RiXtrema Unveils IRAFiduciaryOptimizer Software to Address DOL Fiduciary Rule Compliance

  • Security and Compliance , Risk Management
  • 20.10.2016 01:30 pm

 RiXtrema, a company that provides risk management tools and analysis to the financial advisory and broker/dealer community to help ensure that clients get the analysis and advice they need, today announced the launch of its IRAFiduciaryOptimizer tool to help financial advisors document clients' best interests and ensure compliant rollovers.

This new fiduciary tool is the first software to quantitatively compare and convert existing retirement portfolios into proposed new, compliant portfolios comprised of securities approved by the independent financial advisor or broker/dealer. The comparison highlights a variety of measures such as fees, track record of the investments, risk vs. risk tolerance, and best fiduciary practices.

These might include investing in the best share class, as well as additional services provided by the advisor to the client. The IRAFiduciaryOptimizer produces a report summarizing why a rollover is in the best interest of the client based on the abovementioned measures. Reports can be generated by individual advisors, or by a home office compliance team using an administrator portal to manage outcomes for all advisors/representatives with the firm.

"When the DOL ruling takes effect in April 2017, all advisors who manage clients' retirement assets will have to be prepared todocument that the portfolios they recommend are constructed in the clients' best interests," said RiXtrema President Daniel Satchkov, CFA. "While much of the recent media coverage has addressed the requirements for advisors who deal with qualified plans (401k, 403b, etc.), the fact is that all advisors, including RIAs working with clients to roll over plan assets into individual retirement accounts, will be required to meet the 'best interest' rules and document the results. We developed the IRAFiduciaryOptimizer to address this need."

The Optimizer, developed by RiXtrema's award winning research team, uses a quantitative methodology to find approved investments to replace those currently held in a 401(k) (or any) portfolio. It also enables the advisor to quantify and document any savings, performance improvements, fiduciary best practices, as well as additional services available by switching from the existing portfolio to a portfolio comprised of the advisor's suggested investments. Additionally, it allows the advisor to compare the risk/return profile of the original portfolio with the rollover recommendation, as well as show how it compares on metrics such as total fees, returns, risk, Sharpe ratio and fiduciary best practices. The IRAFiduciaryOptimizer is also fully integrated with the FinaMetrica risk tolerance system enabling compliance groups to create risk-appropriate portfolios, while fulfilling other fiduciary requirements.


Importantly, the IRAFiduciaryOptimizer not only contrasts a 401(k) portfolio with a compliant rollover solution, proving client's best interest as required under the DOL Rule, but it can also convert plan portfolios from non-compliant to compliant using a company's own selected list of compliant investments, and documenting best interest. While this compliance documentation can be done on an individual advisor level, it can also be done for an entire firm or broker/dealer, with batch tools available to make thousands of portfolios compliant in a single process along with producing documentation that shows client's best interest.


Margaret Hornbeck, COO and Chief Compliance Officer for Truenorth, Inc., a $425 million AUM investment advisor based in Wichita, Kansas, was looking for a tool to help her firm meet compliance obligations under the DOL Fiduciary Rule when she discovered the IRAFiduciaryOptimizer. "What I found is so much more than I expected. Our advisors are thrilled with the IRAFiduciaryOptimizer," said Hornbeck. "It not only saves considerable time collecting and illustrating data, it creates comprehensive, professional reports that tie back to the prospect's risk profile and clearly illustrate the value that we bring to the table. The Optimizer is an impressive sales tool that solves a serious compliance need, at a surprisingly reasonable price."

"As advisors and consultants to qualified accounts (ERISA and IRA), the need to comply with upcoming DOL regulations will be of paramount importance," said Lance Hicks, managing member at Alternative Asset Group in Newport Beach, Calif.  "A sophisticated planning tool such as the IRAFiduciaryOptimizer is essential to our practice in order to maintain both compliance and competitiveness in the marketplace.  In addition, the Optimizer has the auxiliary benefit of allowing us to test the efficiency and cost-effectiveness of both existing and proposed model portfolios, to see whether they can be enhanced and improved.  In our experience, the Optimizer has proven to be valid, practical, and easy to use – a powerful and valuable time-saving application."

Thomas Doherty, MBA, CFP®, owner of Half Moon Financial Planning LLC, an independent financial advisor in Kingston, New Hampshire has found RiXtrema's Optimizer to be an extremely effective tool to help him remain compliant. "I have been reading a lot in the financial press about the increasing requirements of advisors of all sizes to document their fiduciary compliance," said Doherty. "I have a small business and I often do rollovers of workplace plans to low-cost IRAs. I had always assumed the broader investment selections would outweigh any difference in expenses to my clients. In the increasingly strict regulatory environment, I became uneasy with not having justified my intuition on rollovers with a sound analysis. After seeing a demonstration of RiXtrema's IRAFiduciaryOptimizer, I realized it is ideal to address that gap in my compliance documentation."

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