With an account minimum of $100,000, Rebalance IRA makes its pitch to well-heeled investors who are looking for more comprehensive and personalized wealth management, those who might also like hybrid robo-advisors Vanguard Personal Advisor Services or Personal Capital. But Rebalance charges higher costs almost across the board — advisory fees and a fee to open an account — and even charges a fee when it lives up to its name, to rebalance your IRA. With these higher fees, it’s not clear that Rebalance IRA is better than traditional or hybrid robos, even for the upper crust.
Rebalance IRA is best for:
- Wealthy investors
- Investors who need more guidance
- Access to human advisors
- Hands-off investors
Rebalance IRA at a glance
|Account management fee||0.5%|
|Investment expense ratios||ETF expense ratios average 0.15%|
|Account fees (annual, transfer, closing)||$250 one-time account setup fee per account|
|Portfolio mix||ETFs from 12 asset classes|
|Accounts supported||IRA and taxable accounts are supported|
|Automatic rebalancing||Rebalance twice per year, on average. Trading costs average $50-$70 per rebalance.|
|Customer support||Phone support Monday-Friday 8:30 a.m. to 8:30 p.m. Eastern; email support. Live meeting once per year.
|Promotion||No promotion currently offered|
Where Rebalance IRA shines
High-touch service: Rebalance IRA’s biggest strength is its focus on providing personal service with real advisors to comprehensively handle clients’ wealth management. This approach positions Rebalance as a hybrid robo-advisor, combining human expertise with the efficiency of preselected, diversified exchange-traded funds. And that’s a key difference from “pure” robo-advisors such as Wealthfront, which are cheaper but also less comprehensive. So Rebalance is competing more with traditional brick-and-mortar advisors and higher-end hybrid robos such as Schwab Intelligent Advisory and Vanguard Personal Advisor Services.
Rebalance IRA assigns each customer a retirement investment advisor and a service representative, and clients have “no limit” access to them. The advisor sets your game plan, examining all your assets and developing an investment program that takes into account your future needs and risk tolerance. Meanwhile, the service rep oversees the logistics of that plan. A key goal of this personalized approach is to handle the tougher, retirement-related issues that arise, not just the relatively simple “buy this ETF” decisions. In addition, the advisor will check with you annually to see how your life or goals have changed and whether your financial plan needs to adjust.
Portfolio mix and fund expenses: Rebalance builds its portfolios using passively managed ETFs, those that track a preset index of companies. That keeps expense ratios down, leaving more money in your pocket. The advisor uses high-quality ETFs created by the largest players in the industry — Vanguard, State Street and iShares. The average portfolio has an expense ratio of around 0.15%, somewhat better than at rivals.
Like typical robo-advisors, Rebalance uses your risk tolerance and goals to fit you with a portfolio. For example, if you have a long time until retirement, Rebalance can make your portfolio more aggressive, focusing on growth. If you’re closer to retirement, you’ll probably want more stable income and less chance of capital loss. Most of the firm’s portfolios contain 10 asset classes to achieve broad diversification, while more narrowly focused portfolios, including “all income” or “all growth” portfolios, typically have about five asset classes.
The funds cover a wide swath of the market, including American stocks, foreign stocks, real estate, small companies and bonds, so your portfolio can have exposure to a variety of investments, based on your needs.
Where Rebalance IRA falls short
Account management fees: Robo-advisors have been aggressive about cutting management fees to the bone. Fees at Wealthfront and Betterment sit at what might be called the industry standard now, 0.25%, and upstart Ellevest recently chopped its opening-tier management fee from 0.50% to 0.25%. But they’re traditional robos. How do things look against a more comparable sample?
Rebalance’s 0.5% is on the higher end of peers — for example, Vanguard Personal Advisor Services (0.3%) and Schwab Intelligent Advisory (0.28%) or the premium offerings at Ellevest (0.5%) and Betterment (0.4%). Rebalance’s fee is much better, however, than Personal Capital’s 0.89% (though that does come down for balances above $1 million). Yet for many people Rebalance’s (and others’) more comprehensive services won’t be needed, and traditional robos will fit their needs.
Open account fee: Robo-advisors are rushing to establish relationships with clients as quickly as possible and slashing all kinds of fees that might dissuade investors from opening an account. Yet Rebalance IRA charges a $250 fee to open an account. Investors at virtually any rival can set up an account at no charge.
Rebalancing costs money: While other large rivals charge no fees for rebalancing if your portfolio deviates from its target allocation, Rebalance IRA says that will cost between $50 and $70 each time. The robo-advisor rebalances your portfolio on average twice a year. Fortunately it’s usually no more often than that.
No tax strategy: While Rebalance offers taxable accounts (in addition to IRAs), it does not offer tax-loss harvesting, a service that rivals offer, many of them for free.
Account minimum: Rebalance IRA’s minimum account size is $100,000, a stiff entry for many investors. Meanwhile, the rest of the industry has been rushing to cut minimums, and many allow clients to open an account with no minimum deposit at all. While Rebalance’s minimum is in the ballpark with some higher-end players such as Personal Capital, it’s higher than at Vanguard and Schwab Intelligent Advisory.
Is Rebalance IRA right for you?
If you’re not particularly cost-conscious and need more personalized and comprehensive advice (from an actual human), Rebalance IRA might be an interesting option. Getting a pair of representatives — including an investment advisor dedicated to you — really provides peace of mind for many investors and could help you make smarter investing and wealth-management decisions. But many investors may find a similar level of service with smaller and fewer fees at robo-advisors such as Schwab Intelligent Advisory and Vanguard Personal Advisor Services.