TAX PLANNING
podcast.“ But are they doing the best job?”
When financial planners usually first engage with clients or prospects, the first thing they do is take inventory of all the client’ s or couple’ s assets and then discuss the goals the clients have for investing and saving.
After that, though, things tend to fall apart. As Cerulli noted, most asset management platforms aren’ t built to integrate the funding of multiple goals with different time horizons, nor are they able to coordinate multiple account registrations to minimize taxes. said.“ Tax harvesting is something that an advisor can understand and convey to a client, where asset location gets really complex. Then, dividing portfolios and running separate asset allocations is just a little bit a step too far for many of them.”
The Path Forward: One Step At A Time
Single account tax harvesting is a good start, but if firms want to move toward a unified managed household approach, asset location provides the greatest impact— for investors accumulating assets tirement income expert, they’ re going to start looking for someone who is.
“ But if you’ re looking to build on those who are in their 50s and younger, who are making rollovers, asset location could be the first step.”
The Report Card
The progress toward“ fully functional” unified household managed platforms varies, the Cerulli report said, quoting its survey of managed account platform sponsors.
Automation is furthest ahead in tax-loss harvesting, mentioned by 72 % of platform sponsors surveyed. The numbers were lower for automated tax-smart withdrawals and automated asset location.
When managed account firms aren’ t moving toward a total household approach,
Every firm needs to do its own analysis of its client base, its prospects and the areas where it can expect growth if it invests in technology.
Moving assets from one advisor to another can trigger tax bills. Advisors are comfortable with tax harvesting, but they’ re usually more comfortable doing it for single accounts.
Advisors may also try to optimize taxes using asset location— in other words, directing assets like stocks, bonds, mutual funds, ETFs and other holdings into accounts that offer the most beneficial tax treatment. Such maneuvers can deliver up to 60 basis points of value, according to a Vanguard study, but it’ s complicated.
“ I think advisors are less willing to do asset location on an ad hoc basis,” Smith or making tax-smart withdrawals. That’ s an urgent need for today’ s flocks of retirees, who may not be well served by simply following the 4 % rule and who need a tax-sensitive approach when drawing down money.
Every firm needs to do its own analysis of its client base, its prospects and the areas where it can expect growth if it invests in technology. Who is your main client and what do they want?
“ If your average client is age 63, it’ s probably going to be retirement income, right?” Smith said.“ If 80 % of your book is clients over age 60, and you’ re not a re- they risk less satisfied clients and reduced loyalty among advisors and their clients, Cerulli warned. But Smith emphasized the upside: If more of these processes are automated across more accounts, there will be more assets to manage and advisors will have more time to spend on work that contributes to their organic growth.
“ You know, we’ ve been talking about wallet share and asset consolidation for 20 years, but I think it’ s becoming more urgent,” he said.“ People are just getting overwhelmed by the number of passwords they have.
“ Anything we can do to make a client’ s life easier and bring those things all together is a compelling story.”
JACK SHARRY is a managing director of SEI LifeYield and host of the WealthTech on Deck podcast.
46 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2025 WWW. FA-MAG. COM