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The importance of systemised rebalancing

Article in IFAOnline today here about how systemised rebalancing may not be treated as requiring discretionary authorities by advisers.  This, I think, provides some insight into regulatory thinking.  It  also raises quite a few questions, some of these being:

Q) Who defines the rules for sysemised rebalancing? And, what is acceptable?

Q) What happens if the client has made some specific instructions (or combinations of) that the systemised process cannot accomodate?

Q) Is there a set periodicity that can be mandated for rebalancing portfolios? What happens if something important occurs in the middle of that period?

Q)  Is a systemised process the key aspect here? Or, is the key aspect how the systemised process is used for clients?

Whilst systemisation is clearly a step forward in removing arbitary decision-making (and perhaps bias), the most important aspect in this discussion is about what is most suitable for the client in the rebalancing process. In other words, there is not a ‘one size fits all’ here.

I imagine the firms that accomodate client-centric and client-directed rebalancing will pass all tests (regulatory and client satisfaction)!

Stuart Holdsworth

Author Stuart Holdsworth

Stuart has over 30 years of experience in the use of technology for the strategic competitive advantage of businesses in the financial markets and investment industry.

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