Upgrading to the cloud-based iRebal marketing automation platform three years ago was a major turning point for Denver-based advisor Debbie Freeman.
She had been using rebalancing software since 2008, but this brought her practice to a whole new level.
“It’s helped us in multiple ways,” says Freeman, a CFP and a principal and the director of financial planning at Peak Financial Advisors.
“The most obvious benefit is time savings. Many advisors discount the true cost of their time spent on manual rebalancing,” Freeman says.
“Manual rebalancing is a huge waste from a time management standpoint,” says former planner Damon Deru, the founder and president of TradeWarrior Software in Layton, Utah, a developer of portfolio rebalancing and account management tools.
“It would take us about 20 minutes to rebalance one client household,” he says. “Multiply that by hundreds of client households every quarter, and it became virtually a full-time job for me.”
Deru and his team in April combined their firm with Chicago-based Oranj, a digital advice platform that merges automation with high-tech service to strengthen relationships between clients and their advisors.
More and more other managers and advisors are taking the same path to automate the task.
“It is more efficient; it’s much less prone to error; it also ensures a uniform process,” says Joel Bruckenstein, a columnist for Financial Planning and expert on applied technology for financial professionals. “If you have a process built into the machine, it’s going to guarantee that the rebalancing is done in a uniform fashion across your client base.”
A recent survey for the publication done by Bruckenstein, publisher of T3TechnologyHub.com, points up that advisors need to leverage the technology to maintain a competitive edge in the industry.
And, no surprise, younger advisors, in particular, have been rebalancing the software to their advantage, with about 62% employing new technology, compared with 53.4% of all advisors.
The merger between TradeWarrior and Oranj combined two solutions into one wealth manager software solution called MAX (Manage, Advise, Experience), which is about to be introduced to the market.
David Lyon, founder and chief executive of Oranj, points out that investment management firms, such as BlackRock, entry-level solution ETF Securities, Frost Industries Advisor and Morningstar Managed Portfolios, host model portfolios and funds on MAX’s wealth management software at a fraction of the cost of other systems.
Other portfolio and rebalancing solutions include Envestnet. On the higher end, according to industry sources, iRebal is the market leader with a nearly 10% market share, followed by companies such as Tamarac.
This story is part of a 30-30 series on how technology is changing your practice.