When rebalancing across multiple accounts, you should?

• A. Ignore the target allocations
• B. Realign holdings to meet overall target allocations across accounts
• C. Sell all holdings in the highest-valued account
• D. Only rebalance one account at a time

Answer: (B)

Rebalancing across multiple accounts means treating the total set of your investments as one portfolio and adjusting holdings so the combined mix matches your target asset allocation. Market moves can push one account or one asset class off its target, even if each account stays within its own limits. By looking at the overall value across all accounts, you can buy or sell in the right places to restore the intended balance.

This approach preserves your overall risk and diversification. It prevents overconcentration in any one asset class or account and keeps your plan aligned with your stated goals. It also avoids the pitfalls of focusing only on a single account, which can leave the aggregated portfolio drifted from its target.

Why the other options aren’t as good: ignoring target allocations lets drift accumulate across the whole portfolio; selling everything in the highest-valued account disrupts diversification and may trigger unnecessary taxes or costs; rebalancing one account at a time fails to correct the combined allocation, so the overall portfolio may remain out of balance.