Comments on: iRebal Acquired by TD Ameritrade http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/ A blog for investment advisors, brokers and financial planners. Tue, 06 Jan 2009 02:31:28 +0000 http://wordpress.org/?v=2.3.3 By: Robert Beauclair http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-2170 Robert Beauclair Thu, 24 Apr 2008 20:02:00 +0000 http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-2170 Does anyone know where an individual can purchase a small rebalancing sofware package for individual use. I am tired of financial advisors who do not do their job and still calllect fees. I have a small seven figures account. Does anyone know where an individual can purchase a small rebalancing sofware package for individual use. I am tired of financial advisors who do not do their job and still calllect fees. I have a small seven figures account.

]]> By: WealthFly » Unified Managed Accounts http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-505 WealthFly » Unified Managed Accounts Wed, 28 Nov 2007 17:53:31 +0000 http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-505 [...] This is why I think the UMA is a marketing gimmick.  I know it will upset many people but really we have had this for years.  When we wrote Techfi Trader, it had this capability.  When Matt did a post about iRebal earlier this year, he mentioned that it had this capability too. [...] […] This is why I think the UMA is a marketing gimmick.  I know it will upset many people but really we have had this for years.  When we wrote Techfi Trader, it had this capability.  When Matt did a post about iRebal earlier this year, he mentioned that it had this capability too. […]

]]> By: Matt Abar http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-64 Matt Abar Fri, 09 Mar 2007 19:54:03 +0000 http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-64 I don't know anybody involved in the deal and have no idea what iRebal's vitals are. But let me flip my napkin over just for fun... I think TD Ameritrade did the deal mainly because they wanted the rebalancing capability in-house to offer to their reps. If so, then they don't care much about the revenue potential of the software so things like company size and projected revenues don't matter much. They probably valued it based on the cost of re-developing the software. I'll guess that number at $3 million. And tack on a bit extra because TD Ameritrade gets some guaranteed revenue from iRebal's existing clients. Say another $2 million. Final wild ass guess: $5 million. Watch... I'll be off by a factor of 10. I don’t know anybody involved in the deal and have no idea what iRebal’s vitals are. But let me flip my napkin over just for fun…

I think TD Ameritrade did the deal mainly because they wanted the rebalancing capability in-house to offer to their reps. If so, then they don’t care much about the revenue potential of the software so things like company size and projected revenues don’t matter much.

They probably valued it based on the cost of re-developing the software. I’ll guess that number at $3 million. And tack on a bit extra because TD Ameritrade gets some guaranteed revenue from iRebal’s existing clients. Say another $2 million.

Final wild ass guess: $5 million. Watch… I’ll be off by a factor of 10.

]]> By: mathew http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-61 mathew Wed, 07 Mar 2007 00:23:19 +0000 http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-61 what do smart people think iRebal went for? i'm curious. http://mattishness.blogspot.com what do smart people think iRebal went for?

i’m curious.

http://mattishness.blogspot.com

]]> By: Mike Benson http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-38 Mike Benson Wed, 07 Feb 2007 15:01:17 +0000 http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-38 Great insight Mr. Tinnin. Rebalancing is a complex process that is different for every firm. iRebal's price tag is justified when you look at all it can do for your firm, that still does not make it any more affordable for small advisors that simply cannot pay the 50k in licensing. Rebalancing is as complex as portfolio accounting due to all the variations of rebalancing at all the different firms. From you terminology I would guess that you also use AXYS and between the two you could be paying 100k a year in software licensing. However, you are taking the right approach in saying it is saving you head count. The ROI calculation is what many shops miss. Many people don't understand that they have to ask how will this product save me money? Will it save more than it costs? In your case you went one further and asked how much value will the software provide my clients? What will that earn me in revenue and retained clients? Great insight Mr. Tinnin. Rebalancing is a complex process that is different for every firm. iRebal’s price tag is justified when you look at all it can do for your firm, that still does not make it any more affordable for small advisors that simply cannot pay the 50k in licensing.

Rebalancing is as complex as portfolio accounting due to all the variations of rebalancing at all the different firms. From you terminology I would guess that you also use AXYS and between the two you could be paying 100k a year in software licensing.

However, you are taking the right approach in saying it is saving you head count. The ROI calculation is what many shops miss. Many people don’t understand that they have to ask how will this product save me money? Will it save more than it costs? In your case you went one further and asked how much value will the software provide my clients? What will that earn me in revenue and retained clients?

]]> By: Derek Tinnin http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-37 Derek Tinnin Mon, 05 Feb 2007 17:50:13 +0000 http://wealthfly.com/blog/2007/01/24/irebal-acquired-by-td-ameritrade/#comment-37 As a user of iRebal, I have to tell you that if you would need to hire several traders and/or portfolio managers to replicate what iRebal can do (assuming you manage a relatively large number of accounts). The $50,000 price tag looks pretty cheap when compared to that benchmark. The trading packages integrated with most portfolio management systems typically look to rebalance at the account level, not the portfolio level. That's because it's easy to have each account match a model. In the real world of wealth management, however, this approach to portfolio management is lacking. Most trading packages don't view security location, client-specific cash needs and tax characteristics the way a human portfolio manager does. As an example, let's assume you have 500 clients and wish to review each client to not only rebalance, but also to consider new deposits and upcoming cash needs, tax-loss harvesting, efficient location of securities, realized/unrealized gains, etc. You would then generate and upload the necessary trades (with complete SEC documentation). How many hours would it take to complete this task? Most firms typically conduct formal reviews like this using a calendar-based or client ranking method. How many people would you need if you wanted to do this weekly or even daily? iRebal gives us the ability to look at every portfolio we manage every day. We don't take action on every client every day, but what is the value of missed opportunities. For clients that need attention, we can be very timely and ultimately add value in terms of after-tax performance and other measures. As a user of iRebal, I have to tell you that if you would need to hire several traders and/or portfolio managers to replicate what iRebal can do (assuming you manage a relatively large number of accounts). The $50,000 price tag looks pretty cheap when compared to that benchmark.

The trading packages integrated with most portfolio management systems typically look to rebalance at the account level, not the portfolio level. That’s because it’s easy to have each account match a model. In the real world of wealth management, however, this approach to portfolio management is lacking. Most trading packages don’t view security location, client-specific cash needs and tax characteristics the way a human portfolio manager does.

As an example, let’s assume you have 500 clients and wish to review each client to not only rebalance, but also to consider new deposits and upcoming cash needs, tax-loss harvesting, efficient location of securities, realized/unrealized gains, etc. You would then generate and upload the necessary trades (with complete SEC documentation). How many hours would it take to complete this task? Most firms typically conduct formal reviews like this using a calendar-based or client ranking method. How many people would you need if you wanted to do this weekly or even daily?

iRebal gives us the ability to look at every portfolio we manage every day. We don’t take action on every client every day, but what is the value of missed opportunities. For clients that need attention, we can be very timely and ultimately add value in terms of after-tax performance and other measures.

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