What happens when you change the allocation or risk score in an Automated Investing Account?

For Taxable Automated Investing Accounts:

When you change your risk level, change your tax level, or customize your allocation, it takes time to transition to your new target allocation. This timing varies based on your current holdings and the quantity of embedded capital gains that may be in your account.

Our software normally buys and sells investments in a way to help minimize taxes, so your allocation may differ from your target allocation for an extended period of time — particularly if you have a lot of embedded capital gains in your account.

When you make new deposits, receive dividends or when overweight asset classes subsequently trade at a loss, we’ll use these opportunities to transition your account to your new allocation.

If your account value is over $5,000, you will have the opportunity to elect a faster transition process. If you elect to override the standard tax-optimized transition, you may incur more taxes. To make this election, when you confirm your new allocation, click Update transition preference and Transition sooner.

Note: If you fully remove US Direct Indexing from your Automated Index Investing Account, we will sell all associated investments immediately, which can lead to significant tax consequences.

For IRA or 529 Accounts:

When you update your allocation in an IRA or 529 College Savings Plan, your portfolio will typically reflect your new allocation within one trading day.

For all Automated Investing Account types:

Our software is designed for long-term investing, so if you’re frequently changing your risk level or customizing your allocation, those changes may not be reflected immediately.