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Rebalance IRA: Is This Robo-Advisor the Right Fit for You?

Author: Ethan Taylor

Rebalance IRA is a specialty robo-advisor dedicated to managing retirement assets. For most workers, retirement monies are their greatest financial asset. Smart IRA and retirement asset management is a crucial determinant of whether you'll meet your retirement goals or not.

The robo-advisory field is crowded with many varieties of automated and automated-plus-human-touch advisors. Is Rebalance IRA worth spending the time to use or should you go with a more generic robo-advisor that handles a broader basket of financial issues?

Read on to find out. (For related reading, see: Liftoff: Is This New Robo-Advisor Right for You?)

Rebalance IRA: The Lowdown

Many investors hold a large pool of retirement assets from traditional IRAs, Roth IRAs, and workplace 401(k) rollovers. Rebalance IRA zeroes in on the best way to manage all these assets so that you meet your retirement goals. The firm begins with an initial consultation with a human financial planner who listens to you and assesses your risk tolerance, retirement and life goals.

Rebalance IRA then determines how it can help you meet these goals and pinpoints where your current strategy is failing. The firm's overriding concern is helping you get the greatest return for your retirement assets while remaining mindful of your particular risk picture and personal goals. The upstart aims to create a sound investment portfolio comprised of low-fee exchange-traded funds (ETFs) in percentages of stock and bond-type assets. A portfolio is constructed based on research and is widely diversified to reduce risk and maximize returns.

Rebalance IRA has partnered with Fidelity and Charles Schwab (SCHW), two well-regarded investment brokerage firms. Rebalance IRA will help you transfer assets to one of these firms where they will manage your investments. You receive statements from whichever company you choose.

As the name suggests, Rebalance IRA buys and sells funds within your account to keep it in line with your mutually agreed upon asset allocation. This widely accepted practice helps to keep risk to a reasonable level and may increase returns a bit as well. Annually, you discuss your investments with a human advisor to make certain that your plan is still the same as initially discussed. If there are changes in your plans that call for a potential change in your asset allocation, the advisor will help. (For related reading, see: Robo-Advisor, Asset Manager Marriages on the Rise.)

Is It Worth It?

To use Rebalance IRA, you need a minimum account value of $100,000. Clearly, this robo-advisor isn't suited for younger investors just starting out. Additionally, there is an annual maintenance fee of 0.50% of assets under management.

The investment methodology and and investment committee come from financial luminaries Burton Malkiel, Charles Ellis, and Jay Vivian. Malkiel and Ellis wrote Elements of Investing, which should hold a place among the great investment books. Given their background, you know that these financial experts' passive investing approach is backed by sound research.

The opportunity to talk with a real financial advisor during the Rebalance IRA process is also helpful, as most investors have questions that are better suited to a real conversation than an e-chat or a talk with a customer service representative. Other robo-advisors such as Personal Capital offer access to financial advisors as well, but their investment methodology is much different from that of Rebalance IRA. (For related reading, see: What's Next for the Robo-Advisor Market?)

The fee of 0.50% of AUM is competitive when compared with wealth managers in general who frequently charge 1.0% or more for investment management services. It's also lower than Personal Capital, although its minimum account value was recently lowered from $100,000 to $25,000. If you compare the 0.50% free to Wealthfront, Betterment or some of the other robo-advisors with a similar approach (though these lack the personal advisor), the fee looks a bit rich.

The Bottom Line

So is Rebalance IRA worth your time and money? As with many investment questions, there's no perfect answer. If you're looking for someone to take charge of a relatively large investment portfolio and otherwise might have selected a higher-fee financial advisor, then Rebalance IRA is worth a look. But if you're up for turning assets completely over to an automated platform and comfortable with robos' investment methodology, you could save some money by choosing a lower fee robo-advisor. (For related reading, see: Top Robo-Advisor Trends in 2016.)

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