Rebalancing is an essential part of investing. It helps keep your clients’ portfolios on track and minimizes those gut-churning drops that often translate into ear-ringing panicked phone conversations. But while rebalancing is important for your clients’ sanity, the process of doing it can take a toll on your own sanity.
A tedious task, rebalancing client portfolios can mean building convoluted spreadsheets to track your clients’ allocations within each of their portfolios, then crunching the numbers to determine how many shares to trade to get your clients back to their target. It can be such a tiresome exercise that many advisors subject themselves to it only once per year.
[Read: Product Q&A with BNY Mellon.]
Designed for registered independent advisors, TD Ameritrade Institutional’s iRebal monitors and manages client portfolios. The tool alerts advisors when a rebalance is needed and recommends trades to be placed. Good news: It works for both active and passive strategies.
Read interview excerpts from our conversation with Justin Di Filippo, director of technology solutions at TD Ameritrade Institutional. He discusses how advisors can use iRebal to rebalance their clients’ portfolios.
Tell us about iRebal and how it works. How does it help advisors through the rebalancing process?
When certain portfolio conditions are met, iRebal alerts the advisor so that they can, at their discretion, instruct iRebal to implement portfolio allocation decisions and execute all requisite trades. Advisors also can automate portfolio monitoring by scheduling workflows to analyze portfolio conditions. Only those portfolios that satisfy an advisor’s preset conditions will show recommended orders.
We recognize that the clients of advisors each have unique circumstances that must be accounted for, like security preferences, restrictions and loss targets set to offset gains, to name a few.
With iRebal, advisors can configure the software to think like they do with respect to client-specific situations.
More broadly, RIAs use iRebal to institutionalize and systematize portfolio management and trading practices. Institutionalize means all clients within the same firm will be treated consistently, irrespective of the relationship manager or advisor. And when we say systematize, it means that in the absence of an individual advisor, the firm’s investment management function can continue to be carried out for clients.
By creating a framework, it helps advisors be more disciplined in executing on a client’s investment plan.
The biggest benefit for advisors is the scalability it can bring to an advisor’s practice. Portfolio management and trading activities that used to take weeks to perform can now be implemented in hours or less. This frees the advisor to focus on value-added activities, such as building client relationships, business development or strategic planning.
How would advisors use iRebal in their daily practice?
It helps to think of iRebal as a technology that gives traditional advisors the ability to automate this whole process, letting them manage and adjust portfolios with much greater efficiency. iRebal can rebalance portfolios, but it also will swap out individual positions, harvest tax-losses, generate cash or put new cash to work.
[READ: Q&A: Riskalyze.]
Advisors use iRebal for real-time client portfolio monitoring as well as the disciplined implementation of cash, investment allocations and trading strategies.
How is iRebal different from competitor software?
When it came on the scene a decade ago, iRebal was the first, true, household-level portfolio-rebalancing solution.
We bought the software from its founders and began educating advisors about the benefits it could offer. We have accumulated more than a decade of intellectual capital from working with RIAs large and small. That knowledge is built into the tool, to make it even better.
[Our] expertise carries through into daily support and consultant interactions and — paired with our trade execution services — provides value not just to advisors but also their clients.
What installation and technical support do you provide? Do advisors need to use Veo One to use iRebal? Or can iRebal be integrated with legacy software?
iRebal is a cloud-based software as a service (SaaS) that’s fully integrated into Veo One, TD Ameritrade’s next-generation brokerage and custody platform for RIAs. Our only requirement is that an advisor must have a custody relationship with TD Ameritrade Institutional.
How much does the service cost?
iRebal is available at no cost to advisors who custody with us.
What is the most important trend influencing your business right now?
We keep looking for new ways to leverage the power of iRebal and to help more advisors take advantage of the technology. We are focused on improving the user experience, such as simplifying workflows to make this technology accessible to an even wider range of advisors. More recently, we embedded model analytics powered by a firm called FinMason, and we offer new ways for third-party Veo-integrated technology firms to integrate their solutions directly with iRebal’s capabilities.
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