Tax Management

Today’s investors often expect their financial advisors to wear many hats: money manager, CPA, mortgage broker, insurance broker, and more. As investors demand more from their financial advisors, financial advisors should expect more from the solutions and products they provide to their clients. Envestnet | Placemark’s Strategic Tax Management allows advisors to construct investment solutions that are highly customized to their clients’ individual tax needs and circumstances, increasing the level of service and value they deliver.

What is Strategic Tax Management?

Envestnet | Placemark uses a sophisticated tax-optimization engine that measures and considers the tax costs for potential security sales in making all portfolio construction decisions. The primary cost of taxes in client portfolios is in the form of realized short-term capital gains, and Envestnet | Placemark’s tax management process seeks to minimize and in most instances eliminate short-term capital gains realization. By accurately modeling the tax impact of all trades specific to the client’s tax rates and considering realized gains and losses both within the portfolio and externally, Envestnet | Placemark seeks to deliver the pre-tax returns of the underlying managers and portfolios while improving after-tax returns.

Features and Benefits of Tax Management

Tax Mandates
Incorporate External
Gains & Losses
Wash Sales
Tax-sensitive clients may establish pre-emptive tax mandates, setting limits on the amount of realized short-term, long-term, or aggregate gains realized in the account. By integrating the tax events of all of a client’s assets – both inside and outside the account – the client’s tax-managed portfolio can become an integral part of the client’s household tax solution. Selling and purchasing the same security within 30-days for tax-purposes is a wash sale. The I.R.S. does not allow the deduction of the loss from a wash sale in the tax year that the purchase occurred. Envestnet | Placemark eliminates wash sales.
Minimize Exposure to
Short-Term Capital Gains
Through loss-harvesting and gain deferral, Envestnet | Placemark can significantly reduce or eliminate short-term capital gains in a client's portfolio, which may allow after-tax savings in most market environments.
When rebalancing client accounts, Envestnet | Placemark weighs the risk mitigation benefits of rebalancing against the client-specific tax costs of rebalancing, resulting in a more customized and balanced approach.