SEI Survey: Increased Focus on Taxes Creates Opportunity for Advisors
SEI Identifies Tips for Advisors to Add Value Through Tax-Managed
Strategies Throughout the Year
OAKS, PA -- (Marketwired) -- 04/11/13 -- Taxes have moved up client
priority lists in the aftermath of the fiscal cliff deal creating new
opportunities for advisors to demonstrate expertise and deepen
relationships according to an SEI (NASDAQ: SEIC) survey released
today. The poll revealed that more than two-thirds of advisors
surveyed (69 percent) say their clients are asking more tax-related
questions. It also showed that an overwhelming majority of advisors
(81 percent) take tax management into consideration when advising
clients on investment decisions. Beyond that, more than half of
advisors polled (52 percent) only look to harvest losses for tax
purposes at the end of the year. The survey, of more than 170
financial advisors, suggests that there are opportunities for
advisors to add value with clients by providing regular tax insights
and implementing tax-managed investing strategies.
"Taxes have become a major focus in the aftermath of the fiscal cliff
and while most advisors take tax management into consideration when
advising clients, there are more opportunities to demonstrate
expertise and add value in light of recent tax changes," said Dean
Mioli, Director of Investment Planning for the SEI Advisor Network.
"With clients asking more tax-related questions than ever before,
advisors should proactively offer tax-related advice and implement
tax-driven strategies throughout the year. By making taxes
top-of-mind advisors can differentiate themselves and gain mindshare
in a competitive environment."
Given the increased importance of taxes, SEI identified five steps
every advisor can use to help their clients increase tax savings. The
1. Utilize Multiple Tax "Buckets" -- All tax strategies are not
created equal. Client assets fit into three tax buckets: taxable,
tax-deferred, and tax-free. When planning, advisors need to be aware
of the attributes and benefits of the strategies in each bucket and
execute an appropriate mix in seeking to enhance client returns while
reducing their tax burdens.
2. Focus on Asset Location -- In light of recent taxes changes, the
key phrase for advisors may have changed from "asset allocation" to
"asset location" (the most appropriate asset types for taxable vs.
tax-deferred accounts). While many advisors have traditionally
focused on determining the right asset allocation to meet a client's
unique situation, the location of assets in a portfolio can actually
create tax advantages. Advisors need to consider where assets are
located within a portfolio to optimize the different tax treatments
that different types of investments receive when placed in certain
3. Don't Overlook Income Shifting -- While gifting strategies have
always been a part of the planning process, they are more important
than ever in light of recent tax changes. Don't overlook shifting
income to a family member in a lower tax bracket or deferring income
to the next year to gain tax benefits. Opt for gifting appreciated
securities, such as low basis stocks, instead of cash. Look to defer
investment from one year to the next to lower the amount of taxable
investment income for the current year. The opportunities are
numerous as long as you're looking for them.
4. Consider All Roth Conversions -- Roth IRAs offer considerable tax
advantages, however a full Roth conversion may not make sense for
every client. There are many different ways a Roth strategy can be
implemented, including a partial conversion, generational arbitrage,
and converting a non-deductible IRA to a Roth IRA. Look to tactically
pair the Roth conversion with other tax strategies, such as
increasing charitable contributions or released suspended passive
losses, to potentially increase the tax savings even further.
5. Maximize Loss Harvesting -- This is one of the most effective yet
underused techniques to reduce client tax liabilities. Don't limit
lost harvesting to an end-of-year exercise. Look to harvest losses
regularly throughout the year to find opportunities to offset future
gains. By looking to harvest losses only at the end of the year,
valuable opportunities may be missed to strategically sell stocks at
a loss and create an "asset" that can offset gains to lower client
SEI conducted the poll at its recent Tax Management Webinar. The
webinar was held to help advisors understand the latest tax changes
and provide them with tax planning ideas to help minimize the impact
of increased taxes on their clients.
About The SEI Advisor Network
The SEI Advisor Network provides
financial advisors with turnkey wealth management services through
outsourced investment strategies, administration and technology
platforms, and practice management programs. It is through these
services that SEI helps advisors save time, grow revenues, and
differentiate themselves in the market. With a history of financial
strength, stability, and transparency, the SEI Advisor Network has
been serving the independent financial advisor market for more than
20 years, has over 5,400 advisors who work with SEI, and $33.7
billion in advisors' assets under management (as of Dec. 31, 2012).
The SEI Advisor Network is a strategic business unit of SEI. For more
information, visit www.seic.com/advisors.
SEI (NASDAQ: SEIC) is a leading global provider of
investment processing, fund processing, and investment management
business outsourcing solutions that help corporations, financial
institutions, financial advisors, and ultra-high-net-worth families
create and manage wealth. As of December 31, 2012, through its
subsidiaries and partnerships in which the company has a significant
interest, SEI manages or administers $458 billion in mutual fund and
pooled or separately managed assets, including $201 billion in assets
under management and $257 billion in client assets under
administration. For more information, visit www.seic.com.
Neither SEI nor its affiliates provide tax advice. Please note that
(i) any discussion of U.S. tax matters contained in this
communication cannot be used by you for the purpose of avoiding tax
penalties; (ii) this communication was written to support the
promotion or marketing of the matters addressed herein: and (iii) you
should seek advice based on your particular circumstances from an
independent tax advisor.
+1 215-564-3200 x110
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