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In an previous post, I mentioned that financial education would lead the charge in the interactive space in 2010. In today’s economy, and with its importance in business, financial education is a space that provides many opportunities to brands. While there are a number of areas within finance that brands can focus on; one area that has gone largely untouched, at least until now, is 401k and retirement services. One company looking to change that is BrightScope.

iFinance had the opportunity to sit down with Mike Alfred, co-founder and CEO, where we talked about the importance of financial education, the idea and concept behind BrightScope and how it plans to change the financial landscape.

To begin, I think it’s best to get a clear idea of what exactly BrightScope is. From their Web site:

BrightScopeTM, Inc. is an independent provider of 401k ratings and financial intelligence to plan sponsors, advisors, and participants in all 50 states. Our mission is to increase the retirement security of America’s workforce by bringing transparency and efficiency to the 401k plan market. We maintain a comprehensive database of information on the 401k plan market and add additional value and insight by quantitatively rating each 401k plan across critical metrics. BrightScopeTM empowers plan sponsors to quickly and accurately determine the optimal structure for their 401k plan and choose the providers that provide the most value for the fees they charge. BrightScope is the only 401k analytics firm that is truly independent and does not accept compensation in the form of revenue sharing from mutual fund companies or plan providers. BrightScope is aligned with plan sponsors and seeks to avoid conflicts that will jeopardize its ability to give its clients unbiased advice. BrightScope is not a fiduciary under ERISA.

While most people have an understanding of basic economics and finance, as the complexity of the data increase, general interest decreases. Unless one works in finance, generally, most people don’t have much interest in the financial space. The reasons can be debated; but in my opinion, the fact that it doesn’t directly relate on an individual level is probably the reason. Fortunately, BrightScope fixes that problem.

I think it’s safe to say that most people want to eventually be able to retire. No one really wants to work their entire life. However, unless you win the lottery or inherit a large sum, most people will be forced to work a lot longer than previous times. This is exactly why understanding your 401k is critical in today’s tough economic times. This is also where BrightScope steps in.

“Financial education is fundamentally missing from society,” Alfred said. “Education is not there. Products are becoming more complex, but we as a society aren’t there. It’s unfortunate, but pensions and the government aren’t going to be there down the line.”

How Does BrightScope Work?

Unlike the money management resources out there today (think Mint, moneyStands, Quicken), BrightScope isn’t a recommendation platform. Instead, BrightScope is more of a plan management database that provides in-depth quantitative metrics of over 30,000 plans. Again, it’s key to understand that BrightScope is NOT a recommendation platform.

There are three main markets that BrightScope advertises its services for: participants, sponsors and advisors. For the purpose of this blog, we’ll focus on participants and advisors. *Note: this is not to discredit the value it provides sponsors. However, for target market of iFinance, we are choosing to feature participants and advisors. Please contact BrightScope if you are interested in more information about their services if you’re a plan sponsor

1. Participant features

There are two main functions if you’re a 401k participant (meaning you currently employer provides a 401k option). First, you can essential research any company’s 401k plan and receive their BrightScope Rating. This rating provides a variety of information comparing said company’s 401k plan and gives it a numerical rating from 0-100.

For more information on BrightScope Rating, click here.

* Best Buy was randomly selected.

The second feature for participants is the Personal 401k Fee Report, that allows participants to get an in-depth look into their current 401k plan and get a clear understanding of the fees associated with their plan. A lot of 401k participants simply sign up for through their employer, contribute each paycheck and never bother to research the investment options. This fee report allows a participant key information and better understand their investments. Again, focusing on education.

2. Advisor features

For advisors, BrightScope features their Advisor Central platform that allows advisors to integrate benchmarking into their plans, learn how to use benchmarking as both an offensive and defensive strategy and create custom reporting.

“The key value of BrightScope is that we aren’t rating on popularity,” Alfred said. “We’re completely objective and providing a resource for participants to become more educated about what goes into their plan and how it’s working for them. From an advisor standpoint, we’re providing tools that can help them become more efficient.”

What the future holds

Despite this untapped space, Alfred and BrightScope are quick to reittirate that they aren’t the answer to everything. As a result, BrightScope is taking to various social media platforms to create meaningful conversations, as well as blogging about a variety of resources.

“There’s $5 trillion combined in 401k’s,” Alfred said. “So it’s clear that this is a very large space. There are a lot of opportunities that we can focus on.”

Whatever your level of interest and knowledge of the financial space is, one thing is for sure – BrightScope is leading the way in educating the financial future.