Financial advisors and portfolio rebalancing software: what to look for

Any portfolio of assets needs careful management. Much like a car left undriven in the garage, an asset portfolio that is not reappraised and rebalanced at regular intervals is unlikely to perform as strongly as desirable. This financial recklessness can end up costing the portfolio holder dear.

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Fortunately, financial advisors and their clients can benefit from well-designed financial advisor software that is eminently fit for purpose; however, finding the right financial advisor can be tricky. Recognising the problem, the Financial Conduct Authority has produced a helpful guide to assist consumers.

What is portfolio rebalancing software?

Portfolio rebalancing software replaces the laborious by-hand or excel spreadsheet methods of assisting a portfolio holder, or their financial advisor, with the periodic buying and selling of assets to ensure that the overall distribution of asset allocation accords, more or less, with the wishes of the portfolio holder. Sometimes the holder wishes to maintain the allocation they had when they set up the portfolio, such as 75 per cent shares and 25 per cent bonds; however, in certain circumstances, which may be to do with stock market performance or specific individual needs, the portfolio may need rebalancing to better express the changed situation. As a rule, it is far better to undertake rebalancing exercises in response to fluctuations in the market than it is to do so as a matter of course at the end of the financial year.

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What to look for in portfolio rebalancing software

Financial advisors have woken up to the fact that portfolio rebalancing software is in demand by their clients; however, there are a variety of options on the market and determining the best one for a firm’s clients is not always easy. The most professional providers, such as https://www.intelliflo.com/financial-adviser-software, will always be happy to discuss the range of options to ensure the best fit.

When choosing the right software, much depends upon the client base. Entry-level software offers a more broad-brush approach, enabling balancing at a client or account level. More advanced solutions can do the same job in greater detail at household level. Each type should also contain functions that take into account a client’s tolerance for risk and allow effective tax planning. The most impressive portfolio rebalancing software is capable of rebalancing thousands of portfolios in minutes.