News, Vision & Voice for the Advisory Community


BrightScope debate has familiar feel of an industry being dragged kicking and screaming into the new world

Investing in the Digital Age: Andy Rachleff writes about the freight train of transparency

Thursday, May 12, 2011 – 1:58 PM by Andy Rachleff, Guest Columnist
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Andy Rachleff: Am I frustrated I can’t update Brightscope’s database? Sure, but I think they’re doing the right thing for the consumer.

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Mentioned in this article:

Portfolio Management System
Top Executive: Andy Rachleff

BrightScope, Inc.
Data and ratings for RIAs

Rich and Co.

Rich and Co.

May 12, 2011 — 3:55 PM

We have never understood the comparision of financial advisors with care salesmen — but everyone sees their business differently.

These are the people whose business practices you are defending:

The Brightscope owners Mike Alfred and his brother Ryan, were fined for an inappropriate sale of a variable annuity in a 529 plan. They were employed by AXA Advisors then. It appears, quoting the report, that variable annuities sold by the Alfred brothers were deemed: “...unsuitable, irresponsible, not reasonably needed and lacking a strategy for risk management.” The fine was $135,000.00. These men are not yet 30.

Please see the FINRA public information reports.

It is very concerning that two people who so aggressively preach disclosure and transparency in all other, while questioning other integrity, fail the same test themselves. But predictable.

Is it appropriate for licensed professionals with this background to be on national media making any sorts of claims and pronouncements about the industry and markets — let alone other advisors or plan sponsors or plans? We think not.

It seems odd that an industry journalist or editor would not have checked on this background before this and brought it to the attention of the professional community. Why have they not been subject to the same scrutiny they loudly demand for others?

The industry and community should hold these two men accountable for their actions.

There is much more when you “turnover the rocks” at BScope. We will continue to post what we learn at our blog: http://richandco.wordpress.com.

Disclosure – We have no direct or indirect commercial interest in any business related to BScope’s. We too believe in serving full transparency and disclosure.

Tide Goes Out

Tide Goes Out

May 12, 2011 — 5:32 PM

I’m back. I can’t help myself.

Mr. Rachleff,

Please do not put all advisers into your boat. Just because you have chosen not to update your ADV’s, that does not mean other advisers have not either. Annual ADV updating amendments were due by 3/31/11 and so was the “new” ADV Part 2. You may want to update your filings or get with a compliance firm or securities lawyer that can keep you abreast of what is required to be filed and by when for your firm. As for our firm’s data on the Brightscope site, it is a few “years” old and the AUM and other fields are nowhere near what our current filings clearly state.

I must admit I became quite interested in the heading “Delight the Customer” until I read it. I thought you would go on to mention how Brightscope should be working with advisers to make their services and pricing more palpable and fully disclosed, but there was nothing of the sort listed. Brightscope could learn a lot from your first sentence there: “I believe a business’s first priority should always be to delight its customer.” But it’s far from what they practice or preach. Obfuscation and making things up as they go along is par for the course at Brightscope’s corporate headquarters, not to mention their absurdly strong-arm and “black-box” approach to selling their “products” (i.e. 401k database, adviser data, etc…).

As for transparency, our firm is all about this term. We believe in “full” disclosure and truly putting our client’s interests first. How Brightscope figures into this is beyond me? Sure the public should be able to research and find information on advisers and firms as simply and openly as possible. But when a company comes to market with a half-baked plan, inaccurate data, and no word on how information is pulled or updated, an adviser is right to be up in arms. And then to top it all off, the owners of the company basically left the adviser business because they were unscrupulous and now they want to regulate or provide information to that very same business? Give me a break!

Keep it Simple

Keep it Simple

May 12, 2011 — 10:29 PM

This isn’t about transperancy of information, it’s about accuracy. The info isn’t current and isn’t accurate. Car invoices are close to accurate or accurate. Same with Kelly Blue book. A care with $12,000 isn’t listed as being worth $24,000. I’ve looked at a few advisor profiles, and they aren’t accurate. This service CANNOT be accurate. If you understand where the info originates, you’ll understand the service can’t work.

Sure, information wants to be free. But misleading, deceptive (not disruptive) information shouldn’t exist, free or not. I challenge any branch manager or registered principal to look up their profile, or their associates. Draw your own conclusions. When you see what is reported, and think about why it’s so inaccurate, you’ll understand why this service cannot work.

Let’s face it-this is a bad business model. Brightscope knows the info is either incomplete, or old, or wrong. I don’t think they care. This can’t help 'the public’ because it can’t be accurate. Free or not, it won’t work. Listen to how the CEO repsonds on message boards. He can’t address specific charges, he only attacks, is sarcastic, delfects, etc.

I feel sorry for the VCs who thought public info was relevant to the public. it’s a nice theory, but it doesn’t work. There is no way I will update my profile. I can’t be invovled with a business like that.

Joe Gordon

Joe Gordon

May 13, 2011 — 11:43 AM

Guess BScope head needs PR training? LOL!
Interesting about FINRA fines and censoring: does a lot to speak to credibility in any subsequent business.
Since Vanguard mostly wrote their white papers, it is all about low expenses to get good plan ratings. Rating a plan on the Sharpe ratio of the plan menu is totally irrelevant as to portfolio construction of a participant from 20-30 choices or more.
Rating an RIA is a PR stunt joke: in over 28 years as an RIA in 3 different entities, I have seen maybe 1% who actually read an ADV-II and ask about the content. Rating an RIA based on Form ADV-II is like rating stocks based on the content of a prospectus: they both are nothing but legal, mumbo, jumbo disclosure statements which satisfy regulatory requirements. They say little about qualitative and other assessments as to the RIA firm’s competence. References are best to assess whether to hire, and actual experience whether to fire!

Rich and Co.

Rich and Co.

May 13, 2011 — 1:31 PM

The fatal flaw of all BScope’s businesses is using inaccurate data. Transparency and full disclosure are optimal business practices, we all agree, however, bad data obscures transparency rather than furthers it.

With the 401k plan data, there is no way to fix the data. The sources are lagged by 1.5. to 2 years. With advisors data, the challenge is the sheer volume and complexity of all the data points for so many individuals and firms.

In all cases real-time data is mandatory when making judgments and claims. However, real-time data is very expensive to collect, maintain and proof. Very expensive.

We can give the BScope people the benefit of the doubt and assume they just don’t understand what they got themselves into and are covering it over with bravado and aggressive sales tactics. Perhaps the same can be said of their sale of an inappropriate investment a few years back.

However, in a regulated industry supposed good intentions and lack of basic knowledge are no excuse.



January 27, 2012 — 12:34 AM


You are either really missing the point or just trying to come up with a contra perspective in order to get published.

If BrightScope was really into transparency why don’t they procure relationships with the consumer on how to find information or how to pick an advisor instead of being funded by advisors? Don’t you think that is a little bit of a conflict of interest? Oh, but maybe you also buy mutual funds recommended in Money Magazine…

My problem with the site is that they are posting personal information about advisors (Their U-4 information) stolen from FINRA’s site. They do not OWN the information since I did not post it on their site. Yes, the information is public but they have no right to use it ESPECIALLY when they are asked to remove the proprietary information. I don’t mind if they set up a community where consumers can post their experiences in relationship to the advisor. However, they are violating MANY Internet laws by hacking/stealing/reposting proprietary information and if advisors want to supply them with additional information to perhaps try and garner clients, I would think twice.
While I have nothing negative on my registration, I like to control my own Internet brand as much as I can.

I urge everyone to notify FINRA via their online alert system.

Elmer Rich III

Elmer Rich III

January 27, 2012 — 4:59 PM

In another post it’s interesting how BS’s counsel mentions patience when: – The Alfred brothers didn’t have enough patience to make sure only the best and most honest information was promoted on their sites or before publishing and attacking every advisors reputation in teh country – Would he be so “patient” if his professional reputation was under attack online

Is counseling patience something he would do if his clients reputations were under attack?

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