Top Rebalancing and Trading Tools Overview

In addition to CRM, financial planning, and portfolio management tools, every financial advisor uses rebalancing and trading tools. Rebalancing software is considered one of the most influential forms of WealthTech technology because it is used on a regular basis to readjust levels of asset allocation and protect investors from undesirable risks.

Today, we offer you an overview of the rebalancing and trading software tools most used by financial advisors, according to the T3 report. The tools are listed below from highest to lowest market share in 2020.

iRebal

Source: T3 report

TD Ameritrade provides its iRebal rebalancing software in two versions:

• iRebal Standalone Software, which is available for a licensing fee
• iRebal integrated into Veo, available for free for accounts held with TD Ameritrade Institutional

Regardless of the version, iRebal is a customizable, rule-based program designed to facilitate complex investment management and rebalancing processes. Financial advisors may rebalance using their unique approaches, while iRebal helps to keep them tax-efficient. In addition, financial advisors may rely on dynamic cash management and tax-loss harvesting.

“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.” — Justin Di Filippo, director of technology solutions at TD Ameritrade Institutional

In November 2019, Schwab and TD Ameritrade announced their plans to merge in late 2020. Recently, Bernie Clark, head of Schwab Advisor Services, said that they will import iRebal and make this rebalancing tool the part of their new platform.

Envestnet | Tamarac

Source: T3 report

Envestnet | Tamarac provides portfolio management, reporting, trading, rebalancing, and client portal solutions for RIAs that empower them to operate with greater efficiency and profitability while delivering a high level of service to their clients. Tamarac improves the trading process while adhering to preferred investment strategies, custom account settings, restrictions, and tax sensitivity settings.

In addition to portfolio rebalancing, with the click of a button, Tamarac allows advisors to automate their model portfolio construction and management, monitor their accounts for trading triggers, make tactical trades, execute trades directly with their broker, and reconcile trades from the previous day.

The list of features includes the following:

• Model portfolio construction — Efficient management across thousands of investors with different goals, risk tolerances, and investment objectives
• Daily portfolio monitoring — Instant look across all accounts and households for any custom criteria
• Cash management — Easy-to-maintain proper cash reserves for each client’s unique needs that adhere to the model, account restrictions, and tax sensitivity settings
• Directed trades — Tactical moves, focusing on individual securities across one or many client accounts outside the model constraints
• Tax management and tax-loss harvesting — Automated tax loss harvesting strategies at the individual security level or across the entire account
• Rebalancing — Advantage of an “always on” rebalancing method and rebalancing accounts as they meet requirements
• Real-time pricing — Calculating trades with real-time pricing for US equities and ETFs listed on US stock exchanges, including NASDAQ, NYSE, NYSE Alternext, and over-the-counter exchanges
• Trade reconciliation — Automated review process of logged trades against executed trades from a custodian
• Straight-through processing — Execution of mutual fund, ETF, and equity trades directly from Tamarac Trading

Orion Advisor Services

Source: T3 report

Orion Advisor Services offers a fully integrated trading suite that includes a tax-intelligent rebalancer, custom SMA optimizer, and robust model marketplace and empowers firms to personalize client portfolios while scaling back-office processes.

Orions’ Eclipse enables advisors to streamline tax-efficient rebalancing, improve portfolio outcomes, and enhance back-office operations:

• Household-level rebalancing, asset location optimization, and a tax-forward method to trading allow advisors to scale their back-office processes.
• FIX Connectivity allows aDVISORS to send trade orders directly to participating custodians.
• Advisors can customize their views and workflows to take quick action on tax-loss harvesting opportunities, out-of-tolerance portfolios, or cash needs.

The list of features includes the following:

• Household-level rebalancing allows advisors to take advantage of asset location strategies to decrease their number of trade orders.
• Multilevel modeling enables advisors to include separately managed accounts, custom security sets, equivalents, and substitute assets in their model allocation.
• Tax-intelligent trading provides advisors with automatic alerts to tax-loss harvesting opportunities, and lets them know immediately when wash sale periods have passed.
• Straight-through processing for sending orders directly to custodians via FIX connections, so advisors no longer have to download and upload trade orders manually.
• Custom views & workflows help advisors stay informed about out-of-tolerance portfolios, cash needs, and contributions and distributions.
• One-off trading to make tactical adjustments on individual portfolios and minimize trade costs and tax implications prior to execution.
• Advanced cash monitoring allows advisors to create unlimited cash buckets for billing, monthly distributions, large upcoming purchases, or other requirements.

In times of COVID-19 pandemic, Orion Advisor Services provides a “Business as Usual” program for advisory firms unable to access legacy software from home: Advisors who sign up for Orion’s cloud-based services will receive prioritized onboarding, free access to the company’s suite of technology through July 1 and deferred payment through October 30.

Read the research on Orion Advisor Services on WealthTech Club.

Black Diamond

Source: T3 report

Black Diamond Rebalancer is fully integrated into the Black Diamond Wealth Platform and allows financial advisors to work with even the most complex portfolios. Its open layout, intuitive workflows, and robust functionality enhance advisors’ every-day portfolio and ability to meet client management needs.

The core functionality of the Rebalancer includes the following:

• Enhanced modeling
• Tax-efficient rebalancing
• Proactive monitoring
• Straight-through trade processing via FIX
• Secure approval workflows and notifications

Morningstar tRx

Source: T3 report

Morningstar Total Rebalance Expert (tRx) helps financial advisors streamline their business through efficient rebalancing and portfolio management.

Morningstar tRx’s core feature list includes the following:

• Analysis experts –– Advisors through tRx are available to instantly analyze and view results, and identify which clients require action.
• Rebalancing — tRx calculates trades while considering defined parameters, maximizing tax savings, minimizing transaction costs, and avoiding redemption fees. Additionally, tRx allows advisors to compare and choose trades with or without location optimization, based on costs vs. tax savings.
• Cash management — tRx automatically considers cash requirements at the model, account, and client levels.
• Tax loss harvesting — Advisors can harvest tax losses opportunistically, creating ongoing tax savings and avoiding the year-end crunch.
• Savings reports –– Advisors can automatically quantify tax savings for their clients by generating savings reports on tRx.

Smartworks Adviser (by Cetera)

Source: T3 report

Cetera Smartworks Adviser delivers the underlying technology to support the operations of each advisory program. In addition, it advances custom technology features that were specifically designed to help manage advisors’ business more effectively.

The list of features offered includes the following:

• Sophisticated account management to set models and drift tolerances at the security, asset class, and asset type levels.
• Streamlined rebalancing features to quickly align accounts based on a drift threshold relative to their models, or schedule rebalancing for a specific calendar date.
• Blast trading to execute trades across multiple accounts instead of individually entering a trade for each client. Advisors can trade even faster for accounts with discretion.
• Drift dashboard to automatically view drift summary statistics and rebalance accounts directly from the dashboard. Advisors can also use the dashboard to generate detailed drift reports for individual accounts on the fly, using real-time prices, positions, and balances.
• Customizable alerts. Advisors can configure alerts to notify clients of security and cash drift, and schedule a date to rebalance an account or to remind them of account anniversary dates.

AdvisorPeak

Source: T3 report

AdvisorPeak provides powerful trading and rebalancing software supported by an experienced team with more than a decade of experience building software solutions for the wealth management industry.

AdvisorPeak makes it easy to manage allocation models, from simple to complex. The algorithm monitors households and accounts and provides real-time data for quick decision-making.

AdvisorPeak’s persistent monitoring algorithms provide real-time data and alerts based on each advisor’s unique settings. Advisors can set custom trade minimums and trading fee thresholds. The platform allows for drift percentage from the target, optimizing for tax savings, and bulk trading with rapid precision.

In April, AdvisorPeak announced its trading and rebalancing platform free of charge for investment advisors through the end of the second quarter 2020.

“We realize many advisors don’t have the necessary software in place to manage their client accounts in a streamlined manner, which is why we decided to make our software available to all investment advisors at no cost through the end of the second quarter. It’s our way of helping advisors through this difficult period.” — Damon Deru, founder and CEO of AdvisorPeak

Bottom line

During uncertain times of pandemic and economic crisis, financial advisors may trade more often than usual to keep clients aligned with their original model of asset allocations and safeguard them from undesirable risk. This is why rebalancing software has become crucial today. Given that some advisors may be unable to use their legacy desktop software, some WealthTech companies have cut or even eliminated fees to provide advisors with online technology. Kudos!