A client named Greg recently reached out with a great question: “Have you rebalanced my accounts this year?” It’s a question we don’t get very often, but it speaks directly to the importance of disciplined portfolio management.
For us, rebalancing isn’t a reactive or one-time event. It’s a structured, proactive process designed to keep your portfolio aligned with your long-term goals while minimizing unnecessary costs and tax consequences.
We follow a quarterly screening schedule. Every six months, we evaluate your stock-to-bond allocation. If your portfolio has drifted significantly from its target mix due to market movements or other factors, we rebalance to bring it back in line. On the alternating six-month cycle, we assess your asset class allocation—such as large-cap vs. small-cap or domestic vs. international—and rebalance if any of these allocations are notably out of tolerance.
This disciplined approach helps ensure your portfolio stays aligned with your investment strategy without overreacting to short-term market fluctuations.
For taxable accounts, we take an additional step before rebalancing. If the process would trigger significant unrealized capital gains, we pause and initiate a conversation with you and/or your tax advisor. Our goal is to avoid creating a large taxable event unless it’s necessary or strategically beneficial.
So, has your portfolio been rebalanced this year? If it was significantly out of tolerance during one of our scheduled screenings, then yes—it was rebalanced. If it remained within tolerance, no action was needed. And if you hold taxable accounts with substantial (in our estimation) unrealized gains, we may have reached out to discuss options before proceeding.
If you’re ever unsure or would like to review your portfolio’s current allocation, we’re always happy to walk through it with you.
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/ SIPC.
This is a hypothetical situation based on real life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.