Frequently Asked Questions
Schwab and Fidelity will send you monthly statements through email or via U.S. mail. In addition, you can access your account with them online 24 hours per day, 7 days per week, providing account balances, trades, cash flows, and past statements.
Methodology & Expertise
We would be happy to discuss portfolio performance, but we find that this topic is often confusing, in part because returns must be evaluated in the context of inherent risk. Please schedule a time to speak with one of our advisors so that we can show you our performance in a way that is relevant to you and your situation.
Rebalance is an investment management firm. We are not “traditional” financial planners, but we specialize in retirement investing. In order to develop a plan for your IRA and other retirement accounts, and to help you grow it, we will discuss financial planning topics. If we find that your situation requires additional, more complex financial planning, we can recommend an hourly-fee planner in your area.
Retirement investing is tricky. The U.S. government gives you a tax break on your contributions, but it wants its share of the gains, in the form of income taxes, once you begin withdrawing at retirement. There are more than 100 pages of IRS code on IRAs alone, and there are many traps along the way. We specialize in optimizing your IRA to so that you end up with more when you need it, in retirement.
Unfortunately, we are unable to offer this level of service. But our portfolios offer a range of risk tolerances and are designed to fit a wide variety of retirement investors. We use them ourselves.
ETF stands for “exchange-traded fund.” These funds trade on the stock exchange just like any stock. ETFs are no secret, but investment professionals such as brokers can’t earn fees from most of them, so they go ignored. Each ETF is a “basket” of stocks that represents a particular index. For example, if you wanted to own every stock in the S&P 500 Index, you would buy one of several ETFs that follow that index. One example is the State Street Global Advisers SPDR S&P 500 (the ticker is SPY). By owning one share of SPY, you own 500 stocks in one.
Mutual funds are six to 10 times more expensive than ETFs because they hire pros, who attempt to select a few stocks within the index that they believe will beat the entire index. By owning the ETFs we use—funds which are widely held and used by millions of investors every day—you get nearly the exact return of the index that fund tracks. Since computers manage the stock buying, rather than a highly paid fund manager, the fees are very low.
An educated investor is our best client. We urge you to read our methodology section and ask us any questions so that you understand and become comfortable with how we manage money. We have adopted the same investment approach used by the world’s most effective college endowments, foundations, and pension funds. They have achieved their well-earned reputations by focusing on asset allocation, not stock picking, by driving down fees, and by sticking with disciplined portfolio rebalancing.
In the year you turn 70 ½ years old, the IRS looks at the balance of your retirement accounts (IRAs, 401k, 403b but not Roth IRAs) and calculates an amount that you are required to distribute as taxable income (called RMD – required minimum distribution). It starts at a little under 4% of the account balance and grows every year. If you inherit an IRA from someone other than your spouse you also have to take the RMD.
(Note: Recent legislation changed the age minimum to begin RMDs to 72. Per the IRS, if you turned 70 ½ in 2019 you should have taken your first RMD by April 1, 2020. If you reached age 70 ½ in 2020 or later you must take your first RMD by April 1 of the year after you reach 72.)
We have a process for simplifying and automating this RMD process, making it predictable and easy for you. There is one-time set-up where we connect your IRA to your bank account and then set up a date where the RMD automatically transfers from your IRA to your bank account. You can also choose to have taxes withheld from RMD and that will be done for you.
Every year, in early October, your broker (Fidelity or Schwab) gives us your current RMD amount calculated for each account we manage for you. That amount is based on published longevity tables* (see below) applied to your account balance as of the prior December 31st. We email you the amount and confirm that you do not want to distribute more than the amount.
In late October, when we rebalance all client portfolios, we make sure the cash required for your RMD is left over after rebalancing your individual portfolio. Why October? History shows that more years the market is up instead of down so by rebalancing and distributing near the end of the year, your money is working for you as long as possible.
Our process is flexible too. For example some clients prefer to have a check mailed to them or transferred to another Rebalance brokerage account and reinvested.
The process will automatically complete – well ahead of tax time. Please see the table below for further clarification on RMDs for IRA accounts.
*Required Minimum Distributions for IRAs
We can usually have your account(s) set up and a portfolio purchased within 5-7 business days.
The minimum size portfolio that you need to get started is $100,000.
If you wish to cancel service, there is no need to be embarrassed or to feel uncomfortable. The process takes a day. We simply remove ourselves from your account and pro-rate and deduct any accrued fees. There is no cost to terminate service and you may do so at any point in time and for any reason.
There is no catch. In fact, the U.S. Securities and Exchange Commission (SEC) requires that we disclose our fees completely in our ADV II. We encourage you to review this document.
Rebalance fees are 0.7% per year for the first $1 million of assets under management per household and 0.5% on assets above $1 million and 0.25% on assets above $5m. There is a one-time set-up charge of $250 for each account. In addition to the investment management fee, there are ETF fund fees that average 0.15%. Client accounts are rebalanced twice a year, with an average cost between $35 and $50 per account.
At Rebalance, we know that for you to live well and retire with more, you must pay less in investment fees. Most investment managers charge fees of at least 1% per year. Because of our unique approach to IRA investing, our technology, and our focus on keeping overhead low, we can offer personalized, high-quality service at half the price.
We use the MarketRiders investment platform, methodology, and rebalancing algorithms. Mitchell Tuchman, the co-founder of MarketRiders, saw the need for Rebalance after many MarketRiders subscribers expressed interest in having their retirement accounts professionally managed using the same approach. Some clients of MarketRiders found that they were too busy to maintain the discipline of rebalancing and to keep up with all of the many important details.
There are two kinds of investment managers: an Investment Advisor, which we are, and brokers, such as those you will find at Merrill Lynch, Goldman Sachs, or UBS. As a Registered Investment Advisor under the Securities Act of 1940, we are required to act as a fiduciary, that is, to put your interests above our own and to declare any conflicts of interest that may arise. You can be assured that we construct portfolios to meet your goals and put your interests above all else.
Comparatively, a broker, or Registered Representative, is required only to recommend investments that are “suitable” for you. Legally, he or she can put his or her own interests above yours when recommending investments.
Your money will be at either Schwab or Fidelity in an account under your name. You will be able to log on to their site any time, day or night, and to check your account balance, and to download statements. Because of our partnerships with these firms, we are able to open accounts and buy and sell securities on your behalf, with your agreement, as part of our service. These firms have ample government and private insurance covering your account.
Form ADV 2A. We file an updated version of this document with the SEC each year. It describes our services, fees, and all practices which relate to our role as your fiduciary. The SEC requires that it be written in “plain English” so that it is easily understood by the average investor.
Investment Advisory Agreement. This is a one-page agreement that we sign with clients who wish to have us manage their IRA.