Monitoring and Rebalancing: Key maintenance tasks for end-of-year review

Kyle Fleming – 12/02/2021

Monitoring and Rebalancing: Key maintenance tasks for end-of-year review

While this time of year may wind down for some, it is a busy season for financial advisors, as well as the Black Diamond® Wealth Platform team. In fact, the team is steadfastly planning what we will work on in the coming year to equip you with streamlined functionality that offers a premier client experience.

We understand when it comes to your client’s financial life, an ounce of prevention is worth a pound of cure. Unfortunately, there is no quick fix for serious problems in late-stage financial lives unless you can predict the future with 100% accuracy. Regular maintenance, with a heightened focus before year-end and the upcoming tax season, is key to keeping things running smoothly. A review of the following areas can help aid in positioning more successful outcomes for your clients:

  • Portfolio Rebalancing – Regular rebalancing has shown to keep the odds of success on your client's side by maintaining a long-term allocation.
  • Tax-loss Harvesting – In addition to maintaining the desired investment allocation, a tax-loss harvesting strategy allows you to improve after-tax investment outcomes over time by selling losing positions to generate a tax credit that the client can then reinvest. Although tax-loss harvesting isn’t an alpha-generating magic bullet, it is more effective for clients in high tax brackets or clients in low return, higher market volatility environments.
  • Required Minimum Distribution (RMD) – A client’s tax burden can be reduced by monitoring and meeting RMD requirements to avoid penalties.
  • Year-End Relationship Review – Make sure to review the qualitative side of your client’s relationship to keep it well-oiled and provide personal touches that will continue building trust with your clients over time. A client’s goals, dreams, purpose, and personal relationships ultimately drive investment decisions, and it’s important to stay connected.
  • Business Review – Review and measure your business performance and processes surrounding revenue, client growth, efficiency, and other business goals to determine if your strategy meets the defined metric goals.

To assist you, Black Diamond’s Rebalancer has capabilities to help you provide potential tax relief for your clients:

  • Rebalancer Dashboard – This area of the platform provides an overview of the work that needs to be completed, calling attention to clients that are out of tolerance, need to raise cash, need to allocate cash, or contain tax-loss harvest opportunities.
  • Tax-loss Harvesting Module – Efficiently locate clients with Loss Opportunities in this space. Opportunities are surfaced and prioritized so you can quickly review the Program, Strategy, Percentage, and Amount of Loss Opportunity. Trades are then optimized against tax-lots, wash sales are considered, and recommendations are made.

In addition, Rebalancer’s dashboard offers features like FIX® connectivity for straight-through trade processing, approval workflows, and robust asset equivalent functionality. These Rebalancer features, along with other Black Diamond capabilities, empower you to customize strategies, models, and programs to help eliminate tax burdens for your clients.

Black Diamond also supports year-end maintenance with the following capabilities:

  • RMD Tool –Provides oversight at-a-glance to make sure clients are on track to meet requirements. In 2022, we plan to add additional RMD capabilities, including support for Inherited IRAs, enhanced reporting, exporting, and usability functions.
  • Relationship Timeline – A social-media-styled space within the Client Experience portal details interactions between you and your clients and memorializes events and decisions made over time. Activity in this space typically skyrockets around year-end, when advisors use this powerful tool to review the major events that have occurred in the last 12 months.
  • Business Intelligence – The dashboard provides aggregated details on your firm, including a growth summary, new and lost clients, and cash flows. Data Mining provides a custom query builder used for firm reporting, compliance reports, and more. Real-time data mining is coming in 2022, and that functionality will reduce the update window from two hours to seconds.
  • Billing – The Billing application empowers you to generate and track fees over time, rounding out the revenue side of business metrics.

Year-end may be busy, but overall client portfolio and relationship maintenance should be easy. To learn how the Black Diamond Wealth Platform can support your business, request a personalized demo today.