A modular approach to re-balancing

Small advisory firms shopping for modestly priced portfolio re-balancing and trade order management software might want to look into Rebalance Express.

The software offering, from RedBlack Software LLC, is being used by 30 investment advisory firms that manage assets ranging from $20 million to more than $1.2 billion.

The company uses a modular approach to building software, which is one of its key differentiators, said Peter Giza, chief of technology and business development.

For example, financial advisers who take a household approach to wealth management can buy a household re-balancing and location optimization module. Other modules include models of models, asset class modeling, intraday fill simulator and multifirm support.

“We do easy data imports and exports, and we are custodian-agnostic — we don’t care who you are custodying or trading with,” said Mr. Giza, noting that RedBlack works with the custodian units of The Charles Schwab Corp., Fidelity Investments, Pershing LLC and TD Ameritrade Inc.

The minimum price of the product is $5,000. Depending on the modules selected and assets under management, the cost goes up from there.

For example, for a single-user advisory firm with $100 million to $150 million in assets under management, the reporting and securities-modeling modules typically would cost $8,200 a year.

If a firm turned on all options, the cost would be just under $10,000, according to Mr. Giza.

Echelon, the company’s flagship version of Rebalance Express, includes every option and several modules. For the single-user firm described, the product would cost about $14,500 a year.

Prices exclude training and implementation costs, which can vary greatly depending on the number of advisers involved and the number of accounts set up.

Two factors that attract customers are the many model options available in the software and the ability of advisers to perform re-balancing quickly across all their accounts.

Erin Hynek, an investment analyst with the registered investment advisory firm O’Sullivan Creel Wealth Advisors LLP, has used the software product for a year. The firm, which manages $185 million in assets and whose name was provided by RedBlack, previously used the iRebal re-balancing product that is now owned by TD Ameritrade.

Mr. Hynek said that two factors — cost and expediency — were what initially led the firm to purchase Rebalance Express. His firm was able to set up the system in just a few days, and the interface proved intuitive to learn.

“One reason it appealed to me was that it was just so similar to something that we had done historically in spreadsheets at my previous firm; it worked in a way similar to the way I already did in terms of work flow,” Mr. Hynek said.

He said that unlike some firms that do batch re-balancing, O’Sullivan Creel re-balances on an account-by-account basis. With the help of the software, he can get through the process for the firm’s entire client base in a few weeks.

“It just makes us more efficient. At a time when our revenues went down, due to sell-offs in the market, we really needed a way to streamline our process and cut the time it took us to re-balance our accounts,” Mr. Hynek said.

The software can be run either on a desktop or hosted by an outsourced service provider and has been built based on open data architecture using Microsoft SQL Server, as well as a cloud-enabled architecture designed around Microsoft.Net technology.

At McQueen Ball & Associates Inc., which manages $900 million in assets, account manager Jason Henninger has spent considerable time with the software over the five months it has been in use.

Mr. Henninger, who also was referred by RedBlack, said that he received quotes from other firms before selecting Rebalance Express, which he felt was the most cost-effective. He said that his firm will spend $17,000 on the software and all its modules.

Aside from cost, Mr. Henninger said, the intuitiveness of the software’s interface was what sold him on the product.

“We have very complicated accounts,” he said. “If you look back over the 30 years of legacy positions we have, there are so many variations that make it tough to get everyone into a model overnight, but once you have invested the time in setting everything up, there’s no way you could go back to doing this manually.”

E-mail Davis Janowski at [email protected].