Guide to Portfolio Rebalancing Tools for Financial Advisors

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.

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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.

Here are some options you may want to consider:

iRebal

• Website: https://advisorservices.schwab.com/irebal
• Cost: Free for accounts custodied with Schwab

Originally developed by Ameritrade, iRebal 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: ¹

• Tracking real-time positions
• Developing tax-considerate rebalancing plans
• Facilitating dynamic tax loss harvesting
• Automating trades
• Managing models with security allocations
• Overseeing portfolio allocations, including allocations for separately managed accounts
• Creating audit trails for compliance reporting purposes
• Generating reports to review asset allocations at a glance

iRebal is a tax-aware 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.

Orion

• Website: https://orion.com/advisor-tech/trading
• Cost: Request a demo to learn more

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
• Daily tax loss harvesting capabilities
• Cash monitoring and management

Orion also alerts advisors to tax-loss harvesting opportunities and keeps track of wash sale periods to help avoid violations. You may purchase Orion Trading by itself or as part of the Essentials or Advantage Stacks. Stacks include additional tools for prospecting, financial planning, investing and reporting. Pricing ranges from $12,000 to $28,000 annually. ²

FinFolio

• Website: https://www.finfolio.com/rebalancing
• Cost: Schedule a demo to learn more

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: ³

• Rebalance thousands of accounts in minutes, either 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

• Website: https://www.envestnet.com/tamarac
• Cost: Request a demo to learn more

Tamarac, now part of Envestnet, encompasses a variety of tools and it’s designed to be a comprehensive solution, for registered investment advisers. In addition to trading and rebalancing, the platform supports client onboarding, performance reporting, billing and reconciliation within a unified system.

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

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

Tamarac also provides onboarding and ongoing support, including training resources and guidance on implementation. This support structure can help advisory firms adopt the platform and align it with their operational workflows.

AdvisorEngine

• Website: https://www.advisorengine.com/wealth-management-technology/rebalancing
• Cost: Schedule a demo to learn more

AdvisorEngine enables advisors to build more efficient client portfolios with a scalable rebalancing approach. This rebalancing platform allows you to manage an unlimited number of portfolios while accounting for individual clients’ needs, goals and risk tolerance.

With AdvisorEngine, you can: ⁴

• Use automated workflows to simplify and streamline the rebalancing process
• Build and manage bespoke client portfolios based on your preferred customizations
• Execute a variety of tax management strategies, including loss harvesting, short-to-long term gains deferral, permanent gains deferral and tax-sensitive transition
• Rebalance automatically through a user-friendly, comprehensive control panel
• Efficiently manage clients’ cash flow needs
• Manage diversified UMA portfolios with multiple sleeves
• Offer an enhanced client portal for convenience and a better client experience

Compliance support is built in, as is a trade review process. AdvisorEngine also offers products that are designed to help with other needs, such as new client onboarding, goals-based financial planning and investment management.

Black Diamond

• Website: https://www.sscblackdiamond.com/
• Cost: Request a demo to learn more

Black Diamond is a full-service wealth management platform for financial advisors that offers trading and rebalancing, among other features. With Black Diamond, you have access to:

• Enhanced modeling
• Tax-efficient rebalancing, with strategic asset location
• Proactive monitoring
• Seamless trade processing

More than 1,900 advisory firms rely on Black Diamond for rebalancing and trading. ⁵ It’s a sought-after source for turnkey wealth management services.

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Benefits of Using Portfolio Rebalancing Tools

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.

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Bottom Line

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

• SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• 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.

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