April 15th is months away, and taxes are likely to be one of the last financial concerns your clients are thinking about at this time of year. But as you know, mutual funds typically deliver their capital gains estimates to shareholders in the November/December timeframe each year.
A fund distributing a large gain may have a major impact on your clients’ taxes and their financial goals.
Depending on a client’s unique situation, taking the gain may be the appropriate thing to do. However, some clients may benefit from an adjustment that achieves the intended asset allocation, while minimizing or avoiding those gains. The subsequent savings can make for happy clients!
Tax Estimator, one of the tools available for Envestnet users who subscribe to BlackRock’s Advisor Center, can help you more easily estimate the capital gain taxes due on your clients’ transactions before tax season arrives.
Instead of spending time searching for information about when and where the gains will be distributed, you simply upload your client’s portfolio to the tool and then view the results to identify which of the funds in their portfolio are paying capital gains. The tool quickly analyzes 7,000+ funds, freeing up your time to focus on other high-priority aspects of your clients’ portfolios. Further, it provides insights related to ETFs that can help you minimize the impact of those capital gains and identify potential solutions.
Because different capital gains are recognized in different months, it’s useful to leverage the tool on an ongoing basis. In fact, many advisors use it on a weekly basis to keep track of new gains estimates as they are reported. At a minimum, the November timeframe is when most funds have reported their gains, and the tool’s analysis can help ensure a comprehensive understanding of what to expect.
With this information in hand, you can jumpstart valuable conversations with your clients about their goals and potential avenues for moving forward, working together to determine what’s right for their portfolio and overall financial needs. Any decisions you make can be directly applied to your clients’ existing plan with Envestnet | MoneyGuide. This proactive analysis, as well as the potential opportunity for savings, can help you provide the best service for your clients and emphasize the value of your partnership.
To learn more about how you can leverage our financial wellness platform, including subscription offerings like Tax Estimator, contact your Envestnet sales team at 855-769-0806.
The information, analysis and opinions expressed herein are for informational purposes only and do not necessarily reflect the views of Envestnet. These views reflect the judgement of the author as of the date of writing and are subject to change at any time without notice. Nothing contained in this piece is intended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Neither Envestnet nor its representatives render tax, accounting or legal advice. Any tax statements contained herein are not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state, or local tax penalties. Taxpayers should always seek advice based on their own particular circumstances from an independent tax advisor.
Through a holding company subsidiary, BlackRock, Inc. (“BlackRock”) owns a non-controlling interest in Envestnet’s parent company, Envestnet, Inc. (NYSE: ENV).