How Not to Screw Up Investment Reviews: Five Must-Have Tools for Advisors

  • March 1, 2017


As a trusted advisor, every year you do your due diligence by calling your clients to discuss how their investment did during the year and determine if they need to make any changes. Sound familiar?

As an advisor in the plan sponsor retirement space, however, you know only too well that your duties are much more complicated and need to occur more frequently than only in one annual visit.

The problem is that, although the expectations for an “investment review” have matured, the tools haven’t kept pace. At Fluent, we think of the plan investment review process as a comprehensive fund line-up analysis, followed by good communications and reporting, and inclusive of fund monitoring results and fact sheets. But more importantly, we think of it as an interactive discussion with your client, regardless of your fiduciary status. Today, access to investment information has made plan sponsors and plan participants more savvy, yet the tools advisors use when communicating to the plan sponsors seem to be stuck in the past. The tools are not keeping pace with the expectations of the audience.

Having spent nearly 25 years in the performance-reporting business, my company has quietly observed and listened to what the industry was saying and followed how it was evolving. “If I only had a tool that could…” was the catch phrase. After the DOL announced the BICE FidReg, we worked behind the scenes to really understand the pain points and to develop a simple, yet comprehensive, tool to solve some of the basic challenges, and make investment reviews easier so that they mean something to your client. We know that advisors are the investment pros, but it is our job to better position advisors and recordkeepers as the trusted authority for a plan, fund or investment lineup for their clients. Giving advisors the right tools for the job is where we start.

So as an advisor, relationship manager, or consultant, how comfortable do you feel evaluating, proposing, and dare we say, recommending new fund options?

You should feel comfortable. And with UtopiaAdvisor you will feel CONFIDENT. Here’s a list of five essential items that you should look for in an investment review solution.

#1: IPS Watchlist Criteria Builder: The ability to set certain criteria that are most important to your client is vital. As you look at tools, ask yourself some fundamental questions. Are there limits to the investment criteria that I can monitor? How flexible is the system? Can I use weighting in the monitoring tool to ensure that the most important criteria means more? It is important that the IPS Watchlist criteria builder is integrated with fund monitoring, alternative fund selection and fund analysis. This gives advisors a complete picture and the confidence they need when asking a plan sponsor to change funds.

#2: Fund Monitoring: Once you input your criteria, on-going monitoring becomes equally important. In addition to static investment reporting, look for a tool that dynamically enables monitoring against your criteria anytime, without rebuilding the scenario. A good fund monitoring system should have the ability to look up funds in the peer group that have already passed your criteria, and compare multiple qualified options to the fund you want to replace. Visual chart comparisons are a simple and easy way to compare alternatives. A good fund monitoring system should bring this practice to life, and also have the ability to obtain and save an image as a record, as well as a list of all funds considered.

#3: Fund Line-up Proposal Builder: In new business practices, advisors need to select funds, import line-ups and save them as models, products or unique plan solutions. Make sure you can easily adopt investment strategies, products or “plans like me”. Be sure you can view fund alternatives, comparison analysis and selections under the guise of an IPS; and make sure you can easily update and stress test those funds against the relative IPS for back up to all your fund recommendation practices.

#4: Fund Comparison: As an Investment Proposal pro, you’ll need to do fund comparisons against your criteria. How easy is it to generate a fund analysis and a comparison report, and then save for future reference? Can you easily do a deeper dive and go beyond the IPS criteria, by adding more data to your analysis, to add more confidence to your work? Can you do this in one place, on the fly, or during a client meeting, while you are in your plan review application? We think you should be able to do all of that. Our tool will give you the resources and the facts to back up all of your decisions.

#5: Fiduciary Checklist: After you have conducted your investment review with the plan sponsor, do you need to sit in your car, dictate to a phone, and/or race back to the office and write down notes; and then, answer your compliance chief’s questions. Because we know you do, we have included an evidence capture tool that documents a history of all of your actions with the client. While you are doing all of your research and proposals, UtopiaAdvisor is recording. All of the funds you looked at, all of the analysis you executed, all of the suggestions you recommended and much more are recorded. Once your research is done, download a report or push a button and send it to your compliance teams.

That Is Not All: There are other supplemental tools that will help you do your job better, and provide better reporting to your clients. We will review these in the next part of the series. Tune in to learn more about UtopiaAdvisor.

Learn more about UtopiaAdvisor. Come to booth #437 at the NAPA 401k SUMMIT or visit our UtopiaAdvisor

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