BrightScope Rating System: How Does It Work, Features, And Other Uses
BrightScope is a financial information company. It offers services through its web-based software on retirement planning and wealth management. In 2016, Strategic Insight acquired the company. By looking at financial data through BrightScope, individuals and businesses can make better financial decisions. The software mainly works with retirement plans and wealth management options.
In this article, you will learn about BrightScope and how it works for businesses and individuals. Apart from that, you will also learn the early history of BrightScope so that you have a better idea of the company’s inception. Finally, we will compare the old and new services of the web-based software. Hence, to learn more, read on through to the end of the article.
What Is BrightScope?
According to official sources –
“BrightScope®, Inc. is a financial information company that brings transparency to opaque markets. Delivered through web-based software, BrightScope data drives better decision-making for individual investors, corporate plan sponsors, asset managers, broker-dealers, and financial advisors. BrightScope primarily operates in two major segments: Retirement Plans and Wealth Management.”
The major users of BrightScope are asset managers who primarily work in the retirement market. With the help of the platform, they are able to get financial information that allows them to identify, target, and retain clients. The system is popular for its 401(k) retirement accounts rating system.
Another great thing about BrightScope is that it can convert a large amount of data into simplified and actionable intelligence. This helps analysts and investors to make decisions better. In the last few years, BrightScope has pivoted its business a lot.
Apart from that, the company also went through a change in ownership. Within these changes in ownership, the company continued to switch its priorities.
Firstly, it supplied the public with information through independent research. This information mostly contained research on retirement plans, mutual funds, and financial advisors. Later on, with the change of ownership, the company started to help asset managers leverage their data. The focus here is to make them more successful with their distribution efforts.
How Does BrightScope Work?
According to Investopedia,
“BrightScope is a financial information company that primarily helps retirement market-focused asset managers identify, target, and retain clients. It is best known for its 401(k) rating system and ability to convert floods of data into simplified, actionable intelligence for paying subscribers.”
There are two segments where BrightScope mainly operates: retirement plans and wealth management.
In the first case, BrightScope is one of the most popular providers of retirement plan ratings. Apart from that, it also offers investment analytics to participants, asset managers, sponsors, and advisors across the United States.
On the one hand, the company maintains a database consisting of comprehensive information on the retirement plan market. On the other hand, it adds value and insights by offering ratings of 401(k) retirement plans across critical metrics.
Apart from that, BrightScope also offers distribution rankings for funds in the retirement marketplace. As a result, it provides asset managers with better insights into the viability of assets and how they stack on each other.
The other segment where BrightScope works is wealth management. Basically, the company does it through BrightScope Advisor Pages. It is one of the first directories that are available to financial advisors. Apart from that, these directories are comprehensive as well. With the help of these Advisor Pages, consumers can discover information and conduct due diligence on their financial advisors.
An Early History Of BrightScope: How It Started?
Investopedia explains –
“BrightScope was created in the late 2000s to make it easier for people to better understand their 401(k)s. Its three co-founders, Dan Weeks and brothers Mike and Ryan Alfred recognized from personal experience how hard it was to determine the quality of a company’s retirement savings plan and vowed to end those struggles by building a database that would give each 401(k) a rating based on things like fees and match.”
Later on, the three founders raised money from angel investors. Then, all of them headed to Washington, DC, to get access to the Labor Department’s 401k plan filings. Now, they took information from as many 401(k)s as they could analyze. Then, they found numerical scores on various data points of the 401(k)s. They also gave information regarding the total cost of the plan, the generosity of the company, and also about other investment choices.
One of the best things about BrightScope in its earlier stages was that all this information was available for free. The goal of the company was to find the best financial solutions for the people. At the same time, the company made money from other sources.
On the other hand, BrightScope charged a fee from those advisors who wanted to stand out in the directory. By paying a fee, financial advisors could also check who looked into their profile.
BrightScope Features: Old Vs. New
BrightScope’s business model and priorities changed with a series of acquisitions. In 2016, Strategic Insight took over BrightScope for a reported value of $35 to $40 million. Within a space of three years, the founders of the company left for new ventures. Later, in 2019, the proxy advisor, Institutional Shareholder Services Inc. (ISS), took over Strategic Insight.
As the new owner took over, the company stopped giving away information for free. All the services of BrightScope came as a part of a product suite from Beacon Enterprise. Those information pieces were available to premium subscribers only. Hence, the retirement plan database and the financial advisor directory were not available for free anymore.
Wrapping Up
Hope this article was helpful for you in getting enough information about BrightScope and how it works. You can see from the article that BrightScope used to provide retirement plan information and data on financial advisors on their platform. However, with time, as bigger companies acquired BrightScope, the services were no longer available for free.Currently, BrightScope’s services are available with the subscription Beacon subscription plans of ISS. If you want to check them out, visit the official website. Do you have further information to add regarding BrightScope? Consider sharing your information with us in the comments section below.
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soumava goswami
A passionate writer and an avid reader, Soumava is academically inclined and loves writing on topics requiring deep research. Having years of content writing experience, Soumava also loves creating blogs in other domains, including digital marketing, business, technology, travel, and sports.
