Roughly one of every three dollars invested in U.S. mutual funds was held in a taxable account at the end of 2019, representing $6.8 trillion in assets.1 And given that taxes on distributions shaved 1.73 percentage points off the average annual performance of actively managed U.S. Large-Cap Blend mutual funds for taxable investors in the decade that ended in 2019, building tax efficiencies into a client’s portfolio process can be a key part of helping them save money and achieve their financial goals.1
By November, most funds have reported their capital gains, creating an opportune time to evaluate potential impacts to your clients’ portfolios and identify solutions. In the past, this could be a time-intensive process. However, BlackRock’s Tax Evaluator, one of the tools available for Envestnet users who subscribe to BlackRock’s Advisor Center, aggregates and analyzes the tax impact of capital gains across all your clients’ portfolios in just minutes, saving you the time and hassle of hunting down this information.
With access to over 7,000+ mutual funds and ETFs all in one place, you’ll get a detailed picture to help unlock potential tax savings.
Build Client Loyalty
Clients are increasingly demanding more integrated services and a more holistic approach to financial services, with an increased sensitivity to fees. Including tax efficiency into your due diligence can help align your processes with your clients’ expectations and further your relationship, while demonstrating how you can help them save.
This time of year is ideal to reach out to your clients in advance of year-end planning to show them that you’re proactively monitoring their portfolios and offering strategic recommendations:
- Redeeming funds ahead of large capital gains distributions.
- Taking advantage of tax loss harvesting opportunities by identifying funds with negative price returns.
- Comparing fund characteristics and rankings to help clients make informed decisions about specific holdings.
Putting Tax Efficiency Into Practice
Here’s how you can get started:
- Visit Tax Evaluator within Advisor Center and analyze a saved portfolio or upload a new one.
- Quickly see which funds have reported estimated capital gains distributions before your clients incur the tax liability.
- When you are ready, download an advisor-friendly report that highlights estimated capital gains distributions, potential tax loss harvesting opportunities, and fund performance.
Tax Evaluator is updated frequently, enabling you to track portfolios at key points throughout the year and keep your clients aligned to their intended goals. And because it’s quick, you can do this multiple times during capital gains season.
To learn more about how you can leverage our unified advice platform, including subscription offerings like Tax Evaluator, contact your Envestnet sales team at 855.769.0806. Visit our BlackRock Resource Center, and read our white paper, “Keep More Of What You Earn,” to learn more about the tools you can leverage to help your clients on the journey to financial wellness.
Sources:
1. “Keep More Of What You Earn,” BlackRock, last modified in 2020, https://www.envestnet.com/sites/default/files/documents/blk-tax-whitepaper.pdf.
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 judgment 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.
Tools on BlackRock’s Advisor Center are offered exclusively for financial professionals. Certain tools allow for the generation of client reports.
Through a holding company subsidiary, BlackRock, Inc. (“BlackRock”) owns a non-controlling interest in Envestnet’s parent company, Envestnet, Inc. (NYSE: ENV).