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.
BrightScope is a financial information company best known for its 401(k) rating system.The company was founded in 2008 and started out with a mission to improve the transparency of employer retirement plans.Several years, acquisitions, and managerial changes later, it now primarily helps retirement market–focused asset managers identify, target, and retain clients.After Institutional Shareholder Services Inc. (ISS) acquired Strategic Insight, BrightScope's services were lumped together as part of the Beacon enterprise product suite, which is available to paying subscribers only.
BrightScope has pivoted its business substantially over the past few years. Following a series of ownership changes, the company's priorities switched from supplying the public with independent research on their workplace retirement plans, financial advisors, and mutual funds to primarily helping asset managers leverage their data in order to drive more targeted and effective distribution efforts.
BrightScope was created in the late 2000s to make it easier for people to better understand their 401(k)s. Its three co-founders, brothers Mike and Ryan Alfred and Dan Weeks, 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.
After raising some money from angel investors and heading to Washington, D.C., to extract company 401(k) plan filings from the Labor Department, the three got to work building their invention. They gave as many 401(k)s as they could analyze a numerical score based on hundreds of individual data points, including the plan's total cost, company generosity, and the number of investment choices available, and made their creation free for the public to access.The Alfred brothers—fresh from previously operating an investment advisory business—and Weeks followed this up by creating the first comprehensive and publicly available online directory of financial advisors. As with the 401(k) ratings, the goal was to help people find the best financial solutions while making some money from the folks on the other side of the fence.BrightScope charged a fee to advisors who wanted to stand out in the directory and look into who checked out their profile. Other revenue streams came from Spyglass, a 401(k) database used by retirement plan consultants and advisors to help smaller employers optimize their retirement offerings, and Beacon, which specialized in giving asset management companies data on which employer retirement plans own their funds and which employers own competitor funds that haven't been performing well.
BrightScope initially charged advisors to access and add details to their profiles, but was forced to reverse this policy after receiving lots of complaints.
A series of acquisitions gradually led to a shift in BrightScope's business model and priorities.
In 2016, the company was acquired by New York-based Strategic Insight for somewhere reportedly in the region of $35-$40 million. Then, within the space of three years, co-founders Mike and Ryan Alfred, who between them effectively ran BrightScope, left to pursue new ventures. Strategic Insight was acquired by proxy advisor Institutional Shareholder Services Inc (ISS).
Mike and Ryan Alfred set up Digital Assets Data, a data platform for cryptocurrency assets, after leaving BrightScope.
Under the stewardship of its new owner, the free stuff started to vanish. BrightScope's services were lumped together as part of the Beacon enterprise product suite, which was made available to paying subscribers only. In other words, BrightScope's defined contribution retirement plan database and financial advisor directory are no longer free to access.
As is often the case when startups expand and new investors come on board, BrightScope was forced to rethink its priorities. A need to make more money saw the company switch from trying to help the general public maximize their retirement savings to primarily catering to the needs of the people sitting on the other side of the table with deeper pockets.
There are now other websites that help employees analyze company 401(k) plans, including one called Beagle.
According to an article from the New York Times, the idea originated with Dave Weeks. Weeks was reportedly struggling to understand his 401(k) plan while working as an engineering manager at Hewlett Packard. He came up with a tool to better organize his risk tolerance and fund choices, and then showed it to his real estate lawyer, who happened to be the father of the entrepreneurial-minded Alfred brothers.
BrightScope has been owned by Institutional Shareholder Services (ISS) since 2019 and forms part of its market intelligence division.
Since 2016, when it was acquired by Strategic Insight, BrightScope moved from being a free information service with databases that allowed consumers to compare 401(k) plans and find financial advisors to a paid service designed to help retirement market–focused asset managers identify, target, and retain clients. It is now owned by Institutional Shareholder Services (ISS).