June 15, 2018

Rebalance IRA Review: Is It Safe?

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If the thought of a computer running your retirement investments without any human interaction scares you, Rebalance IRA might be your answer. Known as a hybrid robo-advisor, they offer automated investing combined with live support, giving you the best of both worlds.

Overall Score

3.5

Annual Fee

3.0

Minimum Deposit

1.0

Human Advisors

5.0

Customer Service

5.0
5-point scale (the higher, the better)

Pros and Cons

  • Professionally managed by human advisors
  • Annual live meeting with an advisor
  • Highly diversified asset allocation
  • Huge minimum investment
  • Fees to rebalance account
  • No tax loss harvesting

Bottom Line

Auto IRA advisor providing personalized service for higher fees, for investors with $100k to start

Is it worth it? Keep reading to find out.

Rebalance IRA manages your IRAs and 401(k)s for you. What they do is evaluate your current accounts and make suggestions on how you could make them better. If you allow Rebalance to manage your accounts, they will create a portfolio that maximizes your investments and minimizes your fees. This is something many investors don't do - they have a "set it and forget it" type mentality. If you don't know anything about your retirement funds, it may be time for some help.

Rebalance is a robo-advisor in theory. Their software manages your investments once the live advisors create the portfolio for you. It's not like your typical robo-advisor that asks automated questions and bases your portfolio on those answers. You have actual live advisors conversing with you and helping you come up with the right plan.

How Does Rebalance IRA Work?

As we stated above, you don't have to answer the typical 12-question survey with Rebalance. Instead, you schedule a consultation before you even open up an account. During this consultation, you will talk with a financial expert about your current retirement savings and your retirement goals. You'll cover all accounts, including any IRAs and 401(k)s you already have in place.

The financial expert will assess your information and provide suggestions on areas that need improvement. For example, if they feel your investments aren't diversified enough, they will recommend a better strategy. They may also spot areas where you are paying too many fees, which take away from your potential returns.

Once Rebalance comes up with the appropriate portfolio for you, you will transfer your accounts to Rebalance. Don't worry, Rebalance handles this step for you. Your investments will have to sit with either Fidelity or Charles Schwab, as those are the only two brokerages that Rebalance works with. You get to choose the broker, though. Rebalance just oversees the account for you.

Who Is Rebalance IRA Best For?

© bogenfreund (CC BY-SA 2.0) via Flickr

Rebalance IRA would seem to be a good fit for investors who just don't know where to turn. They have IRAs or 401(k)s set up but don't have the capacity to manage them. While that's true, they require a minimum $100,000 starting balance. This eliminates many beginning investors and focuses on those who have been at it for a while and are feeling a little lost.

Because it's a robo-advisor, it is a good system for the hands-off investor. You don't have the hefty fees of a full-service brokerage, but you do have the peace of mind that your accounts are being monitored full-time.

What Are the Fees?

Initially, Rebalance charges a $250 set-up fee. From there, you will pay 0.5% of your assets under management per year. In addition, you'll pay the expense ratios for any ETFs traded, which average around 0.2%.

Rebalance also charges a rebalance fee between $50 and $70 for each time they rebalance your portfolio.

Reasons We Like Rebalance IRA

  • You get two dedicated financial professionals working on your account. When you open an account with Rebalance IRA, you are assigned an investment advisor and a retirement service representative. This personal team oversees your accounts and provides you with the personal service many robo-advisors lack.

  • Your account is automatically rebalanced. If things get off track and your portfolio is knocked off kilter, Rebalance automatically rebalances it through the use of their automated software. This helps to keep you on track with your target allocation and goals.

  • Rebalance uses the Modern Portfolio Theory for investments. The MPT seeks to maximize your returns by diversifying your assets. It's not about picking individual stocks - it's about managing risk and growing your nest egg over the long-term.

  • Rebalance focuses on retirement funds rather than short-term growth. Many robo-advisors put emphasis on taxable accounts that you can use for short-term growth. Rebalance only focuses on retirement funds, giving you the financial expert's targeted expertise.

  • Rebalance can manage your 401(k) if it's with Charles Schwab or Fidelity. If you already have a 401(k) or IRA with Charles Schwab or Fidelity, you can seamlessly add Rebalance as an account manager and let them take over. If you don't have an account with either brokerage, Rebalance helps you set one up easily.

  • Rebalance doesn't create your portfolio until they talk with you. This is one of the unique aspects of Rebalance. Most robo-advisors rely on the typical questionnaire to evaluate your risk level. Rebalance's experts actually talk to you so that they have a full picture of your goals, risk tolerance, and how you intend to spend your retirement. They don't rely on answers and automated responses.

  • You can have a hands-off approach to investing for retirement. Once you set up your retirement accounts with Rebalance, they do all of the work. You can just sit back while the experts handle your accounts. This eliminates the risk of your accounts taking a nosedive without you knowing it. Many people set up IRAs and 401(k)s and leave them, assuming their allocation is good and that their goals will be met. Rebalance helps to eliminate unpleasant surprises and helps you stay on track.

  • Rebalance keeps you updated on any changes in your portfolio. Your financial team will check in you with periodically. They will update you on your account's growth as well as let you know of any changes they had to make to rebalance your portfolio.

  • You get an annual "live checkup" of your account. Every year around the same time, your financial experts will have a "live meeting" with you. This meeting will help them reassess if your goals have changed or if you've had a life change that may change your risk tolerance. They will then change your allocations according to your new goals.

  • You can get a better understanding of your retirement accounts. If you don't know the first thing about investing, you may be taken advantage of with fees. If your money isn't working as hard for you as it could, you will know it once the Rebalance experts review your accounts.

Reasons You May Want to Look Elsewhere

  • You need a very high minimum investment of $100,000. Rebalance is not for the beginning investor. $100,000 isn't chunk change; it could take you a long time to get to that point. There are no other options at Rebalance, though. You must wait until you have at least that much.

  • You only have two brokerage account choices. You have to have a brokerage account with Fidelity or Charles Schwab if you want to use Rebalance's services.

  • The fees are somewhat high. Rebalance charges 0.5% of your assets under management per year. When it comes to robo-advisors, this is pretty high (the average is 0.25%). But because you get the live support, it could be argued that the fee is lower than the traditional broker.

How It Compares

Rebalance IRA vs Betterment
Betterment is on a completely different playing level than Rebalance. They only charge 0.25% of assets under management and they don't require a minimum balance. Their premium account, however, requires a similar minimum balance of $100,000 and charges 0.4% per year. This account gives you access to unlimited advice from a Certified Financial Planner.

 

Rebalance IRA

Betterment

 

Benefits and Features

Annual Fee0.5%; $250 one-time set up charge0.25% for accounts under $100,000; 0.40% for accounts $100,000+
Minimum Deposit
$100,000
$0
Phone Support
M-F 8:30a-8:30p ET
Yes
Live Chat Support
No
No
Email Support
Yes
Yes
Human Advisors
Yes
Yes
Assets Under Management
$500 Million
$10 Billion
Tax Loss Harvesting
No
Yes
Goal Tracker
No
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Fractional Shares
No
Yes
Taxable Accounts
Yes
Yes
401k Plans
Yes
Yes
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
Yes
Yes
529 Plans
No
No

Rebalance IRA: Pricing information from published website as of 06/14/2018

Betterment: Pricing information from published website as of 04/04/2018

Rebalance vs Wealthfront
Wealthfront is another "typical robo-advisor" with 0.25% fees and a $500 minimum deposit requirement. Wealthfront does offer retirement account services, but only for IRAs (they don't handle 401(k)s like Rebalance does).

 

Rebalance IRA

Wealthfront

 

Benefits and Features

Annual Fee0.5%; $250 one-time set up charge
0.25%
Minimum Deposit
$100,000
$500
Phone Support
M-F 8:30a-8:30p ET
Yes
Live Chat Support
No
No
Email Support
Yes
Yes
Human Advisors
Yes
No
Assets Under Management
$500 Million
$10+ Billion
Tax Loss Harvesting
No
Yes
Goal Tracker
No
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Fractional Shares
No
No
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
Yes
Yes
529 Plans
No
Yes

Rebalance IRA: Pricing information from published website as of 06/14/2018

Wealthfront: Pricing information from published website as of 04/04/2018

Rebalance vs Vanguard Personal Advisor Services
Vanguard Personal Services is about as close to Rebalance as you can get. They do require a $50,000 minimum investment and they charge 0.3% per year. Vanguard does offer taxable accounts, though, not just retirement account investments like Rebalance.

 

Rebalance IRA

Vanguard Personal Advisor

 

Benefits and Features

Annual Fee0.5%; $250 one-time set up charge
0.3%
Minimum Deposit
$100,000
$50,000
Phone Support
M-F 8:30a-8:30p ET
Yes
Live Chat Support
No
No
Email Support
Yes
Yes
Human Advisors
Yes
Yes
Assets Under Management
$500 Million
$100+ Billion
Tax Loss Harvesting
No
client-by-client basis
Goal Tracker
No
Yes
Automatic Deposits
Yes
Yes
Online Platform
Yes
Yes
iPhone App
No
Yes
Android App
No
Yes
Fractional Shares
No
No
Taxable Accounts
Yes
Yes
401k Plans
Yes
No
IRA Accounts
Yes
Yes
Roth IRA Accounts
Yes
Yes
SEP IRA Accounts
Yes
Yes
Trust Accounts
Yes
Yes
529 Plans
No
Yes

Rebalance IRA: Pricing information from published website as of 06/14/2018

Vanguard Personal Advisor: Pricing information from published website as of 04/04/2018

Bottom Line

Rebalance IRA is not for the beginning investor. It may not even be for the experienced investor who doesn't have a lot of money invested. If you have more than $100,000 in your retirement accounts and you want a hands-off approach to investing, it could be good option to help you grow your retirement investments.

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