Fiduciary stalwart Fi360, a provider of fiduciary-related education and tools, has released an update to its popular Fiduciary Focus Toolkit.
The addition provides financial advisors with comprehensive reporting on prospective clients’ past versus recommended holdings to illustrate how an advisor can improve investments and performance.
With these new business development capabilities, advisors can now grow their client base and assets under management more efficiently than ever, all while complying with fiduciary standards.
The Toolkit, which was originally launched in October 2016, automates workflow and oversight for advisors and broker-dealers to ensure fiduciary best practices and compliance.
The Toolkit is exclusively fiduciary-focused, according to the company, allowing financial professionals to easily and efficiently comply with prudent practices and reduce their liability related to fiduciary obligations.
Key features include a highly interactive dashboard, investment monitoring utilizing The Fi360 Fiduciary Score, customizable watch-list criteria and alerts, as well as the ability to create and document investment policy statements to streamline reporting.
Aside from the advisor benefits, the Toolkit has “enterprise-level applications as well, giving the home office on-demand insight into how advisors are doing and whether they are adhering to the fiduciary standard, a historically challenging task. The Toolkit complements traditional advisor-facing software, like risk tolerance tools and CRMs, which can be integrated for ease of use.”
Analysis conducted by the Center for Financial Planning and Investment at California State University, Northridge, and released in March, found the Fi360 Fiduciary Score can be useful to financial advisors when selecting investments for their clients.
The Fi360 Fiduciary Score, which the firm describes as “a transparent and objective investment rating system used to evaluate open-ended mutual funds, ETFs, collective investment trust funds and group retirement annuities,” helps financial professionals demonstrate a prudent investment selection and monitoring process. Fi360 is a provider of fiduciary-related education, designations, training and tools.
Economists affiliated with the CFPI evaluated the score in its new research paper titled, “Analysis of Fi360 Fiduciary Score: ‘Red is Stop, Green is Go.”
The research focused on the color groups used as predictors of funds’ future performance, and confirmed that the top groups (green and light green) provided statistically better median results than other groups (yellow and red).
The score ranges from zero to 100, with zero being the most preferable: zero to 25 (green); 26 to 50 (light green); 51 to 75 (yellow); 76 to 100 (red).
In addition to higher returns, the research concluded that funds identified in the green quartile also tended to have lower levels of risk (as measured by return standard deviation and semi-deviation).
Funds marked as green were also more likely to remain in that category over one‐, three‐ and five‐year time horizons. The score was also found to help advisors avoid bad investments—funds in the red quartile were far more likely to remain there or to stop trading than to improve.
It notes, however, that the score is not meant to be a stand-alone investment selection tool—it’s intended to be advisor enabling. The score is often used by advisors to eliminate the wrong funds, and then use their own assessments to select the right investments from those remaining.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
