Financial planning software provider RightCapital announced on Tuesday that it has enhanced its platform to make it easier for advisors to comply with the Department of Labor’s fiduciary rule, as well as address clients’ retirement income, annuities, Social Security optimization and tax-efficient drawdown planning needs.
RightCapital was founded in 2015 by Shuang Chen and his brother, Song, who serves as chief technology officer.
“We’re a relatively new player, but we’re gaining a lot of momentum,” Shuang Chen, co-founder and CEO of RightCapital, told ThinkAdvisor on Thursday. When the firm launched its DOL fiduciary rule solution at the Finovate conference in September 2016, he said, “that’s when we added the annuity function, to Social Security [function], really targeted to help IBDs to react to the new DOL change.”
Tuesday’s release builds on that offering with an enterprise solution that allows reps to share clients, and gives managers control over who can access, monitor usage and review plans, according to a statement announcing the release.
“Part of the feedback we’re getting from BDs is they’re in process of deploying all this technology to the reps, and they want to be able to see the plans of their reps, so the compliance officer can monitor all the plans,” Chen said.
He noted that “the DOL rule requires them to act in the best interest of the client, which involves, really, two components.” One is customer discovery: “They absolutely have to know much [more] about their customer and their needs and goals.”
The other component is being able to prove that they did in fact act in the client’s best interest, Chen said. “If you want to recommend this life insurance, you have to go through a more holistic planning approach to understand the risk tolerance, to understand the needs and wants of the client, and now you can identify a life insurance coverage gap.”
Some larger financial planning platforms can be too much for mid-sized firms serving clients with between $250,000 and $2 million, he said.
“The more comprehensive, premium planning products will involve eight or 10 hours for financial advisors to create a plan,” he said. Those systems are “a great fit for advisors who are serving actual high-net-worth clients” who have complicated planning needs that would necessitate 10 hours of planning.
However, not every firm needs such a comprehensive planning tool. Asset managers who are being tasked with more financial planning duties to comply with the DOL rule are overwhelmed, according to Chen.
“Firms are finding all these existing financial planning solutions a little bit too comprehensive, a little bit too overwhelming, a little bit too expensive,” he said. “The training costs are prohibitive.”
Chen said it takes about 30 to 60 minutes for advisors to create a plan on the RightCapital platform. Pricing is about $80 to $100 a month, he said.
RightCapital also announced on Tuesday that Parsonex Advisory Services is the first enterprise client. Parsonex is based in Englewood, Colorado, and offers retirement planning and wealth management services.
CEO Jonathan Miller said his firm chose RightCapital’s platform for its ease of use. He said in a statement that the platform strikes “the right balance of simplicity and functionality. It’s easy to use and implement, but doesn’t sacrifice important functionality. It offers financial planning to the masses, but provides advanced insights for our wealth management clients.”
The Garrett Planning Network has agreed to offer member advisors discounted access to RightCapital’s platform for about $100 a month, InvestmentNews reported on Tuesday.
— Read Advisors, Data Is Your Product on ThinkAdvisor’s TechCenter.