You can SAVE TIME with AdviceCloud's Client-Centric Rebalancing

One of the most crucial functions advisors and their teams implement for clients is keeping their portfolios on target. Particularly for advisors that are charging based on assets under management; it is important to do a great job managing the assets. As firms grow their client base and clients transfer over legacy positions, it can be difficult to align their current portfolio with your desired investment model while not creating a massive tax bill for them. This is where our client-centric, tax-aware rebalancing process can SAVE YOU LOTS OF TIME!

AdviceCloud includes a tax-aware, household-level rebalancer with features that give financial advisors the ability to fine-tune their managed portfolios. A bit more about our solution:

AdviceCloud allows users to create sleeves, sometimes referred to by other terms such as "sub-models" or "models of models." Sleeves allow users to define reusable sub-models that can be mixed and matched to create a complete investment model. For example, an advisor can use sleeves to create tranches of securities grouped by asset class, region, or risk level, which they can then combine and weight just like any other security to create a final investment model.

When creating an investment model or a sleeve in AdviceCloud, an advisor selects the securities and weights that they want in that model. We refer to these securities as primary securities. AdviceCloud also has the concept of secondary securities, which are securities that can be substituted for primary securities. Secondary securities are useful for defining substitutes that are equivalent to one another from an investing standpoint, such as different ETFs that all track the same index. They can be used for tax-loss harvesting, or to reduce the amount of trading that occurs when migrating a household's existing portfolio to a target one (since many clients have legacy positions that are very similar to your preferred security).

Once your sleeves and models are defined and your relevant substitutes are added, you are now ready to assign those models to client accounts or households. You can also place specific restrictions on either the account or household - such as "do not sell X", "do not buy X", "hold X until there is no capital gain due", etc. AdviceCloud allows advisors to mix and match the investment models that are assigned to a household's individual accounts, if they choose or assign a single model across the accounts in a household. We combine the investment models assigned at the account level and then work them into the household model by offsetting risk or asset categorizations in other accounts that would otherwise be over or under weight.

Once models are created and assigned to households, AdviceCloud monitors each portfolio and recommends rebalances if they veer too far from their target portfolio. When determining how to rebalance a portfolio, our software considers several variables and parameters to determine how to best trade against that portfolio to reach an optimal target. AdviceCloud takes into account factors like how much cash is available, what the tax consequences are, the portfolio's growth/defensive allocation, the portfolio's asset class breakdown, which accounts within a household are over or under weight based on risk or security weights, and much more.

Once each client-centric portfolio target is determined, the rebalancer creates a plan with the specific trades to get the household back on target. All rebalances in AdviceCloud require user approval; we do not submit trades automatically without first receiving human input, as we recognize that there is often some knowledge or intuition that a financial advisor has that may make a proposed rebalance sub-optimal. Users can edit the individual trades in a proposed rebalance before approving and ultimately submitting them to their custodian.

Automated rebalancing is just one way in which AdviceCloud helps financial advisors by eliminating the busy work involved in their day-to-day operations. To see more about what capabilities AdviceCloud has to offer, please check out our Product Features page.