Category: News

On April 6, 2016, the U.S. Department of Labor (DOL) issued its final rule expanding the “investment advice fiduciary” definition under the Employee Retirement Income Security Act of 1974 (ERISA) and modifying prohibited transaction exemptions for investment activities in light of that expanded definition. The new rule will go into effect on April 10, 2017, in a phased manner, with full implementation by January 1, 2018. The primary attributes of the new rule include:

1. Significantly expanding the circumstances in which broker-dealers, investment advisers, insurance agents, plan consultants and other intermediaries are treated as fiduciaries to ERISA plans and individual retirement accounts (IRAs), and are therefore precluded from receiving compensation that varies with the investment choices made or from recommending proprietary investment products absent an exemption;
2. Providing new exemptions, and modifying or revoking a number of existing exemptions, addressing those activities; and
3. Retaining the ERISA distinction between non-fiduciary “investment education” and fiduciary “investment advice.”

Importantly, the DOL defines an “investment advice fiduciary” under this ruling as a service provider that acts in the best interests of clients, one who must enter into a Best Interests Contract (BIC) with clients who own or administer accounts governed under ERISA. Such investment advice fiduciaries can only receive compensation that is deemed “reasonable.” However, the DOL included A Best Interests Contract Exception (BICE), permitting these advice fiduciaries to receive commission-based compensation and compensation from 3rd parties, like mutual funds and insurance companies, if granted a prohibited transaction exemption (PTE).

Sounds like alphabet soup, doesn’t it? Net, eBIS^TM believes this ruling is a step in the right direction for retirement savers, but it does not go far enough. As a positive, it forces commission-based advice-givers to submit additional disclosure to investors about their sources of compensation and commit to a best interests standard with clients. The ruling does not, however, eliminate conflicts of interest, as brokers and advisers can still sell commission-based products to retirement clients that are either proprietary to their firm or include hidden marketing fees, which the DOL labels “conflicted compensation.”  This situation introduces moral hazard if a high commission/proprietary/marketing-fee product is less appropriate for a client than a low commission/independent/no-marketing-fee product. Further, the DOL ruling does not require advisers to make investment recommendations in a financial planning context, which would require an understanding of the complete financial circumstances of the client.

eBIS holds itself to a much higher standard than the DOL mandates. eBIS has never accepted any type of commission or marketing incentive, a.k.a., conflicted compensation, and commits to the fiduciary standard in its purest form: always act in the best interests of clients, making recommendations as a prudent expert would while evaluating their specific financial circumstances. We feel a true fiduciary meets all of the following criteria:

1. Bound by the “Prudent Expert Rule” in investment decision making.
2. Employs Modern Portfolio Theory (MPT) in portfolio construction, focusing on investment risk, taxes, and costs.
3. Requires a four year college degree, with a preference for advanced degrees, and industry-specific certifications to handle and manage client money.
4. Fully discloses business practices, fees, and professional history in a readily available regulatory filing.
5. Generates revenue through fees only, billed directly to the client, generated by either an hourly bill rate or an assets under management/advisement percentage. Does not accept performance fees.
6. Avoids all conflicts of interest by rejecting referral/finder’s fees, affiliate fees, 12B-1 fees, revenue sharing, soft dollars, and any other direct or indirect compensation not emanating directly from the client.
7. Engages any client through an account agreement, defining important details such as the structure of the advisory relationship, limited power of attorney (LPOA) rights and responsibilities, and remediation avenues in case of disputes.
8. Compiles an investment strategy specific to the client after evaluating his/her full financial picture through a financial planning lens. Documents strategy in an Investment Policy Statement (IPS), from which the adviser cannot deviate without written amendments signed by both adviser and client.
9. Defines a code of ethics against which all employees and contractors representing the firm are bound. Includes a pledge of integrity to act professionally and in the client’s best interests.
10. Avoids self-dealing, including a trading policy that puts trades for clients’ accounts ahead of/in priority to employee trading.
11. Never acts as a custodian of client assets. Engages an independent custodian, regulated by FINRA and insured by SIPC, at arm’s length from eBIS, to custody assets, process transactions, and report asset positions at least quarterly (with on-demand online access).
12. Keeps client relationship and all client information confidential, bound by a non-disclosure and confidentiality agreement.
13. Is regulated by an independent, state-specific regulatory authority or the Securities and Exchange Commission (SEC), not a self-regulating entity, e.g., FINRA.

We call this set of criteria the eBIS Fiduciary Standard, as we adhere to each of the points above, as delivered through our four fiduciary solution offerings: Retirement Plan Fiduciary Services; Financial Planning; Investment Management; Portfolio Risk Management.  We believe all advisers providing investment advice should follow this highest standard.  Being a fiduciary should mean nothing less.

 

About eBIS
eBIS is a Registered Investment Adviser, specializing in investment management, financial planning, and retirement plan fiduciary services.  Since 2002, we’ve delivered solutions that help our clients implement sound investment portfolios, understand embedded risks, and improve risk-adjusted returns in a regulatory compliant manner.  We strive to build bridges between strategic ideas and realized solutions by asking questions, generating consensus, and communicating in terms everyone can understand.  We deliver solutions that are flexible, scalable, and adaptable as your situation changes. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small and medium-sized businesses and individual investors.  www.ebis.biz

eBIS^TM, a Registered Investment Adviser (RIA), announces the delivery of Investment Management and Financial Planning solutions available to individuals, endowments, foundations, and defined contribution retirement plans.  Both solutions focus on understanding YOUR specific circumstances before making recommendations.  Client data is acquired through a robust set of surveys and supporting interactions, covering items such as financial circumstances, financial goals, and perspectives on risk, then analyzed to construct a custom investment model and/or financial plan.

 

In order to tailor an investment model for a client, eBIS focuses on 3 pillars: risk, taxes, and costs.  eBIS labels these pillars the Investing Triumvirate, as they are the primary governors of investor success.  With risk as the first, and most important, pillar, eBIS has developed a proprietary risk model, capturing each major asset class, its prospective return drivers, relative valuation, and how it has behaved historically.  Each asset class receives a risk classification and grade, which influences inclusion in the portfolio model and informs decision making on portfolio diversification, with the aim of capturing as diverse a set of risk factors as possible, including new asset classes that have only recently become available through technological innovation.  By capturing a diverse set of return drivers, eBIS’s model helps support asset growth across economic cycles, which can increase compound portfolio returns by reducing volatility.

 

As explained by eBIS president Pete Shannon, “We provide an investment model that breaks from traditional investment channels: brokerage, focused on ‘hot’ securities and past performance (while often delivering excessive risk), and typical Registered Investment Advisory, focused on market efficiency and costs, but blind to risk and innovation in asset classes that can offset it.  eBIS wants to help our industry move away from these models toward what really matters in investing: investment risk.  Our risk models are an outgrowth of our institutional risk management advisory practice – informed from our experience advising some of the largest financial companies globally.  The average investor should have access to what works for the largest financial institutions; in this realm, we can make a difference and enhance the retail investment experience.”

 

Taxes, with the client’s marginal tax rate as the primary variable, also drive decision making for each individual portfolio.  Performance is always viewed on an after-tax basis; investments must perform for each client based on his/her tax circumstances.  Investment assets are located strategically in taxable or tax-deferred/free accounts based on their cash-flow distribution profiles.  In the event that an investment declines in value in a taxable account, eBIS will tax-loss harvest those declines, acting as a tax offset against current or future taxable gains.  eBIS analyzes investment costs at multiple levels (expense ratio, trading costs/liquidity, cash drag, etc.), evaluating whether each investment justifies its underlying costs, with a strong preference for cost minimization.

 

Initially, every potential client is offered a portfolio review as part of the investment management service.  As part of the initial consultation, eBIS will evaluate your current investment portfolio and provide a risk, tax, and cost assessment, along with recommended changes, free of charge.

 

The investment management service integrates with the financial planning solution, where eBIS coalesces all client information into a comprehensive financial plan.  Each financial plan covers the 7 important goals of life planning: discretionary expenditure, family change, education, tax, retirement, insurance, and estate transfer.  eBIS labels these aspects the 7 “rungs” in your own personal Financial Planning DNA, as they determine how you will evolve in your financial life.  The client receives documentation on recommendations for each rung and support from eBIS on implementation.  The plan is reviewed and updated as your life situation changes.

 

Pete Shannon commented, “No desired destination is reached without planning the route to get there.  We act as a Google Maps of sorts, plotting a financial route for you, the most direct route to your desired destination given your circumstances.  Everything about you goes into the route plan: existing assets, career and retirement goals, family circumstances, insurance needs, tax circumstances.  Just as current traffic might influence Google to suggest alternate routes, so too do all of your personal variables influence eBIS to suggest an appropriate personal financial plan.  Unlike many large advisers who pigeonhole you into pre-fabricated investment portfolios and savings plans with little regard for personal variables, our offering is completely dependent on your input.  We feel we have a best-of-breed risk model, but allowing it to benefit you depends on applying it intelligently to your situation.  We spend a lot of time getting to know you, as that knowledge acts as a vehicle for our decision making across all 7 goals in your financial plan.”

 

As a Registered Investment Adviser, eBIS is bound by the fiduciary standard, requiring the firm to act in the best interests of its clients, and is regulated by an independent government agency.  Further, eBIS is completely independent and has no financial incentive to recommend any investment product or strategy; it eschews all affiliations and partnerships with 3rd parties, which can introduce conflicts of interest.

 

As a fiduciary, eBIS issues an Investment Policy Statement (IPS) and/or financial plan to each client, signed and executed by both parties, documenting the recommended financial strategy and implementation timeframe.  This document ensures that both the client and adviser agree on the recommended approach.  Any future changes in strategy must be documented in writing and signed by the client.  Similarly, an account agreement with the client details all management fees and how they are assessed and collected.  eBIS generates revenue exclusively through fees billed directly to the client, and never from commissions, referral or performance incentives, revenue sharing or cross-marking agreements, all of which have embedded conflicts of interest.  Investment portfolios are implemented through a robust custodial trading and reporting platform, always in the name of the client and at arm’s length from eBIS.

 

Shannon commented, “The average American faces a deficit in savings, financial planning and retirement readiness.  We want to do our part to stem this trend.  Taken together, our Investment Management and Financial Planning solutions provide a robust framework for lowering investment risk, supporting asset growth, meeting financial goals and retiring with security.”

 

Details on both solutions can be found here: Investment Management, Financial Planning.

 

About eBIS
eBIS is a Registered Investment Adviser, specializing in investment management, financial planning, and retirement plan fiduciary services.  Since 2002, we’ve delivered solutions that help our clients implement sound investment portfolios, understand embedded risks, and improve risk-adjusted returns in a regulatory compliant manner.  We strive to build bridges between strategic ideas and realized solutions by asking questions, generating consensus, and communicating in terms everyone can understand.  We deliver solutions that are flexible, scalable, and adaptable as your situation changes. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small and medium-sized businesses and individual investors.  www.ebis.biz

eBIS^TM, a privately held, independent investment strategy consulting and financial services solutions company, announces the delivery of a comprehensive set of fiduciary services tailored to defined contribution retirement plans (401(k), 403(b), 457).  The unbundled service offerings allow plan sponsors, be they corporations (401(k) plans), non-profit entities (403(b) plans), or government entities (457 plans), to customize adoption to their specific needs.  With services ranging from full §3(38) fiduciary investment management paired with employee education and investment advice to point consulting on areas such as benchmarking analysis and fiduciary program management, sponsors can choose a set of services suited to them.  Importantly, eBIS offers the service of regulatory adherence consulting, providing key advice to sponsors for compliance on ERISA and PPA legislation and Department of Labor regulations.

 

As with all of eBIS’s offerings, the focus is on innovation: thinking differently to generate ideas and deliver solutions that aren’t widely available in the marketplace, providing a differentiated employee benefit to plan sponsors. With a tightening labor market, companies need ways to attract and retain top talent, and their retirement plan, if structured well, can act as a marketing tool.  eBIS president Pete Shannon commented, “We feel the retirement plan industry deserves greater innovation.  Most plans offer a core fund lineup of stock and bond funds, and, if it is above average, balanced or target date funds.  The problem: none of these financial products consider the employee’s circumstances.  Employees deserve investment solutions tailored to their individual needs, delivered by an independent fiduciary free from conflicts of interest.  Our solution focuses a keen eye on the retirement readiness of each employee, through appropriate investment menu construction, investment advice, employee financial education, and plan program management.  Focusing on the individual makes the employee feel valued.  It can make a big difference in HR retention and recruiting.”

 

Just as importantly, employers need to deliver retirement security to plan participants.  Shannon added, “eBIS fiduciary services offer particular value to plan sponsors because of our experience in risk management.  With over ten years helping institutional clients quantify and manage their portfolio risks, we offer sponsors a unique perspective on the flavors of risk that can negatively affect employee retirement readiness.  We offer sophisticated investment solutions that employ a wide range of asset classes suited to varying risk tolerances and return goals.  This approach can help manage downside portfolio risk, bringing risk management techniques to the individual employee that have historically been reserved for large institutional and private wealth investors.  If we can help lower investment risk, improve compound returns over time, and raise savings rates, the employee wins.  Retirement shouldn’t be a pipe dream.  With proper retirement plan management and diligent savings, it doesn’t have to be.  We think it’s time to level the playing field.  Every single worker in our country deserves institutional-quality investment ideas applied to their retirement deferrals.  A core corporate mission of ours is to help average Americans reach their retirement goals.”

 

As a true independent fiduciary, eBIS has no affiliations to financial products or 3rd party asset managers, eliminating conflicts of interest.  All client relationships are fee-only and clearly documented.

 

For more information on the complete set of eBIS’s retirement plan services, please click here.

 

About eBIS
eBIS is a Registered Investment Adviser, specializing in investment management, financial planning, and retirement plan fiduciary services.  Since 2002, we’ve delivered solutions that help our clients implement sound investment portfolios, understand embedded risks, and improve risk-adjusted returns in a regulatory compliant manner.  We strive to build bridges between strategic ideas and realized solutions by asking questions, generating consensus, and communicating in terms everyone can understand.  We deliver solutions that are flexible, scalable, and adaptable as your situation changes. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small and medium-sized businesses and individual investors.  www.ebis.biz

eBIS^TM, a privately held strategy consulting and financial services solutions company, today marks the completion of its tenth year in the business of providing innovative services in investment management, financial risk quantification, and regulatory adherence. eBIS was founded in 2002 to bridge strategic ideas and business solutions in a market made increasingly complex by international risk and capital management legislation and advances in financial engineering. “Over the last ten years, eBIS has built a reputation for trusted strategic advisory services, insight to best practices, and robust solution development,” said eBIS president Pete Shannon. “Our teams have architected many valuable solutions, from a model to assess derivatives risk, to regulatory adherence in Basel I & II, to dimensional profitability insight for portfolio management and corporate finance. Along the way we’ve learned a lot. Being in the throes of change, as our industry has seen recently, certainly highlights the need to react and adapt quickly. That dynamic affirms our belief in flexibility: to client needs, and also in the solutions we architect.” The eBIS client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management. eBIS strives for client satisfaction and long-term relationships, ones based in mutual hard work, accomplishment, and trust.

 

To celebrate our ten year milestone, and in the spirit of learning and sharing information, which is the bedrock of our firm, eBIS provides financial services knowledge capital to those seeking it. Its corporate web site provides documentation on various best practices in areas such as data warehousing and Basel II adherence through its Knowledge Center. It also provides a custom financial services news portal, filtering finance and technology related news stories by category from content providers across the web, available on its website or through RSS for consumption in a news aggregator or mobile device.

 

“The financial services market is now facing another wave of risk management challenges and global financial regulation,” said Shannon and adds, “eBIS stands ready to continue to generate ideas and provide guidance, helping companies and regulatory entities make informed decisions. We want our web content to contribute to this end, and look forward to continuing to help clients navigate change with our consulting services. We’re sure the next 10 years will prove at least as challenging as the last, and we hope as much fun. We sincerely thank our clients and partners for the opportunities to work with them.”

 

About eBIS
eBIS is a privately held investment consulting and financial services solutions company with over 10 years of experience in bridging gaps between strategic ideas and business solutions. Leveraging understanding of both financial risks and solutions that can quantify and mitigate them, eBIS partners with clients to deliver value-added business insight. eBIS specializes in strategic investment advisory services, risk architecture engineering and analytics modeling using proven best practices, reusable solution toolkits and innovative problem solving. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small businesses and individual investors. www.ebis.biz

eBIS^TM, privately held strategy consulting and financial services solutions company, today launched the first news portal focused on the financial services industry. The portal parses and filters news from over 50 sources to help financial services professionals from technologists to executive management stay abreast of industry news, best practices and technology trends.  The portal enables users to track news in the areas of regulatory compliance, financial risk, asset management, data warehousing and performance management analytics, in addition to other areas.  Users can view the news content by category directly on the eBIS web site, or subscribe to its RSS feed and view the content through a web-based news aggregator or mobile device.

“Through our experience in financial services, eBIS recognized the unmet need for news targeting this important niche audience,” said Pete Shannon, eBIS president, about the launch of the innovative news portal on the company’s web site. “Many people spend hours scouring the Internet for news relevant to our field.  I know I do, and we wanted eBIS to provide a tool to distribute relevant, timely content, categorized by area of interest.  For the first time, professionals focused on the quickly evolving arena of financial services can easily find the news they need in one place.  We hope people will benefit from it.”

Additional Detail:

The eBIS news portal is organized by the following categories:

• Top Financial Stories
• Asset Management
• Banking
• Data Warehousing & Business Intelligence
• Financial Minds
• Financial Products
• Financial Reporting Standards
• Financial Risk & Performance Management Analytics
• Geopolitical & International RegulationInsurance
• Technology News in Financial Services
• US Regulation

Each category contains a daily list of the top news stories in that area, along with a short summary of each news item and the ability to link to the full story as published by the content originator. Unlike other portals, users also have the ability to search for historical news items and filter news content by key word or category.  To experience the new eBIS news portal, please visit www.ebis.biz

About eBIS
eBIS is a privately held investment consulting and financial services solutions company with over 10 years of experience in bridging gaps between strategic ideas and business solutions. Leveraging understanding of both financial risks and solutions that can quantify and mitigate them, eBIS partners with clients to deliver value-added business insight. eBIS specializes in strategic investment advisory services, risk architecture engineering and analytics modeling using proven best practices, reusable solution toolkits and innovative problem solving. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small businesses and individual investors. www.ebis.biz

eBIS^TM, privately held strategy consulting and financial services solutions company, was named to the Oracle Financial Services Analytical Applications Customer Advisory Board (CAB). In this role, eBIS joins other leading financial services firms and consulting partners in an effort to help shape the direction, functionality and delivery of Oracle’s analytic products. eBIS president Pete Shannon stated, “eBIS brings to the CAB focused experience in bridging business strategy and technology solutions.  Our understanding of enterprise financial risk and profitability, and our war stories of trying to capture financial theory in a technology vehicle, should provide Oracle with perspectives to help their enterprise offerings. We also have information to share gathered from our own financial forums.  We have worked closely with Oracle and its integrated companies for years and look forward to the opportunity to positively influence their products for even better customer satisfaction and risk management results.”

About eBIS
eBIS is a privately held investment consulting and financial services solutions company with over 10 years of experience in bridging gaps between strategic ideas and business solutions. Leveraging understanding of both financial risks and solutions that can quantify and mitigate them, eBIS partners with clients to deliver value-added business insight. eBIS specializes in strategic investment advisory services, risk architecture engineering and analytics modeling using proven best practices, reusable solution toolkits and innovative problem solving. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small businesses and individual investors. www.ebis.biz

eBIS^TM, privately held strategy consulting and financial services solutions company, launched Enterprise Performance Management (EPM) forums in the second half of 2008 to create a community for financial professionals to share ideas, discuss industry trends and gather information in the analytic applications space.  With over 10 participating financial institutions, the periodic forums facilitate dialogue among institutions with common goals, with eBIS providing subject area expertise and research in addition to topical guidance.

In particular, the forums afford an opportunity to discuss industry and regulatory events, their effect on business operations and specific software solutions needed to manage risk.  eBIS president Pete Shannon said, “Based on the breadth of the companies represented on the calls – from major asset management institutions to the world’s largest business software company to U.S. and global commercial and retail banks in the top ten – eBIS has created an important and useful forum for financial services institutions dealing with today’s profitability reporting and risk management challenges.”

Topics covered in the forums include software options for risk and profitability related solutions in addition to strategic approaches and best practices for data acquisition, logical data storage, analytic processing and reporting.  In one forum, Oracle representatives provided direct input on roadmaps to Oracle’s varied product offerings and upcoming Fusion^TM platform, generating spirited dialogue, valuable insight into customer preferences and ideas for product direction.  In another forum, eBIS presented an analysis of the competitive landscape in data warehouse and risk analytics software. Reaction to the forums from senior members of participating institutions has been positive: “Yes, the conference call was useful.  Thanks for including us, and please continue to do so!” “Great discussion today!” “A wonderful start and I was chastised over here for not inviting more folks.” “It was definitely worthwhile.”

Added Pete Shannon, “In view of the richness of the ideas, comments and feedback we’re hearing in the forums, eBIS will seek to formalize opportunities with enterprise software vendors to synthesize this input.  We can present a single voice to influence product strategy, using input from these important companies in the financial services industry, as well as our own experience in this domain.  Both financial and software firms can benefit from the ideas generated during these discussions if they are actioned in a meaningful way.”

About eBIS
eBIS is a privately held investment consulting and financial services solutions company with over 10 years of experience in bridging gaps between strategic ideas and business solutions. Leveraging understanding of both financial risks and solutions that can quantify and mitigate them, eBIS partners with clients to deliver value-added business insight. eBIS specializes in strategic investment advisory services, risk architecture engineering and analytics modeling using proven best practices, reusable solution toolkits and innovative problem solving. The company’s client list includes top ten international and U.S. financial institutions in commercial and retail banking, investment banking and asset management, as well as small businesses and individual investors. www.ebis.biz