment menu construction.”
RiXtrema’s move follows a recent trend which shows that advisers are increasingly turning to technological solutions to remain complaint ahead of the DOL rule.
Founded in 2010, RiXtrema is a portfolio crash-testing company that helps advisers discuss risk with clients. Larkspur Data is a provider of targeted data and market intelligence for financial advisers in the 401(k) and qualified plan industry.