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InvestEdge Announces Alliance with Northfield for Risk Monitoring and Rebalancing of Tax-Sensitive Accounts

InvestEdge, Inc., a premier provider of wealth management solutions to banks, trust companies, brokerage firms, and financial advisors, and Northfield Information Systems, Inc., a market leader in providing investment professionals analytical tools to enhance individual portfolio and firm-wide performance, have formed an alliance partnership.

Through the new alliance, investment firms that handle tax-sensitive managed accounts will benefit from the combination of InvestEdge’s portfolio management overlay platform, InvestEdge ASP, and Northfield’s Open Optimization software. The partnership will enhance InvestEdge ASP’s portfolio management, trading, rebalancing and client reporting capabilities with Northfield’s advanced analytical tools which enable investment managers to measure risk and create the best possible trades for their customers on an after-tax basis.

“The integrated solution is ideal for firms where investment managers handle large numbers of high value accounts,” said Bob Stewart, CEO of InvestEdge. “Most managers are not currently monitoring the risk factors of each portfolio by incorporating the tax circumstances of the investor and the tax considerations of the existing portfolio. As a result, managers are often unable to respond promptly to new information about market conditions while concurrently considering the myriad tax implications of proposed portfolio changes.”

The addition of Northfield’s Open Optimization software to the InvestEdge system addresses this challenge with open, analytical risk models that include most marketable securities traded worldwide. The models analyze each portfolio’s factor “bets” and suggest buys and sells. As a result, hundreds to thousands of taxable accounts—which are managed through InvestEdge ASP—can be rebalanced in a fraction of the time required by traditional means. The algorithms used to calculate the proposed transactions are completely transparent, which allows investment managers access to all factor data and underlying assumptions used to calculate risk.

Once rebalancing has occurred and been accepted, transactions can be passed directly from InvestEdge ASP to a trading system, enabling straight-through processing. Further, InvestEdge ASP can produce customizable reports to demonstrate the before-and-after impact of transactions.

“The combination of Northfield’s industry-leading tax optimization technology and risk analytics with InvestEdge’s industry-proven wealth management platform enables investment firms to trade off risk and return during the rebalancing process using a consistent industry-accepted methodology across all portfolios and strategies,” said Dan diBartolomeo, President of Northfield. “This platform allows firms to scale their operations with less cost and represents a significant step toward simplifying the management of taxable accounts.”