Most of the farmers and business owners we sit down with in Brookings built their wealth the hard way, and they built it lopsided on purpose. A farm operation might have seventy or eighty percent of net worth locked into land and equipment. A professional service business owner has the bulk of theirs tied up in the practice itself. That concentration isn't a mistake, it's how equity gets built in agriculture and professional services. The mistake shows up later, when the same owner treats an outside brokerage account the way they treat a bin of stored grain: fill it once, check on it occasionally, and assume it's fine. It usually isn't.
Risk drifts even when you don't touch a thing
A portfolio that started at 60 percent stocks and 40 percent bonds doesn't stay there on its own. After a strong run in equities, that same account can quietly become 75/25 within three or four years, carrying more risk than the owner ever agreed to. Nobody made a decision to take on more risk. The market made it for them. The Federal Reserve's research on household finance and investment behavior points to this exact pattern: households that don't actively manage allocation tend to accumulate concentration risk without realizing it, often discovering the imbalance only after a downturn (Federal Reserve Notes on Household Finance and Investment Behavior (opens in new tab)). Rebalancing is what corrects that drift. Skipping it isn't neutral. It's a decision, just one nobody signed off on.
What balance looks like when land is already half your net worth
Standard asset allocation advice assumes your investment account is your main pool of risk. For a lot of our clients, it isn't. If half your net worth is in South Dakota farmland and a combine that depreciates every season, your investment portfolio needs to diversify against that concentration, not repeat it. Loading up on farmland REITs or commodity-heavy funds inside your IRA doubles down on the same weather and commodity-price risk you already carry on the balance sheet. A genuinely balanced portfolio for a row-crop operator or an agribusiness owner often leans toward assets that move independently of grain prices and land values: broad equity index exposure, fixed income, and enough liquidity to cover a bad year without selling ground. The same logic applies to a professional service owner whose practice is the concentrated asset. Diversification only counts if it's actually uncorrelated.
Rebalancing is a tax decision as much as an investment one
Selling appreciated stock to bring your allocation back in line triggers a capital gain, and the timing of that gain matters more for farm and business income than most portfolios ever get credit for. Farm income swings hard year to year, and that's exactly why Schedule J income averaging exists: a strong crop year, paired with realized investment gains from a portfolio rebalance, can push a farmer into a higher bracket than the last three years combined. Averaging that income back over the prior three years can soften the hit meaningfully. Deferred grain contracts work the same lever from a different angle, letting a farmer choose which tax year a grain sale lands in. Once you're already managing income timing with a grain contract, timing a portfolio rebalance around the same tax year isn't an extra step, it's the same planning conversation. We've paired a rebalancing year with an excess fertility deduction for landowners in eastern South Dakota, deducting the built-up soil fertility on purchased ground as it's used, which offsets some of the taxable gain from selling appreciated stock in that same year. None of this happens by accident. It happens because someone looked at the whole picture before December, not after. Julie Underwood, CPA, works through these multi-entity timing questions with our farm and agribusiness clients, and the entity side of that strategy is covered on our multi-entity farm tax strategy page.
Concentrated equity in the business you run is its own imbalance
If you own a professional service business in Brookings, your largest asset probably doesn't trade on any exchange, and that's the risk nobody talks about at the coffee shop. Every dollar of equity value sits in one illiquid basket: your firm. A balanced approach means building outside assets deliberately, not as an afterthought once the practice is sold. It also means thinking about how a future sale or transition gets taxed, since that's the single biggest rebalancing event most business owners will ever go through. Our service business exit and succession planning work exists for exactly this moment, structuring the transition so the tax bill doesn't erase years of diversification planning in one filing.
A rebalancing habit beats a rebalancing event
Risk tolerance isn't fixed. A 38-year-old farmer two years into taking over the operation can absorb more volatility than that same farmer at 61, weighing a transition to the next generation. An annual rebalancing check, tied to your actual tax picture rather than a calendar reminder from a brokerage app, catches both the drift in your allocation and the shift in what you can actually afford to risk. The AICPA's Personal Financial Planning resources make the same case for a coordinated, ongoing review rather than a one-time allocation decision (AICPA Personal Financial Planning Resources (opens in new tab)). Waiting until year-end to think about any of this, investment gains included, is the same mistake covered in why high-net-worth individuals lose money waiting until December to plan.
Where TruCount fits into the picture
We don't pick your stocks or manage your brokerage account. What we do is model what a rebalance actually costs in taxes before you execute it, coordinate that timing with your farm or business income, and flag ag-specific tools, like R&D tax credits for farmers, that can offset a gain in the same year you're realizing one. That's the CFO-level insight bundled into a fixed monthly fee: someone watching the whole balance sheet, not just the return filed last April, through a secure online platform where you can see the numbers in real time instead of waiting for a year-end summary.
Common Questions
How often should I rebalance my investment portfolio? Once a year is a reasonable baseline for most people, tied to a specific month rather than "whenever I think of it." Farmers and business owners often get more value pairing that review with tax planning season, since the rebalance and the tax bill from it should be decided together, not discovered separately.
Does rebalancing always trigger a tax bill? Only in a taxable account, and only on the gains you actually realize when you sell. Rebalancing inside an IRA or 401(k) doesn't trigger a current tax event, which is one reason many advisors rebalance retirement accounts first and taxable accounts more carefully.
How does farm income averaging affect a portfolio rebalance? Schedule J lets a farmer spread a high-income year, crop sale gains included, back over the prior three years' tax rates. If a rebalance lands in a year with strong farm income, coordinating the two can meaningfully lower the combined tax bill compared to treating them as separate decisions.
What does a balanced portfolio look like for someone whose net worth is mostly land or business equity? It looks lighter on assets correlated to your existing concentration, land, commodities, or your own industry, and heavier on broad, liquid diversification you can access without selling the farm or the practice. The right mix depends on your actual balance sheet, not a generic age-based rule.
If your investment accounts haven't been rebalanced since the last time you thought about it, that's worth a conversation before your next tax filing, not after. Contact TruCount CPA PC and we'll walk through what a coordinated rebalance actually costs and saves for your specific situation.
