Brightscope lets advisors get basic entry to its Advisor Pages for free, talks Morningstar deal and pencils in an IPO for about 2017
After two years, less than 1,000 advisors paid for the website and BrightScope hopes free is a better price-point for some
Brightscope is a terribly important innovation in the emergence of professional standing within the financial services industry. The transparency and discernment of range of services and ultimately the effectiveness of those services resulting in client ratings of advisors is the Good Housekeeping Standard of Approval. Dalbar has SEC approval for client ratings of advisors which can be used by advisors without violating SEC advertising rules. This sort of external catalyst for the professional standing of advisors introduces a virtuous cycle that drives much needed industry innovation advancing modernity.
If left to its own devices, it is pretty clear the industry does not respect the best interest of the investing public as has been the case over the past 73 years.
This business model seems to share some of the same tenets as ObamaCare…
Grant,The free market it is the exact opposite of the ObamaCare centralized government planning model. The present government sanctioned brokerage compliance protocol is the ObamaCare equivalent, where brokers are not accountable for their recommendations and have no ongoing duty to act in their client’s best interests as required by statute. The Government is presently sanctioning that brokers do not render advice as confirmed by tens of thousands of FINRA administered arbitration proceedings adjudicating client disputes. The government should protect the best interest of the investing public not the brokerage industry’s best interest as that destroys the trust and confidence of the investing public. ObamaCare is destroying the medical profession by making doctors government employees where professional judgment is subordinated to bureaucrats. In the financial services industry, the industry is being crippled by bureaucrats whose loyalty is to the industry, not the consumer.
Let the free market work. There has never been a case since Adam Smith introduced the “invisible hand” in 1776, where the best interest of the consumer has not prevailed. In todays FINRA/SIFMA regulatory world where the brokerage industry interests superceed the consumer’s best interest, we do not have a free market as there is no voice for the consumer as regulators are compromized.
Fiduciary duty in the consumer’s best interest is coming one way or the other. What we have now in the financial services industry is the broker has no control over their value proposition, their cost structure, margins and professional standing. With regulatory reform protecting the consumer’s best interests, faster, better and cheaper advice is in the offering. Importantly, a far higher level of counsel will be provided at less cost to the consumer and the advisor earns 50% more. This is modernity in the financial services industry in the best interests of the investing public.
I didn’t state that the tenets were either good or bad…But I appreciate your opinion. I know you are working for the greater good. I appreciate the work that you do in the Fiduciary World you are a steward for the entire industry… That is a massive undertaking. And I agree in part with your opinions stated here… It is my opinion that Advisors (especially the Advisors reading RIABiz ) have the ability to retain complete control of their value, cost structure, margins and professional standing. Why would any Advisor acquiesce to the commoditization of your suggestions if they were empowered with the knowledge that they are in complete control of their business? Faster and cheaper isn’t always better. Price becomes an issue in the absence of value.
Just take a look at a bond trading desk or retail packaged products and tell me advisors are in control over their cost structure, margins and professional standing. As for value proposition, unless the retail advisor, much less the retail broker, is extraordinary there is very little advisor control as they are limited as to what they can work with. Commodization of advice as a product is where we are now. If advice is approached as an expert process that is managed by the advisor, then you would have a point. That is a distinct minority of today’s advisor, not because they wouldn’t like to, but because large scale support for expert fiduciary standing do not exist at the moment. There are several groups working on it, but it might be two years away.
Are you part of the Brightscope staff Winks? Paid consultant? Free user of their database?
Morningstar can’t be so naive. An IPO? Come on man!
Here we go again with the ever shifting Brightscope business plan. Investors must be breathing down their necks.
And what about those 1,000 advisers that fell for the bait. Is some remuneration in line. Will they get a fancy sticker, I mean badge, free of charge?
The data is dated across all their products. One can find the up to date data in free and government regulated entities. This is a dying bird. How long will the media continue to feed it?
I would love to be more transparent and have accurate data provided to the public, but for Brightscope to make it look like I have no professional designations unless I paid them $95 per month was a little underhanded, in my opinion. I will try to get accurate information posted now that it won’t cost more than my financial planning software.
I see your point… There is certainly a great disparity between the number of Advisors who are taking advantage of owning their own Advisor Alpha and those who feel they are in a price war for same-services. I hope the number is more than one or two percent of all Wealth Advisors. I’m not sure what that number might be… I do know this; Clients that come to an Advisor based on price will leave for the same reason. We should talk…you can find my info on Twitter @TangibleAlpha Thanks for sharing your thoughts.
I have no economic interest in Brightscope, but am one of its many admirers. Brightscope or something like it is part the maturing of the advisory services industry that is emerging from a commission sales culture that is serious about professional duties and standing. What is wrong about articulating the depth and breadth of the advisors counsel establishing accountability and measuring effectiveness? It requires the entire industry to compete on the basis technical competency and transparency. Importantly, the industry will gravitate toward a minimum threshold of counsel that is greatly elevated from today where brokers neither acknowledge they even render advice nor have any ongoing responsibility to act in the consumer’s best interest.
My problem with the site is incomplete data, and me having to pay a LOT of money for the privilege of making their data accurate.
The company was started by brokers. By the looks of their history in our profession, I prefer not to have them serve as our advocates. Their business model has changed and changed and changed and if history is any indication…it will continue to change IF they are so fortunate as to stay in business.
Their hardline approach with advisers on the corporate data side (401k) and now the firm level/individual data side leaves much to be desired. They portray this image of being this wonderful advocate for the consumer, but that is not the way they treat advisers when trying to sell them on one of their many “products”. Classic boiler-room techniques are used and their sales tactics have “broker” written all over them. And now this latest two year maelstrom. Old hat.
In my opinion (which I am entitled to), they are the masters of subterfuge and marketing. I believe you need to research the other options available to the public and advisers before jumping on the BrightScope bandwagon, but to each his own. Best of luck to you Mr. Winks.
RE: 'hinting about future collaboration with fellow data tracker Morningstar. For example, Brightscope may assist advisors in building portfolios using input from the Chicago giant.'
Very interesting, especially when as mentors as part of a startup incubator I was going through these guys told me that portfolio analysis for the small advisor was a 'bad idea’. I also told them that to fund it, I was scraping the IARD site for advisor data to sell to brokers. Admittedly they changed up the business model, but soon after they started doing this. Felt I had to comment, since these guys at the time were just scraping 401K plan data and said that my focus on small advisor portfolios was a bad idea. It may well be, but interesting to see that they don’t think that it is that bad after all…
I’ve come back to these items as part of my upcoming 'Advisor Workbench’ project and may decide to have similar offerings, albeit the portfolio stuff is a ways off, since getting good data from custodians is real work. Since I can also scrape FINRA BrokerCheck data and the IARD site I can repackage (without vetting) advisor data and let advisors updated it for little or nothing (< $20 / month). Stay tuned!
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