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One Tool With Six-Figure Savings Potential

Implementing rebalancing software can yield significant savings in both overhead and time spent managing client portfolios.

Bill Winterberg, 06/14/2012

Managing investment portfolios on behalf of clients is a core service offered by nearly all financial advisory businesses. Regardless of whether a passive or active investment philosophy is followed, advisors can spend considerable resources aligning portfolios with their clients' needs and goals. The resources required to manage portfolios can grow considerably as a firm acquires more clients and gathers more assets under management.

Advisors at growing firms want efficient portfolio trading and rebalancing solutions that not only save time and overhead, but also considerably cut down the rate of trading errors that can directly impact the firm's bottom line. One solution that offers the potential for a significant return on investment for advisors is Total Rebalance Expert.

Total Rebalance Expert
San Diego, Calif.-based Total Rebalance Expert (TRX) was founded in 2007 and first introduced its eponymous rebalancing software to the financial-services market in 2010. TRX is the product of a collaboration between Sheryl Rowling, the company's current CEO, and Cheryll Lurtz, TRX's CIO.

The company advertises TRX as a tax-efficient and easy-to-use rebalancing solution for financial advisors. Rowling, a self-described "compulsive perfectionist CPA," brings more than 25 years of experience managing registered investment advisory firms and is also the principal of Rowling & Associates, a registered investment advisory firm and CPA firm also in San Diego. Lurtz directs the technical development behind the scenes at TRX, overseeing software engineering efforts and new integrations.

Implementing TRX
TRX originally integrated exclusively with Schwab Performance Technologies® PortfolioCenter. Today, integrations have grown to support many of the most widely used portfolio management software programs, including both Black Diamond and Axys from Advent Software Inc., as well as Morningstar Office, Orion Advisor Services, and FinFolio.

TRX supports flexible installations, as advisors can load it on their own local server, use the cloud-based solution from TRX, or elect to have a third-party provider host the program on outsourced infrastructure. Once advisors identify the location of their portfolio management software database, TRX imports necessary data on account positions and security pricing through an automated import process. Portfolio rebalancing depends heavily on accurate asset class identification of mutual funds and ETFs, so TRX allows advisors to either obtain asset class information from their portfolio management software or specify their own asset classes manually.

The main screen of TRX has two menu tabs at the top, one labeled TRX Manager and one labeled Configuration. The Configuration menu is where advisors will find an extensive list of options to define settings and preferences to be applied globally across the program.

Global settings allow advisors to set preferences such as the "out-of-bounds" tolerance percentages (before TRX recommends rebalancing an asset class), minimum account cash requirements, ordinary income and capital gain tax rates, and much more. While there is some effort required to define these settings, I suspect advisors won't have much need for continual adjustment once they've completed the initial setup process with the help of TRX support.

Bill Winterberg, CFP, is a technology and operations consultant to independent financial advisors. His comments on technology have been featured in a variety of financial industry publications. You can view more information about Bill and see his schedule of upcoming speaking engagements at his Web site, FPPad.com. The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.
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