Technology Update

Another tool to help re-balance the books

Financial adviser's automated process joins at least four other competitors'

Jan 22, 2012 @ 12:01 am

By Davis D. Janowski

Nine years ago, adviser Rich Chambers got frustrated.

At the time, there were no tools available for him to re-balance his book of business. Mr. Chambers had to re-balance his accounts manually, using a spreadsheet, just like other financial advisers, many of whom do that to this day.

A former programmer, he realized that there had to be a better way.

Using Microsoft Excel, Mr. Chambers set out to automate the process himself.

His pet project has evolved to a point where he is almost ready to turn it into a product.

Mr. Chambers has even set up a side business, Advisor Innovation Inc. (, to finish development of RebalanceMax and begin selling it to advisers on a commercial basis.

“RebalanceMax is really most suited for people currently doing their re-balancing with Microsoft Excel but who find it too tedious,” he said.

Mr. Chambers' three-person advisory practice, Investor's Capital Management LLC, which has $175 million in assets under management, has been using the system for nearly a decade.

“We went the automation route and are looking for folks that want to go that route, too, but don't have the time to develop it themselves,” he said.

Mr. Chambers has begun inviting other advisers to help him work out the remaining bugs.

Thus far, he has signed up three registered investment advisory firms, charging each $2,000 a year to use it. Mr. Chambers would like to enroll an additional seven firms at the same rate.

A total of 10 firms would allow him to break even on the cost of the part-time professional programmer that he has hired to complete the advanced development work, he said.

Lest firm owners think that they would be unknowing guinea pigs, Mr. Chambers said that his solution actually provides a lot of transparency and will appeal most to those advisers who are seeking clarity as part of their re-balancing efforts.

“It is really for firms that like to be hands-on. With our program, you can see every trade being made before they are submitted and the impact on the client's portfolio is therefore more obvious — you know exactly what will happen,” Mr. Chambers said.


RebalanceMax will join a market that includes four well-regarded (for the most part) and fairly well-established independent players. There are others, but these four are the most widely used.

I will spend the least ink on the two largest, which are veteran players that most advisers will already know: iRebal and Tamarac Those two have the deepest feature sets and depth and cater to the largest firms, with a price tag to match.

iRebal is the creation of ThinkTech Inc., now a subsidiary of TD Ameritrade Inc., and competes most directly with the re-balancing module of Tamarac, which in the past few years has put a lot of effort into development of an RIA platform centered on that re-balancing engine (see the online version of this story for links to stories on these two).

If these two offerings are at the apex of the re-balancing food chain, think of Rebalance Express from RedBlack Software LLC and Total Rebalance Expert as the intermediate offerings.

Each of these competes with the previously mentioned gorillas in the market, but they have been around only for a few years.

Although both have billion-dollar-plus firms as customers, each also will appeal to many firms in the same assets-under-management range as Mr. Chambers' firm and those he is targeting with RebalanceMax.

The minimum entry-level cost for each is $5,000 a year, but most firms spend somewhat more, topping out at about $10,000 annually. In the case of RedBlack's modular set of offerings, firms with a large number of accounts and multiple modules can spend more, but typically not more than $20,000 per year.

Although the costs and savings will vary from firm to firm, what is beyond dispute is that there are significant savings to be had from automated re-balancing.

The most recent data available are from a December white paper recently published by Total Rebalance Expert and shared with InvestmentNews by the company's founder, Sheryl Rowling. She launched the company in mid-2010 and now has 60 RIA firms as customers.

Ms. Rowling surveyed 20 user firms with assets under management ranging from $50 million to $1 billion and found that on average, they saved 330 hours a year by automating re-balancing.

In her calculations, this came out to $325,000 in “total average annual benefit,” basically the average amount of revenue that the typical firm in her survey could make working with more clients, using the time saved.

Another way that Ms. Rowling frames it is that the savings comes out to 27 times the cost of the software.

“Over two-thirds of [the firm's] users estimate increased capacity of $25 to $100 million AUM,” she wrote in a follow-up e-mail.


I asked Pete Giza, chief of technology and business development with RedBlack Software for similar data.

“On average we see $40,000 to $50,000 per year in labor savings for a one-man shop, and that is savings year-to-year. For an average firm, it is in the range of $55,000 to $60,000,” Mr. Giza said.

“We have found that the average firm with hundreds of accounts is spending 21 man-days a year per book to re-balance without software,” he said.

Although the message behind the findings won't be disputed by any of the companies in the re- balancing space — namely that regular re-balancing is good for both advisers and clients, and that re-balancing software will save the former lots of time to make more money — the actual results will vary from firm to firm and product to product.

Links to companies and products:

For more information visit the home of RebalanceMax (Advisor Innovation Inc.) online.

Here are links to the other products and companies mentioned in this story:

iRebal from ThinkTech Inc.

Rebalance Express from RedBlack Software LLC

Tamarac Inc.

Total Rebalance Expert

Related stories:

Shareholders Service adds RedBlack and TRX to the mix

A modular approach to rebalancing [Rebalance Express from RedBlack]

New rebalancing solution cost-effective for smaller firms [Total Rebalance Expert; TRX]

LPL Financial rolling out new portfolio rebalancing technology

Tamarac takes a leap by offering a single solution

Tamarac announces new Advisor 9 and outsourced services

Fidelity platform on schedule, [Northfield used for rebalancing]

Fidelity, Pershing, Schwab, TD in a tech 'arms race'

Top rebalancing-software vendors duke it out for new customers


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