The Tax Man Cometh, These Providers Aim to Help

Welcome to Deconstructed, a weekly newsletter from Financial Advisor IQ that breaks down news and perspectives on portfolio construction.

Tax season is here. For some advisors, that can be an opportunity to talk about the tax alpha they are helping clients achieve by way of tax loss harvesting strategies.

While tax loss harvesting is not a new idea, both wealth and asset management firms have been investing in technology to systematize and optimize the way they apply these techniques across investment holdings to reduce clients' tax burdens. And more advisors are catching on.

After one wirehouse, Merrill Lynch, last August introduced a report showing advisors the potential tax savings clients could achieve in daily dollar terms by using tax loss harvesting services, daily enrollments in the wirehouse's tax overlay service surged 88%, FundFire, a sister publication of Financial Advisor IQ, previously reported.

And the wirehouse isn't alone in promoting these types of offerings. Read more from FundFire Senior Reporter Nate DiCamillo about the next generation of tax loss harvesting strategies taking shape from wealth management firms and asset managers here.

Morgan Stanley's Parametric affiliate, for its part, has built out a program where it applies tax loss harvesting across third-party separately managed account strategies from managers such as American Funds parent Capital Group, Lazard, Columbia Threadneedle Investments and others. Read more about the program here.

One way advisors are using the program is to manage taxes when transitioning from one portfolio of stocks to a new SMA manager, Jared Gray, a managing director on the product management team at Parametric, explained to FundFire's DiCamillo.

Video of the Week

Manju Boraiah, head of systematic fixed income and custom SMAs at Allspring, discusses the challenges that can come up when considering tax loss harvesting on fixed income holdings. Click here or on the image below to watch the video interview.

Keep Reading...

• Firms Roll Out Next Generation of Tax-Managed SMA, UMA Strategies
• Parametric Expands Active Equity Tax-Loss Harvesting Program
• Advisors Seek Stepped Up Tax-Alpha Reporting to Justify Fees
• How Allspring Tackles Tax Loss Harvesting in Active Fixed Income

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