JERSEY CITY, N.J.--(BUSINESS WIRE)--Many advisors know that TD Ameritrade Institutional’s1 iRebal® on Veo® can help quickly rebalance client portfolios, manage cash flows and harvest tax-losses, but early users say this time-saving technology does something else even more valuable: restores balance to their workday.
Regular rebalancing is a popular strategy for keeping portfolio allocations on target, yet the traditional process – manually loading positions onto spreadsheets, calculating how many shares to buy or sell, and then executing trades – can take days and even weeks when multiplied across hundreds of accounts. That helps explain why the ranks of RIAs using rebalancing software soared to more than half this year from 31 percent in 2012, according to the latest Financial Planning annual technology survey.2
And the most popular rebalancing technology among independent advisors is iRebal, the survey said. Since its launch in June, advisors say iRebal’s customizable, cloud-based technology – available at no cost to firms on the Veo® brokerage platform – has helped them save enormous amounts of time and offer a higher level of service by streamlining the complex task of rebalancing.
“Before iRebal, we were spending a lot of time on manual processes that weren’t adding value,” said Benjamin Birken of Woodward Financial Advisors Inc., a Chapel Hill, N.C., firm that manages $180 million. “Now, every minute that we’re not downloading positions onto a spreadsheet is time we can spend on higher level planning, meeting clients and talking about their finances.”
A few weeks ago, Birken said he used iRebal to sell two funds for clients that held them, and purchase a new fund for those same clients, completing in an hour and a half work that normally would have taken a month. “That’s the kind of A-Ha! moment every firm will have. The time savings created by iRebal are incalculable,” he said.
The ability to scale up – that is, serve more customers efficiently and profitably – has become a top concern among RIAs since low-cost online advisory firms emerged as a threat to traditional advisors. A growing number of firms are looking to stay competitive by using technology to automate routine tasks and deliver a better experience for consumers with high expectations for service and convenience.
“There’s a lot of talk about people competing against robo-advisors but, at the end of the day, the lines will blur: we will all be technology-assisted advisors. It’s going to be about people utilizing cutting edge technology and iRebal deserves a place in that conversation,” said Josh Brown, chief executive of Ritholtz Wealth Advisors, a New York-based RIA that manages $170 million in client assets. “iRebal makes the whole process of rebalancing and tax-loss harvesting faster and easier.”
WNY Asset Management of Williamsville, N.Y., manages $340 million across more than 3,000 accounts, using model portfolios, WNY research director Joseph Starinsky said. Exchanging a stock or mutual fund, he said, could require hundreds of trades that would take days or even weeks.
“This is one sleek machine: it cuts the time we spend on rebalancing portfolios by more than half, even 75 percent,” Starinsky said. “Our firm has really embraced it. It takes away the stress from the daily trading mayhem and gives me more time to concentrate on my other duties, like research.”
It also handles the nuances of what are complicated transactions. For example, iRebal helps advisors simplify the work of assessing tax implications of portfolio moves at the position level or for each lot, which is especially helpful when clients have multiple accounts. Advisors can set iRebal to calculate the tax impact of trades during rebalancing, streamlining the process of identifying and harvesting tax loss opportunities as they happen, not just at the end of the year.
“I can’t even imagine how long it would take to look at every single after-tax account manually to try to find positions or lots that had losses significant enough to justify the trading costs,” Woodward’s Birken said. “Now we can run that request across the whole client base in a couple of minutes and see all the losses that meet certain parameters. That’s huge. “
Since iRebal on Veo was launched in June, nearly 700 advisors have completed introductory training in workshops and webcasts. New training classes continue to fill up as quickly as they are announced and firms are quickly using the technology to generate trades.
“We’ve been beating down the doors to get access. It’s one of the most important tools we use, because it lets us determine what needs to be rebalanced in minutes and then fire off trades. That’s powerful,” said portfolio manager Donald Capone of J.K. Financial Inc., a Dallas firm managing nearly $100 million. “Advisors won’t know how much time they can save until they use it,” he said.
And because it enhances the value of a firm’s services, it also can be a competitive strength, he said. “This is a tool that many advisors don’t have and so it sets us apart. We have the capacity to know by the minute how our accounts line up and, at the push of a button, attempt to take advantage of moves in the market.”
Ritholtz Wealth Advisors recently sent its clients a report, generated with the help of iRebal, that detailed the results of tax-loss harvesting transactions.
“We live in a day and age when advisors struggle to demonstrate their value,” said Brown. “We want to show all the tools that we bring to bear for the client.”
J. Richard Coe, whose Coe Financial Services in Wichita, Kan., manages nearly $100 million in assets, says iRebal makes his firm more “nimble” by letting him execute trades as potential opportunities arise. Spending less time on routine, labor intensive tasks means more time for more productive activities, from meeting clients and networking to big picture thinking and tactical trading.
“One of the most time sensitive things we do is trading and we want to be able to pursue the delivery of better results to our clients,” he said. “I can’t imagine doing what we’re doing without it.”
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Advisors have not received remuneration for participation in providing these testimonials. Advisor testimonials may not represent the experience of all advisors using TD Ameritrade brokerage services. The advisors mentioned are not affiliated with TD Ameritrade Institutional. More information about the advisors is available on the SEC website (www.adviserinfo.sec.gov).
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.
2 Tech Survey 2015: What's New Now?, Financial Planning, Dec. 1, 2014, http://www.financial-planning.com/news/technology/tech-survey-2015-whats-new-now-2691255-1.html?force_pg=/News/ (Registration required)
Source: TD Ameritrade Holding Corporation