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22 April 2020

The Rebalancer Advantage: Agility During Market Uncertainty

By John Milne

Now more than ever, tools that once seemed like luxuries can quickly become necessities. This is especially true for advisory firms using rebalancing and trading technology. Thanks to the quick ability to react to market fluctuations, these firms have the upper hand in maintaining client allocation targets.

Over the past six weeks, I’ve taken special notice of firms leveraging Rebalancer within the Black Diamond® Wealth Platform. Not surprising, during the month of March, I saw a significantly higher volume of trading activity from our advisors. Order execution was up 25 percent from January and February combined, while tax-loss harvesting opportunities were executed at a rate more than six times the previous two months.

It’s in these moments we see the true power a rebalancer can add to an advisory practice. Whether you are looking to make a wholesale asset substitution from one security to another, or harvesting losses to minimize your client’s tax burden, Black Diamond’s Rebalancer enables the execution of these opportunities in a matter of minutes as opposed to hours or even days. Additionally, it takes into account all client restrictions and preferences ensuring you remain aligned with their expectations.

The Black Diamond team has long realized the importance that a robust rebalancing solution can play in all market conditions. This is why we have continued to make focused investments in the application since its launch in September 2018, and do not intend on slowing down. Features like FIX® connectivity for straight-through trade processing, approval workflows, and robust asset equivalent functionality were released in 2019. We continue that momentum with functionality like a trade reconciliation toolset, releasing this quarter, which will further support compliance operations for trade audits. With almost 400 advisory firms leveraging the application, we can lean on our greatest asset, our clients, to gather their feedback as we move the application forward.

While some of the features I’ve mentioned may be available in a third-party rebalancing solution, what I find game-changing is how Black Diamond’s Rebalancer is natively integrated into the platform. This integration gives us the benefit of supporting core workflows critical to your business.

A few examples include:

  • Advisors can quickly send a note on any trading activity to their client’s Relationship Timeline. By accessing this web feed through their Client Experience portal, clients gain full transparency and reassurance that their advisor is actively managing their portfolio.
  • Firms can enable a “Request Cash” feature for their clients within the Client Experience portal. This means advisors can help pull cash from their client’s accounts, or offer expert guidance to a panicked investor looking to retrieve funds.
  • Through the Billing workflow, firms can quickly identify accounts that have insufficient cash to cover their fees and easily send a cash request to the Rebalancer to raise the needed funds.

While advisors using rebalancing software are able to exploit the benefits during such market uncertainty, Black Diamond clients have the added luxury of a first-class Rebalancer service team. This team is also responsible for getting firms up and running – which I’ve seen happen in as little as one week! The team configures firm set up according to trading preferences and provides ongoing, expert support.

While no one knows when we will “get back to normal,” I think one thing that will remain is the realized importance of a rebalancing solution. The agility it affords to react to all market conditions is instrumental, and the operational efficiency tied to the client-facing benefits will set expectations beyond our current state of uncertainty.

Watch this webinar to learn more about the Black Diamond Rebalancer, and the key features and workflows advisors have found especially beneficial during the current state of the market.