Frec, the innovative investment platform known for redefining direct indexing, today announces the launch of its Portfolio Allocation feature. Unlike traditional robo-advisors that enforce automatic rebalancing, Frec empowers investors with the choice of how and when to rebalance their portfolios, marking a shift in how investment management is approached.
Most robo-advisors adhere to rigid allocation models, frequently rebalancing portfolios to maintain predetermined ratios. This approach often leads to suboptimal performance, as it requires selling high-performing assets to purchase underperforming ones. Frec’s Portfolio Allocation feature challenges this norm by putting decision-making power directly in the hands of investors and allowing them to make one-time cash deposits, yearly for example, to solve rebalancing.
“For years, robo-advisors have promoted the idea of constant rebalancing as the gold standard, but this one-size-fits-all approach often doesn’t align with real-world investor needs,” said Mo Al Adham, CEO and Founder of Frec. “With our Portfolio Allocation feature, we’re breaking away from this flawed model. Investors can now rebalance at their own pace, ensuring their portfolios reflect their personal strategies, and with more tax efficient alternatives.”
Here’s how it works: investors set their desired portfolio allocation—for example, 60% U.S. stocks, 10% international stocks, and 30% money market funds. Instead of automatically buying and selling assets to maintain these ratios, Frec offers tools to help investors decide when and how to rebalance. Options include:
- Sell and Buy: Investors receive recommendations on selling or buying but retain full control over executing changes. This is the least tax efficient option and is on autopilot at other roboadvisors.
- Cash Deposit: Frec encourages using external funds to bring allocations back in balance without triggering unnecessary sales.
- Leverage Up: Users could alternatively fund their cash deposit using Frec’s portfolio line of credit to rebalance their portfolio.
This level of flexibility allows users to avoid the common pitfalls of forced rebalancing, such as realizing unnecessary capital gains or selling high-performing assets when other options exist. Where many robo-advisors have made the assumptions that customers have all their assets with them, most customers have multiple brokerage and bank accounts. Faced with a tax bill to rebalance, many customers would prefer to move cash or even use a line of credit loan to rebalance rather than sell-and-buy and incur a tax bill. Frec’s Portfolio allocation feature is designed for today’s investors, who often maintain multiple accounts across platforms and prefer a tailored approach to wealth management.
“By moving away from automatic rebalancing, investors can now approach rebalancing strategically, deciding when it’s the right time to act based on their goals, market conditions, and tax considerations,” added Al Adham.
The Portfolio Allocation feature further strengthens Frec’s position as a leader in innovative investment solutions for self-directed investors. It builds on the company’s commitment to empowering its users with tools that simplify sophisticated strategies, optimize tax savings, and enhance long-term returns. With $170M in customer assets and a growing suite of features, Frec continues to challenge traditional financial norms, offering products that meet the nuanced needs of high-net-worth, self-directed investors.
