Email FacebookTwitterMenu burgerClose thin

Guide to Portfolio Rebalancing Tools for Financial Advisors

Share
A financial advisor using a portfolio rebalancing tool to to create customized portfolio solutions for clients.

When deciding what to include in your financial advisor tech stack, portfolio rebalancing tools are a must-have. Rebalancing software makes it possible to create customized portfolio solutions for clients while allowing you to scale your business more efficiently. Portfolio rebalancing tools offer a comprehensive range of features and benefits, ideally at an affordable cost.

Ready to grow your client base? SmartAdvisor helps you connect with leads.

Portfolio Rebalancing Tools for Financial Advisors

Rebalancing software programs aren’t identical and it’s helpful to know how to compare them when deciding which tools to implement in your business.

At a minimum, any software you choose should allow for automated portfolio rebalancing, asset allocation modeling, tax management and customization options. User experience also matters as no matter how many features a rebalancing tool includes, it may not work for you if using it feels like a headache. Below are some options you may want to consider:

iRebal

iRebal was originally developed by Ameritrade and is now offered through Schwab following the merger of the two companies in 2020. This rebalancing tool is built into the Schwab Advisor Center and is designed to help advisory firms handle rebalancing more efficiently and cost-effectively.

In terms of features and functionality, there’s a lot that you can do with iRebal, including:

  • Developing tax-considerate rebalancing plans
  • Managing models with security allocations
  • Overseeing portfolio allocations, including allocations for separately managed accounts
  • Creating audit trails for compliance reporting purposes
  • Generate reports to review asset allocations at a glance

iRebal is a tax-considerate rebalancing tool, meaning that it considers predetermined tax implications in its algorithm. That’s an advantage as it can make it easier to identify tax-loss harvesting opportunities for your clients. iRebal is also equipped to help you avoid conflicts with the wash-sale rule when executing trades to harvest losses.

Orion

Orion offers comprehensive, tax-intelligent trading software that incorporates rebalancing tools. It’s designed to help advisors streamline back-office operations using automated workflows.

Some of the key features of this tool include:

  • Household-level rebalancing
  • Multilevel modeling
  • Simplified trade order processing
  • Custom views and workflows
  • Cash monitoring and management

Orion also alerts advisors to tax-loss harvesting opportunities and keeps track of wash sale periods to help avoid violations. If you’re looking for an all-in-one solution for your firm, the Orion Advantage Stack includes a full suite of tools for prospecting, financial planning, investing and reporting.

FinFolio

FinFolio is a portfolio rebalancing software that allows you to create multi-currency and tax-efficient trades. This tool can streamline and integrate trading activities into your back office, regardless of which trading strategy you prefer.

Here are some of the things you can do with FinFolio.

  • Rebalance accounts on a case-by-case basis or automatically following a regular schedule
  • Maintain multiple UMA sleeves within a single account or develop strategies that include separately managed accounts
  • Establish rules and restrictions for trading, including position minimums, rounding rules and minimum holding periods
  • Complete tactical trades outside of your established models
  • Manage cash in client portfolios
  • Harvest tax losses for maximum efficiency
  • Track drift across assets in order to bring them back in line with investment targets

FinFolio also includes a confirmation step to allow monitoring of all trades for compliance reporting. It’s a fully integrated app so you don’t need to sync it with your customer relationship management software or reporting systems.

Tamarac

Tamarac encompasses a variety of tools and it’s designed to be a comprehensive solution for registered investment advisers. In addition to trading and rebalancing, this software allows you to handle client prospecting and onboarding, reporting, billing and reconciliation all in one place.

With regard to trading and rebalancing, here’s what Tamarac has to offer:

  • Impressive modeling capabilities
  • Daily portfolio monitoring to track drift across asset allocations
  • Cash management functionality
  • Directed trades
  • Tax-loss harvesting
  • Real-time pricing
  • Trade reconciliation and straight-through processing
  • Integration with other tech tools, including Salesforce

Along with all the tools you need to rebalance client portfolios, Tamarac also provides strong support and service. The support team is available to help you through the initial onboarding and training process, and they can offer tips on best practices to follow when implementing the software.

Morningstar Total Rebalance Expert

Morningstar Total Rebalance Expert is a customizable tech tool that’s designed to help advisors increase tax savings for their clients while maintaining target asset allocations and reducing fees. Automatic rebalancing allows you to save time while managing client portfolios more efficiently.

With Total Rebalance Expert, you can:

  • Review client portfolios in real-time
  • Generate reports to gauge tax impacts at a household level over time
  • Drill deeper into models to estimate the potential tax impact of trade decisions

Tax-loss harvesting is fully automated within the software and runs daily. Like other portfolio rebalancing tools included here, Morningstar Total Rebalance Expert is also equipped with cash management capabilities.

Benefits of Using Portfolio Rebalancing Tools

A financial advisor using portfolio rebalancing software.

Using portfolio rebalancing software can offer several advantages for your business, regardless of its size or the types of clients you serve. Here are some reasons to consider incorporating rebalancing tools into your operations:

  • Simultaneous rebalancing: Manually rebalancing client portfolios can be exceptionally time-consuming, especially if you have a larger book of business. With rebalancing tools, you can rebalance thousands of accounts at once, adding valuable hours back into your day.
  • Tax management: Tax-loss harvesting can be hugely beneficial to your clients when done correctly. Rebalancing tools can ensure that you’re not missing any opportunities to increase the tax efficiency of portfolios and that you’re not violating the wash-sale rule with trades.
  • Drift tracking: Rebalancing tools make it easier to track drift across client accounts so that you can rebalance them as needed. A good software tool should allow you to establish minimum and maximum levels of allowable drift and alert you when asset allocations move outside those ranges.
  • Streamlined rule-setting: Rebalancing tools make it easier to establish rules and guidelines for order creation and execution across multiple accounts. Again, that can save you time versus having to create orders manually.
  • Cash management: Cash management can be burdensome but rebalancing tools can alleviate some of the strain. For example, your software could allow you to deposit or withdraw cash from client accounts or realign cash levels using the most efficient number of trades possible.

Analyzing your current portfolio rebalancing strategy and how well it’s working can help you estimate the potential benefits you might gain by switching to a new software program.

Bottom Line

A financial advisor comparing portfolio rebalancing tools.

There are many different portfolio rebalancing tools out there to choose from and we’ve just scratched the surface with the ones mentioned above.

Taking time to compare the various features, benefits and pricing options for different rebalancing programs can help you find an option for your firm.

Tips for Growing Your Advisory Business

  • Portfolio rebalancing is just one of the many ways you can leverage tech tools for your business. Online lead generation tools, for example, can allow you to connect with prospects without spending hours making cold calls or sending marketing emails. With SmartAdvisor, you can connect with leads and increase your online visibility in less time.
  • It’s possible that you might have access to portfolio rebalancing tools or other tech software through your RIA custodian. iRebal, for example, is available to advisors who use Schwab as their custodian. If you’re in the market for a new custodian to work with, ask what software solutions they provide, if any.

Photo credit: ©iStock.com/dima_sidelnikov, ©iStock.com/vm, ©iStock.com/Antonio_Diaz

...