Early in our development of our Professional RapidReview Tool^℠, one of the people assisting us in new business development (let’s call him “Albert”) called to ask if I would be willing to meet online with his “significant other” (let’s call her “Rita”) to use the ProRRT^℠ to score and rank some of her mutual fund investments in advance of a meeting with her investment advisor.

I happily agreed since Albert had been of great help in making introductions.

When I met online with Rita, she had her brokerage statement handy. So, I opened the ProRRT^℠ and began to use it to score and rank her mutual fund investments, with her not only watching but also participating in the selection and weighting of performance factors important to her.

We started with the mutual funds in which she had the largest balances. Altogether, in about 45 minutes, we scored, ranked, and discussed her four largest holdings.

One scored well and was relatively highly ranked. So, there was no compelling reason to recommend a change.  The other three, however, ranked way down in their asset classes and it appeared clear that there were choices that had performed much better and better matched her needs, goals, and preferences within their asset classes.

It’s important to understand that Rita, while a very sophisticated and highly educated lady, has been a largely passive investor and was not knowledgeable regarding the comparative analysis of mutual funds and ETFs.

However, she clearly understood what she was seeing.

She stated that she had not seen anything like this . . . nothing that provided her with a way to see for herself the full range of choices and how they compared to her own holdings. 

She pointed out that she had been relying on the recommendations of her investment advisor, with no meaningful way to determine if those recommendations were good, much less the “best,” for her.

At the end of our meeting, she surprised me by asking: “Should I just go ahead and fire him?”

I suggested that she not do so, but to see if he would get her what she wanted. I pointed out that, because her account wasn’t large, if she proved to be too much trouble, he might actually fire her. With that bit of advice, Rita thanked me, we ended the meeting, and I thought no more about it.

Several days later, I was talking with Albert, and, toward the end of our conversation, he asked: “Would you like to know what happened with Rita?” I said: “Sure, I’d love to know.”

He then told me that Rita had fired her advisor. “Really?” was my surprised response. “Yes,” he continued, “she came back and told me that she would be willing to go to a different advisor (one with which Albert was working) but only on the condition that he license and use the ProRRT℠ technology.”

This unexpected result proved to be very instructive. It revealed an additional compelling rationale for investment advisors to obtain a license to use this new technology.

That important “lesson” is this. There is no way an investment adviser can afford to have a client know more about the relative performance and position of his or her mutual fund and ETF investments than the advisor who recommended them.  

A “retail version” of this technology, for individual investors (like Rita), has now been released – it’s our Retail Investment Tracking Application^℠, aka “Rita^℠.” Yes, we named it after the person who I had helped.

With that release, individual investors are now able to score and rank their mutual funds and ETFs for themselves, in virtually the same way I did for Rita. What will they discover when they do?  How will the ones you have recommended stack up?  

Here’s the takeaway: Rita^℠ is now here.

Are you prepared for “The Rita Effect^℠”?  

Can you afford not to be?  If Rita, in the story above, reacted in this way, how will your clients react?  And that highlights a second, less obvious but equally important, lesson.

Rita did not want to do the scoring and ranking herself. She wanted an advisor to do it for her . . . one that has licensed and is using the ProRRT^℠. 

That’s “good news” for investment advisors using the ProRRT^℠ – Rita^℠ could prove to be a source of new clients.