The Big Broker-Dealer Squeeze: Navigating the Generational Challenges of Labor Compression and Heightened Client Expectations

By Rob Battista, SVP and Managing Director, Vestmark Advisory Solutions

Vestmark Blog BD Squeeze Generational Challenges 2880x1000

With more than one-third of advisors expected to retire in the next decade—catalyzing a transition of nearly 40% of client assets—there are fewer and fewer advisors available to provide advice to an ever-increasing group of clients.

At the same time, client expectations of service levels from their advisors continue to accelerate, with particular emphasis on the demand for personalization of investment services and strategies, as well as the need for more frequent and ongoing communication between advisors and clients. According to a YCharts study from December 2022, almost 50% of respondents wish their advisor contacted them more.

Broker-dealers are facing the challenging impact of two opposing demographic forces: an impending labor shortage brought on by the surge in advisor retirements, coupled with escalating demand for hyper-specialized, high-touch client services.

Put simply, to remain competitive, broker-dealers need to find a way to do more­ for clients with less resources.

Tax Transition and Optimization Solutions: A Modern Way to Future-Proof Broker-Dealer Firms

As the number of advisors in the industry contracts, broker-dealers seeking increased efficiency naturally turn to technology as a way to automate manual processes and save their remaining advisors valuable time. But losing advisors is only one part of the challenge. Broker-dealers need to ensure that they aren’t introducing efficiency at the expense of the heightened personalization clients have come to expect.

With tax management top of mind for most clients, especially those with top-tier wealth, tax transition and optimization solutions, powered by innovative technology and the white-glove expertise of a dedicated partner, could be the answer.

Tax transition and optimization services, utilized across an entire diversified portfolio, provide advisors with the resources they need to create significant, highly personalized value for their clients through increased customization opportunities, expanded tax management capabilities and greater potential for tax alpha.

These services also arm advisors with a gateway for client engagement and highly personalized client discussions. Modern clients are acutely aware of the tax consequences of investing and welcome custom portfolios designed to minimize tax bills. When tax management was a highly manual process, it made operational sense for advisors to focus on taxes only at the end of the calendar year. But technology and outsourced tax optimization services enable advisors to engage in these conversations year-round, fulfilling the aforementioned client demands for both personalization and more communication.

The end result is the potential for greater client retention, increased share of wallet, and differentiation to attract new clients and recruit more advisors to the firm. An individualized solution puts the advisor in control of tax outcomes, refocusing a portfolio on after-tax returns, while actually saving the advisor time and effort. Advisors reach these objectives by relying on outsourced partners that automate and provide industry-leading services and expertise, reducing advisors’ time spent on administrative and non-client facing tasks.

Turning Today’s Challenges into a Competitive Opportunity

Since 2001, Vestmark has been a leading provider of portfolio management, rebalancing/trading solutions, as well as outsourced services for wealth managers and investment advisors. Our tax transition and tax-managed overlay service eliminates manual workflows, replacing them with a streamlined advisor and client experience, time savings and business growth.

Vestmark’s tax overlay and tax transition capabilities can be configured and delivered flexibly to fit the needs and desired exprience of each firm. Outsourcing tax optimization and tax transition services enables significant time savings for advisors while simultaneously arming them with a unique, highly personalized value-add experience for clients that includes portfolio customization and a focus on after-tax returns. Not only can this help broker-dealers do more with waning resources, but it can also be a compelling recruitment tool as they look to replace retiring talent.

As a leading industry service provider, Vestmark offers advisors solutions and resources designed to efficiently transition and continuously optimize client assets, providing a powerful playbook for advisors and their broker-dealer firms as they look to a fast-approaching future that requires fewer advisors to provide more services for their clients.

To learn more about how our tax management solutions and services can help you, schedule a demo today.


Investment strategies that seek to enhance after-tax performance may be unable to fully realize strategic gains or harvest losses.

By Rob Battista, SVP and Managing Director, Vestmark Advisory Solutions