During his remarks at the AdventConnect Conference in Boston, Reed Colley, senior vice president and general manager of Black Diamond, announced his firm would soon offer rebalancing capabilities to users. According to Colley, about five firms are currently beta testing the rebalancing capabilities. If all goes according to plan, he expects to increase the number of testers to between 20 and 30 by year-end. The production release is expected in the first quarter of 2012.

Meanwhile, Tracy Thompson, Black Diamond's executive vice president of sales, said that the firm will significantly expand its alternative investment tracking and reporting capabilities. According to Thompson, who now works almost exclusively with RIA firms in the $1 billion AUM and up range, some large RIAs have up to 50% of their assets in alternatives. As a result, Black Diamond will integrate the new alternative functionality, which he referred to as the Alternative Investment Engine, into the Black Diamond platform.

Colley stated that Black Diamond's move into rebalancing would not alter the firm's relationship with current rebalancing partners such as iRebal, RedBlack and Total Rebalance Expert. These firms offer tax sensitive optimization and asset location advice, functionality that will not be included in the initial Black Diamond rebalancing release. When asked if future versions will include more advanced functionality, Colley replied that Black Diamond ill continue to build out the rebalancer, and that the course of development would be heavily influenced by the feedback he receives from clients. Reading between the lines, Colley's statement strongly suggests that tax optimization will be forthcoming in a future release.

No pricing information was available at this time.

The Black Diamond rebalancer lacks tax sensitivity today, but the underlying design of the functionality is elegant. Unlike other rebalancing software, which is traditionally purchased as a stand-alone application, Black Diamond has managed to seamlessly integrate their rebalancing functionally in the existing Black Diamond BlueSky architecture. The result is a fast, seamless, rebalancing workflow. Since the rebalancing functionality is built into the existing system, it can be accessed through the existing Black diamond iPad application; in fact, Colley demonstrated the functionality for me on his iPad.

Although neither Colley or Fidelity was willing to comment on the likelihood of Black Diamond rebalancing functionality appearing on WealthCentral soon, it seems a sure be that it will in the not too distant future.