The Rebalancing Act

The Rebalancing Act

December 07, 2018

Last week’s blog post featured a video from Dimensional Fund Advisors about the importance of tuning out investment noise. This week, we want to share with you how the Financial Plans & Strategies team works daily to manage your investments.

Financial Plans & Strategies takes an active approach in portfolio management by checking for rebalancing opportunities daily. Although some firms outsource their investment management services, we think it is vital to know each client and understand their individual needs. This knowledge helps us to take a personalized approach when rebalancing to keep each client on target.

How do we do it? 

Every client we meet with has a target asset allocation based off their goals, time horizon and risk tolerance that breaks down the percentage of investments that they have in stocks vs. bonds. Within those stocks and bonds are many sub-asset classes. Our investment committee has assigned targets for these different asset classes based on the client’s goals and needs.

Each morning we receive notifications from our rebalancing software. These alerts let us know if anything is off target in all sub-asset classes of client portfolios by alerting us if portfolios have breached thresholds that we have in place.

For example, if your target is to have 10% in Large Cap Growth Stocks, we account for market fluctuation and have thresholds in place to ensure that you stay close to this goal. If your Large Cap Growth Stocks breach these thresholds, we receive a notification letting us know that you are either under 8% or over 12% in this area. Then, our advisors determine the best course of action based on your individual preferences and needs.

Using these systems, we are able to help you maintain a good balance by selling to capture areas where you have experienced significant growth and buying into areas that are underfunded.


* In certain circumstances this rebalancing approach is not suitable. In these cases, we work with clients to make sure the approach we use fits their needs.