Here’s why this is so important and what you can do to help.

Individual investor use (your use) of Rita℠ could have a profoundly beneficial effect on the financial services marketplace. By empowering individual investors (you) to independently score and rank the full universe of mutual funds and ETFs within any asset class, investors will no longer be blindly dependent on the advice and sales recommendations of brokers, investment advisors, publications and any other sources of investment information (or disinformation). A better-informed investor client will require advisors and brokers to be better prepared for more knowledgeable questions, especially “why this one versus these other top scorers” questions.

There may be a good answer to such questions - or maybe not. But, importantly, you’ll be able to ask. Because of that, they’ll have to provide a rational answer. If they can, can’t, or won’t, you’ll be able to better judge for yourself whether their services are really worth the fees you’ve been paying.

We’re urging brokers and investment advisors to license the “professional version” of Rita℠, our Professional RapidReview Tool℠ (the “ProRRT℠”), to better enable them to answer such Rita℠-empowered questions and to improve the investment recommendations to (and investment performance of) their clients. And we’re working to warn them of the likely effect – “The Rita Effect℠” – of having their clients know more about the relative performance of their mutual fund and ETF recommendations than they do. That “warning” is reproduced below . . . it also tells the “backstory” of the real person, Rita, who inspired the name.

The RITA Effect℠

Here’s the “backstory” on how our tool for individual investors came to be named “Rita℠”. It’s a true story and there really is a woman named Rita. We wrote this to alert investment advisors to the fact that their clients may soon know more about the relative performance of their investment recommendations than they do.

Early in our development of our “Professional RapidReview Tool℠” (our “ProRRT℠”) one of the persons 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 her meeting with her investment advisor. I happily agreed, since he 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 ones in which she had the largest balances. Altogether, in about 45 minutes, we scored, ranked, and discussed her four largest holdings. One was well ranked and there was no compelling reason to recommend a change. The other three, however, ranked way down in their universes and it appeared clear that there were choices that performed better and much 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 was being shared with her.

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 for her 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 this guy?”

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 discussion on other topics, 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 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 investments than the advisor who recommended them.

A “retail version” of this technology, for individual investors, has now been released – it’s our “Retail Investment Tracking Application℠,” aka “RITA℠.” 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.

Here's What You Can Do to Help and Why It’s Important That You Do.

If you have an investment advisor, he or she will likely have not yet heard of either the ProRRT℠ or Rita℠. So, please do them the favor of letting the know. Not only will you be helping them improve their competitive position (compared to brokers and advisors without this newly available technology), you’ll also be helping to improve the investment recommendations to and investment performance of all of their clients . . . including you! If your broker or advisor is not interested or states that they believe they have “better tools” or a “better process,” Rita℠ will enable you to independently put those statements to the test by simply scoring and ranking those recommendations. It’s not about how “elaborate” or “sophisticated-sounding” some investment selection process is, it’s about the results it produces. You may remember the way one popular move sums this point up in four words: “Show me the money.”

We’re very much looking forward to the beneficial changes “The Rita Effect℠” will produce in the investment advisory marketplace . . . changes that you (and hopefully many more individual investors like you) will have played a hugely important role in producing.