Two collaborators are positioning themselves for greater presence in the fledgling advice market.
Ibbotson Associates, Chicago, and Wiesenberger, Rockville, Md., are working to make Ibbotson's investment advice available to defined contribution participants.
The new system will integrate Ibbotson's investment advice software program with Wiesenberger's Architec(k), an Internet-based 401(k) education and planning tool, said Mike Henkel, Ibbotson president.
The system, which will still be called Architec(k), will take participants through an online education and planning session, deliver investment advice from Ibbotson, allow them to make decisions and instruct their plan providers to implement those decisions, he said.
"Between the two of us, we will have a turn-key tool," he said.
That is, as soon as the industry solves some of its legal dilemmas, he added.
Ibbotson has a relationship with the TCW Group, Los Angeles, as an independent provider for the advice software. However, that deal limits the amount of revenue Ibbotson can realize from its work with TCW to 5%. That deal is not affected by the Wiesenberger collaboration.
With the Wiesenberger partnership, Mr. Henkel said, Ibbotson hopes to be positioned for inclusion in other service providers' bundled products. The only hitch is that Ibbotson executives require all service providers to obtain prohibited transaction exemptions from the Department of Labor, Mr. Henkel said. So far, only TCW has an exemption, which allows the money manager to give participants investment advice, he acknowledged.
Ibbotson would also provide the service to plan sponsors directly but, Mr. Henkel said, the primary market is service providers.
Until more service providers receive exemptions, Wiesenberger and Ibbotson will use their software to provide participants with investment education, but not advice.
"As long as we leave it at the asset class level, it is still education," Mr. Henkel said. "If we get our ducks in a row then, instead of doing just asset portfolios, we will tell them what mutual funds to buy."
