AssetMark launches tax management services

As more registered investment advisory firms and other wealth management companies move into tax services, a financial technology provider launched new tools to meet the rising needs.

Concord, California-based turnkey asset management program and outsourced investment technology firm AssetMark opened its new “tax management services” software to the roughly 9,300 independent financial advisors using its platform on Jan. 12. That followed a pilot program and roughly 18 months in the idea and development phase, according to David McNatt, the head of investment solutions with AssetMark. 

A council of advisors using AssetMark’s technology engaged in an “an extensive back and forth” with the company’s executives with an eye toward adding “personalized, comprehensive” tax services on top of the firm’s existing technology, he said in an interview. Beyond saying that the “cost-to-value is incredible” and citing company disclosures, McNatt declined to share exactly how much the firm is charging for the upgrades.

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The software helps advisors carry out tax-optimized portfolio rebalancing, transfer assets efficiently from brokerage to advisory accounts, tap into loss-harvesting opportunities that don’t run afoul of wash-sale rules and perform other important tasks that can affect the overall gains in clients’ portfolios, McNatt said. With the tax impact on yields a growing part of the conversation in the past couple of years around how best to serve clients, “What advisors told us is that it was really, really challenging for them” to break into the related field using the existing technology, he said.

“We really wanted to make sure that the service that we did was frankly much better than what we saw in the market,” McNatt said. “The goal is to improve the after-tax return and help the investor keep more of the money that they’ve earned.”

Some advisors have been offering tax services for decades, but more large wealth management firms are beginning to embrace that combination as well, according to Tim Steffen, the director of advanced planning with Milwaukee-based Baird. 

The conditions these days, in which advisors are “just clamoring for more and more” tax information, represents a difference of “180 degrees” from when Steffen started his career at Baird about 25 years ago, he noted in an interview. The company has three certified public accountants who are available to meet with advisors and clients alongside other professional staff who can help planners address tax questions. Holistiplan’s software enables Baird’s advisors to upload clients’ tax returns and get back a listing of the key data points and areas with potential planning opportunities.

“Clients are always looking for good advice and help on these things,” Steffen said. “It’s easy to say, ‘Well, that’s a tax question. You should go to your CPA.’ The reality is that not everyone has a CPA they can go to in their Rolodex. Advisors being able to offer this is a significant value-add to many relationships.”

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About 200 advisors working with AssetMark used the pilot version of its tax software enhancements in the three months before the official launch last week, according to McNatt. The personalized advice stemming from the new tool has aided advisors in finding tax savings such as maximized long-term losses coinciding with the capital gains of a large real estate sale and restricting the trading in another account with appreciate stock in which the client and their advisor had planned to donate that security holding to a charity, he said.

Since “it’s not just enough to sell it” by trumpeting the potential benefits, and advisors told AssetMark that they wanted to “prove it on the back end,” as well, the software reports the after-tax returns on a monthly basis, McNatt said. 

“We’ve thought about this in a very holistic way to really empower the advisors to show the value that they bring to the table,” he added.