A web tool that emphasizes fiduciary guidance from fi360

fiduciary360 LP recently updated its web-based tool kits that assist financial advisers with managing and monitoring investments, with an emphasis on fiduciary guidance.

Several advisers called me about the updates, so I decided to take a look at the upgrades to the platform.

fi360 has two kits available. One is meant for advisers and broker-dealers; the other is designed for service providers (wholesalers, for example, and other intermediary firms that do not manage client assets directly).

My focus will be on the advisory offering, which is meant to help advisers manage and document their investment process with individual clients.

These tools go far beyond just generating cookie-cutter, fill-in-the-blanks investment policy statements.

The core components are the fi360 Fiduciary Score analysis of exchange-traded funds and mutual funds, and the Investment Analyzer for helping to search for and compare funds. It also includes an Asset Allocation Optimizer, custom Due Diligence Criteria reports and watch list management capabilities.

These tool kits have been designed from the ground up and have evolved over the past 10 years to meet a fiduciary standard of care, as defined in fi360’s Prudent Practices for Investment Fiduciaries handbook series.

The fi360 Fiduciary Score is an investment-rating system born out of the handbook’s methodology but incorporates performance data from Morningstar Inc.

It evaluates funds on nine criteria: assets in the fund, expense ratio and fees relative to its peers, performance relative to peers, whether its composition is consistent with asset class, regulatory oversight, risk-adjusted performance relative to peers, stability of the organization, track record and style consistency.

fi360 upgraded its Fiduciary Score Average calculations to make the scores more reflective of specific lengths of time and allow for more-accurate direct comparisons between funds.

For example, the new average calculation reflects a true three-year average. Previously, this might have been an average of two, four or six quarters, depending on the amount of data that fi360 had at the time.

The product isn’t meant to be used as the sole source of information for reaching an investment decision, said Andy Frommeyer, director of products and services at fi360, Rather, it is meant to help advisers by suggesting a course of action in line with their fiduciary goals, and not just performance.

David Bromelkamp, an adviser and chief executive of Allodium Investment Consultants LLC, a retail-investment-adviser firm with $150 million in assets under management, has been using the platform for 30 months.

Mr. Bromelkamp, who is also a certified public accountant, said that he takes the fi360 tool kit offerings very seriously.

Many of the core functions remain intact, but there have been many improvements that make the interface more intuitive and easier to navigate. This allows firms — both broker-dealers and registered investment advisers — to customize reports and client access.

The Asset Allocation Optimizer has been better integrated with other tools within the site, so changes to the asset allocation are now reflected in client portfolio models.

Also, more flexibility has been added in terms of allowing firms to customize the due-diligence criteria that they create for the investment proposals.

“We use the tool kit to separate the wheat from the chaff,” Mr. Bromelkamp said.

“It isn’t going to tell you which manager is the best manager, but what it will do is help you get rid of the 90% of them that are wannabes,” he added.

Allodium’s advisers use fi360’s tool kit in concert with technology from other providers, including Fortigent LLC and Morningstar.

And that is where I see fi360’s chief weakness — a lack of integration with other third-party providers.

It is hard to hold this against fi360 since its competition is really only indirect. It comes in the form of intrusion prevention system (IPS) features embedded in all the large portfolio management platforms serving the industry.

Mr. Frommeyer said that such integration has not been a focus or a demand of their adviser customers but that such integrations are on the firm’s development road map.

In fact, he said that the firm is working on integration with a major custodian.

An annual platinum subscription to the fi360 adviser tool kit will cost an adviser $1,650, a silver-level subscription is half that and there is a significant discount for accredited investment fiduciary and accredited investment fiduciary analyst designees. The firm is very open about its pricing and provides a detailed cost matrix and comparison chart on its website (fi360.com).

E-mail Davis D. Janowski at [email protected].