Tax-Aware Advice: Personalization Hidden in Plain Sight

By Vestmark Inc., Resources

Vestmark Tax Aware Advice Personalization Hero 2880x1000

It doesn’t matter whether you’re a massive multinational tech company or an individual advisor, personalization can make or break your business—a message that’s been repeated at industry conferences, in countless surveys and various media reports in recent years. For wealth management firms around the country, new tools and solutions are emerging to help advisors create a tailored experience for clients, which is why firms are capitalizing on this trend-turned-table-stakes.

While many advisors focus on personalized goals and investment management, the top tier of wealth management professionals is taking personalization one step further. Tech-enabled firms are using tax-managed overlay services and tax transition services to empower their advisors to provide clients with next level customization—a rare, “hidden in plain sight” source of differentiation.

Net Keep is the New Net Worth

For decades, advisors have focused on their clients’ net worth, while sometimes neglecting to pay attention to net keep—the assets that clients have in their accounts after taxes. Advisors who align their advice with these client concerns can win trust and attract new assets.

“Top wealth-management firms are embracing the need to provide highly personalized services and are developing and purchasing tools that will allow them to do so,” according to a recent report from Deloitte on technology that’s disrupting wealth management.1 “It’s thus become imperative for wealth-management firms to elevate their offerings in order to help maintain and foster strong and engaging client-advisor relationships.”

Tax minimization strategies can be discussed early in a client relationship—as early as onboarding—and technological solutions can be implemented to safeguard client assets and keep tax strategies on track.

When advisors opt to switch firms, offering tax transition services is an easily leveraged method for bringing client assets into a new company. As competition for client wallet share heats up, a tax overlay service can be the difference maker that reassures clients that they’ll indeed be better suited by an advisor with the latest in tax-savvy technology, advice and investment management.

When tax management is largely a manual process, advisors tend to focus on taxes towards the end of each calendar year. This outdated technique results in missed opportunities.

However, equipped with the right tools and technology, today’s advisors have a different avenue for improving clients’ net keep. Technology can enable automated processes like daily position monitoring, creation of alerts, avoidance of wash sales, and investment into appropriate substitute securities so that the portfolio is less likely to miss out on any market appreciation due to market factors in that sector, for example.

The best tax-management strategies, executed across clients’ portfolios, can potentially offer superior after-tax performance, when compared to non-tax managed equivalents. “Even if you aren’t a tax expert, you have to be aware of how taxes will affect your clients’ portfolios,” explains David Gordon, SVP of Direct Indexing at Vestmark. “Clients may hold you accountable for the tax consequences of your investment advice.”

Peace of Mind and Personalization

With clients expecting more services tailored to their needs, it’s harder and harder for advisors to scale their businesses. But for wealth management firms who want to remain competitive, finding a way to support this is paramount…and possible.

With the right technology, automation and workflows replace manual processes, offering advisors both scale and customization. Clients, by extension, get better investment and tax solutions across their portfolio. Rules-based guidelines help home office executives and compliance professionals sleep better at night, when they know that their firm’s tax services are adhering to the same standards across all offices and among all advisors.

At Vestmark, we know that advisors, just like investors, value flexibility and modularity. That’s why we’ve built a suite of solutions designed to support advisors, home offices and executives tasked with growing their businesses. We provide wealth management firms with tools like individualized tax budgets, for example, allowing clients and advisors to work together to determine what the client is prepared to pay in taxes, related to taxable portfolio gains. Meanwhile, Vestmark’s service works to help ensure that capital gains taxes stay within those established targets, year after year.

We provide pathways to personalization and encourage advisors to differentiate through unique tax strategies, without ignoring firmwide guardrails. To learn more, 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 Vestmark Inc., Resources