Endowments, foundations and pensions aren’t the only entities that maintain an internal team to build their assets. While small advisory firms may outsource the management of their assets, larger financial advisor firms are embracing the concept of investing by committee.

“Large pools of money at pensions, endowments and charitable foundations are managed by a handful of investment professionals,” said Mitch Tuchman, chief investment officer with Rebalance IRA based in Palo Alto. “There's debate during their meetings, constructive disagreement and collaboration about what the best investments are for the portfolio or pension. ”

Tuchman chairs Rebalance IRA’s investment committee, which includes Burton Malkiel, Charley Ellis, Jay Vivian and Scott Puritz.

“We do not believe in active stock picking,” Tuchman told Financial Advisor. “That's a key fundamental idea underlying our portfolios.”

Malkiel is an emeritus economics professor at Princeton University and author of A Random Walk Down Wall Street; Ellis, a Chartered Financial Analyst, previously oversaw the Yale Endowment as Investment Committee Chair;  Vivian is the former managing director of IBM’s Retirement Funds; and Puritz; a nationally recognized retirement investing expert with an MBA from Harvard Business School, recently testified before the U.S Senate on proposed rules designed to make retirement investing safer.

“When an advisory firm outsources its investment decisions, or allows advisors to invest as they see fit, there’s more risk for the clients,” said Tuchman. “At Rebalance IRA, these three experts provide us with in-house expertise and hands-on experience to execute that process for our clients.”

Although the top leading robo-advisor firms grew by 65 percent in eight months to $19 billion assets under management in 2014, according to Financial Advice Market Review (FAMR), robo-advice is limited to assembling a group of stocks and bonds to avoid risk in a portfolio.

“It is critical to continually evaluate client portfolios by optimizing risk and return,” Tuchman said. “That requires analysis, back testing and modeling.”

The Rebalance IRA investment committee implements these and other investment methods, meeting up several times a year to review and ensure that assumptions are intact.

“With interest on 10-year Treasurys in the 1.5 to 2.5 percent range for the last five years, we’ve built a unique income portfolio,” Tuchman said. “We don't use Treasurys or TIPS; instead we employ various income substitutes in order to moderate low interest rates from the  U.S. Treasury in a rising interest rate environment.”

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