Record Tax Savings in Model Portfolios Underscore an Ongoing Opportunity for Investors

Data from 55ip’s tax-smart technology reveals a silver lining among the clouds of a down market as advisors leverage solutions and fuel record growth on the platform

55ip, the financial technology platform designed to deliver personalized, tax-smart investment management at scale, announced that data from its platform this year reveals a record number of advisors taking advantage of tax-loss harvesting opportunities for their clients. Across client portfolios through Q3, the 2022 YTD tax savings benefit for model portfolios of ETF and Mutual Funds was 2.99 percent. Dating back to 2020, the annualized tax savings across clients in model portfolios on the platform was 2.82 percent. The savings demonstrate the value of ongoing harvesting within client portfolios throughout the year when compared to those not harvested for tax losses.

“The growth of model portfolios is one of the fastest growing trends in asset and wealth management, but concerns about the tax implication of transitioning and managing client accounts have been a major barrier to broad use by advisors”

“The growth of model portfolios is one of the fastest growing trends in asset and wealth management, but concerns about the tax implication of transitioning and managing client accounts have been a major barrier to broad use by advisors,” says Paul Gamble, Chief Executive Officer of 55ip. “Volatile markets can be emotionally and financially challenging for investors, but our data indicates they can also present potential opportunities for meaningful benefits from a tax perspective. During unstable market climates, we see advisors taking the opportunity to help their clients understand the importance and benefits of tax-loss harvesting strategically year-round.”

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As investors have looked to their advisors for answers, advisors have turned to 55ip for its automated tax management capabilities. Underscoring an increasing industry-wide need, growth on 55ip’s platform, since January 2021 reached record levels with a 125 percent increase in advisory firms that utilize the platform, a 357 percent increase in the amount of client accounts, and a 343 percent increase in total powered assets. In addition, the number of tax-smart transitions, using tax-loss harvesting to automatically move client accounts into model portfolios, reached record levels, given the market dynamics.

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“Our growth speaks to the rising demand among advisors seeking tax-smart strategies in portfolios,” says Gamble. “This year’s market volatility has clearly shown the value of solutions designed to help mitigate tax impacts. Investors should work with their financial advisor to determine the strategy that best fits their long-term goals and how tax-loss harvesting fits into that strategy. We’re well positioned to support advisors and their clients with year-round opportunities now and in the future based on whatever the market environment may bring.”