How to rebalance in iRebal®

Overview

Assign your client portfolios to a model and start running rebalances. iRebal allows you to use a variety of submission types based on the trades you want to implement.

To rebalance an account, you must first create a portfolio for it and assign it to a model.

Two types of models are available for you to build: 

  • Security Models 
  • Blended Models

How to create a Security Model
A security model is composed of a list of securities with target allocations.

  1. Go to the Models inventory page by hovering over the Models menu in the navigation bar and selecting Models.
  2. Click Create and select Security Model.
  3. Enter a unique name for your model, as well as an optional description, then click Continue.
  4. Search for securities to add to the model or use the Advanced Filter for more security selection options. To add an allocation to cash or a sweep money market fund in your model, select the security that represents cash ($CASH) and add it to your model as a target security.
  5. Add targets for securities in your model by entering a percentage from 0.0-100.0 until the security allocations equal 100%. 
  6. Click Save.

How to create a Blended Model
A blended model is composed of two or more security models with target allocations. Blended models are sometimes referred to as models of models. These allow you to create multiple custom allocations while only requiring you to manage security targets in a small number of core models. Your blended models will automatically update with any changes you make to the underlying models.

  1. Go to the Models inventory page by hovering over the Models menu in the navigation bar and selecting Models
  2. Click Create and select Blended Model.
  3. Enter a unique name for your model, as well as an optional description, then click Continue.
  4. Search for the security models that you would like to add to this blended model.
  5. Assign targets for each model you're adding to your blended model by entering a percentage from 0.0-100.0.
  6. Adjust allocation targets until the total component model allocation equals 100%.
  7. Click Save.

A portfolio is the client relationship against which iRebal will rebalance a single model. If you rebalance at the account level, each portfolio will contain a single account. If you rebalance at the household level, a portfolio may contain multiple accounts that can be rebalanced together against one asset allocation or model.

  1. Hover over the Clients menu in the Navigation bar and select Unassigned Accounts.
  2. Use the checkboxes to select the accounts for which to create a portfolio.
  3. Click Actions then assign each selected account to its own portfolio.
  4. Click Create Portfolio.
  1. Hover over the Rebalancing menu in the Navigation bar and select Create a Rebalance.
  2. Select your Rebalance Type.
  3. Search or use the advanced filter to select portfolios for this rebalance.
  4. Click Process.

Will the household groups defined in Group Manager be reflected in iRebal?
No. Groups defined in Groups Manager do not automatically flow into iRebal. 
To create the same household portfolios in iRebal:

  1. Click the Export table data link in Group Manager to create a CSV file.
  2. You will get a list of accounts for the selected household or group.
  3. Use the list to populate the Accounts to Portfolio Assignments Import file in iRebal.

Can I rebalance accounts held outside of Schwab, such as a 401(k) or other brokerage accounts?
No, but you can add externally-held accounts and positions to a client’s portfolio. iRebal won't generate potential orders for the externally-held account(s), but it will consider the holdings as part of the allocation during rebalancing.

How does iRebal handle cash sweep and position traded money markets?
iRebal uses a custom symbol ($CASH) to represent cash and sweep money market cash. All sweep money market holdings in a client account will be mapped to $CASH. If you target cash as part of your allocation, or if you typically maintain a small amount of cash in accounts as a buffer, you can add a corresponding target to $CASH in your models.

Position-traded money markets are treated as individual mutual funds and not considered part of $CASH. If you want to hold position-traded money market funds in accounts, you must add distinct targets to them are separate from $CASH.

Does iRebal have the ability to protect legacy positions?
Yes, users can set Global, Model, or client-specific (Portfolio-level) security rules.

These rules include: 

  • Never Sell: Lock holding in place while counting the value of the security in the account market value.
  • Exclude: Acts as if the security is not present in the account. It won’t be sold as the model is applied to the net value of the account.
  • Never Buy: Buy amount of restricted security can go to cash, an alternate security, or be prorated across the model.
  • Equivalents: Legacy security positions are counted towards the target allocations of a model holding. You can choose to continue purchasing legacy positions or open new positions based on model targets.

Does iRebal offer any automation?
iRebal allows you to schedule rebalances to run on any occurrence presets of their choosing across one or multiple Portfolios/Models. However, when the scheduled rebalance is run and results are proposed, users are required to review, approve, and submit the results of identified trades from a rebalance.

Does iRebal automatically submit trades?
No. iRebal will generate potential trades when an ad-hoc or scheduled rebalance is run, but the trades will not be added to the Order Blotter until they are approved by a user with trading access. After orders are approved and sent to the Order Blotter, a user submits the trades for execution.

All my clients have custom allocations, so I don’t use models. Will iRebal be of value?
Yes, many firms use iRebal to view real-time client balances and positions and enter desired trades. In this way, you are creating an audit trail and simplifying trading.

iRebal covered call workflow
iRebal fact sheet
Schwab Advisor Center Rebalancer to iRebal transition guide
 

How to get started in iRebal®
How to work with Model Market Center™
Introduction to Model Market Center™
Introduction to iRebal®