Financial advisors have been chasing tax alpha for years, layering on third-party tools, juggling spreadsheets, and manually scoping tax lots to squeeze out a few basis points of after-tax return. But what if the rebalancer already sitting at the heart of your practice could do the heavy lifting—not as a bolt-on feature but as a deeply integrated, model-based optimization engine?
Over the past five years, SS&C has united ALPS Advisors, a $30 billion asset manager with deep quantitative research capabilities, with Black Diamond Wealth Solutions’ reporting and rebalancing platform. The result is a turnkey asset management solution where tax-aware portfolio transitions and active management happen inside the same unified code base advisors already use every day.
Alex Hagmeyer, Co-Chief Investment Officer and Senior Director of Quantitative Research at SS&C ALPS Advisors, describes the approach as fundamentally different from typical acquisitions where companies “acquire and smush technology together.” Instead, ALPS Advisors and Black Diamond operate under one parent with shared engineering teams in Denver and Jacksonville working within the same sprint development cycles. “It’s really been a collaborative effort and one that I can say is truly native versus trying to squash different types of systems together,” Hagmeyer explains.
Beyond Settings and Heuristics
SS&C Black Diamond’s Rebalancer offers state-of-the-art capabilities. Advisors can set tax-loss harvesting targets, define asset equivalents, and configure parameters that flow through every rebalancing session. More than 1,000 RIAs rely on the system today. Advisors using the Rebalancer also have access to a Model Marketplace powered by ALPS Advisors, offering curated, low-cost ETF portfolios with automated daily updates.
ALPS Advisors built a homegrown optimizer that uses risk models to discover the “picture perfect trade” for each client. Comprehensive financial planning now demands attention to estate planning, insurance, and income tax strategies—areas where advisors can add clear value. Investments, while still critical, can’t monopolize hours of manual lot-level analysis.
“I think what we found was financial advisors would be one of two things,” Hagmeyer explains. “They’d have state-of-the-art rebalancing software like Black Diamond’s, and they’d have an operational system in place where they’d be able to set their asset equivalent, set their tax-loss harvesting, or be able to easily drill down and scope and look at tax lots and identify exactly which ones they want to sell. That does take time though.”
The ALPS tax-aware optimizer, built into Black Diamond’s Managed Account Services platform, enables advisors to input a tax cost budget—say, $10,000 in realized gains for the year—and the system identifies which positions to sell, which to hold, and how to minimize tracking error (or drift) against the target model.
“We found it to be a game changer for financial advisors, if you can give them a tool where they can just—like a fighter jet pilot can just move the joystick a little bit this way, the dial this way, and then bam, they’ve got their trades,” says Hagmeyer.
Rather than dedicating precious time to mining outperformance, advisors can focus on demonstrating clear, measurable tax value in client conversations. When markets sell off 10% or 15%, the conversation can transform from defending performance to explaining how the firm harvested losses and added value during volatility.
“In my study of the financial advice space over the last four or five years, it increasingly is becoming a place where financial advisors can add a ton of value,” he adds.
Tax-focused investing often opens doors to deeper planning discussions—charitable giving optimization, strategic Roth conversions, and comprehensive household tax strategy. “To me, it’s a much more interesting way to develop the client relationship than to be able to grind out basis points of beating a headline benchmark quarter after quarter,” Hagmeyer emphasizes.
Three Phases of Personalization at Scale
ALPS Advisors frames tax-aware portfolio management across three distinct stages, a structure Hagmeyer credits to a recent industry analysis focused on next-generation advisory platforms. The framework shows where tax optimization fits into the full client life cycle.
The first phase, portfolio onboarding, addresses transitioning complex, multi-account households into simplified, model-based portfolios. Markets at all-time highs mean legacy positions carry substantial embedded gains. The ALPS optimizer handles the trade-off between tax cost and tracking error, allowing advisors to specify a budget and let the system find the optimal path forward.
The second phase, active tax management, kicks in once accounts are onboarded. Volatility in specific market segments creates opportunities to harvest losses and generate ongoing tax alpha. “Maybe semiconductors may fall away from some of the heights they’ve been in more recently, and that offers a time to be able to tax-loss harvest actively over time in generating tax alpha in doing so,” Hagmeyer notes.
The third phase, distribution optimization, becomes critical in retirement. Clients need cash, and advisors must decide how to raise capital in a tax-aware manner. Should they draw from IRAs or taxable accounts? When does a Roth conversion make sense? The optimizer can model different scenarios, helping advisors maximize after-tax returns over the long term.
The three-phase framework makes clear that personalization at scale isn’t a one-time event. Every client arrives with a tax situation, every client is moving toward a distribution strategy, and the middle phase—active management—is where advisors demonstrate ongoing value.
Real-World Scale: Direct Indexing Across Households
Hagmeyer points to a sophisticated RIA that licensed the optimization technology from ALPS Advisors to run a direct indexing mandate across entire households. The firm wanted S&P 500 exposure managed holistically across qualified and taxable accounts, breaking the mold of siloed investment structures.
“So, by including multiple accounts in the optimization, including qualified accounts, you give the optimizer a lot of flexibility in terms of the decisions it can make on what to sell, what not to sell, how to create turnover in the accounts to match that exposure that the financial advisor is looking for,” he explains.
During the tariff-induced volatility in April 2025, the firm executed 3,000 to 4,000 trades, Hagmeyer adds, taking advantage of the scalable, model-based approach to capture tax alpha at a level that would have been impossible with manual processes.
The ALPS DirectIndex portfolios, which hold 150 to 250 securities each, are designed specifically for high-net-worth clients where tax management becomes a primary value driver. Industry research on direct indexing strategies suggests the approach can generate 85 to 110 basis points of expected annual tax alpha. Critically, the strategy enables loss harvesting even when broader indices are positive.
Sophisticated asset management techniques once confined to separately managed account providers with institutional-grade technology can now operate at the financial advisor layer across entire households.
Proposals That Start With a Tax Budget
Tax-aware optimization begins before the first trade. ALPS Advisors has built proposal generation capabilities directly into the Black Diamond platform, allowing advisors to model transitions before onboarding a client. An advisor working with an ultra-high-net-worth household can import tax lot data, drill down to understand where liabilities exist, and set a tax cost budget based on client tolerance.
The need for such capabilities became clear through direct conversations with advisors. “Many that we spoke to were sort of doing patchwork. They’d get something from some vendor that was good, and they’d extract those PDFs and include that with some stuff they were building inside, and then they’d have to patchwork this together” Hagmeyer says. “We saw an opportunity to also build a proposal generation capability right there within the Rebalancer tool as well, where you can select existing accounts that are on site within Black Diamond or import accounts that might not be on-site.”
The system then runs multiple optimizations, presenting three, four, or five scenarios with varying levels of tax cost and tracking error. Advisors can show prospective clients exactly how the transition would unfold, what the tax bill would look like, and how the portfolio would move toward the target allocation over time. The proposal itself becomes a selling point, demonstrating sophistication and attention to the client’s unique situation.
No more extracting PDFs from one vendor, combining them with homegrown spreadsheets, and manually stitching together a coherent presentation. The workflow stays inside Black Diamond, where client data, reporting, and communication tools already live.
The Future: One Unified Experience
Hagmeyer envisions a future where the line between the Rebalancer and the tax-aware optimization capabilities disappears entirely. Advisors will have a choice: manage rebalancing themselves using enhanced tools that incorporate model-based optimization, or delegate the entire process to the ALPS crew in Denver.
“I think we’re increasingly going to see a merging of the traditional state-of-the-art rebalancing software technology and the sophisticated tools and techniques that we use within the TAMP,” he says, “and bringing that to bear for clients and meeting them where they’re at, however they want to use it, whether that’s within the rebalancing software itself or outsourcing it to our overlay team to handle it.”
Over the next 12 to 18 months, ALPS plans to surface more of the sophisticated portfolio management techniques the overlay team currently uses directly into the Rebalancer interface. Advisors who want to upgrade their systems for tax-loss harvesting or tax overlay will gain access to features that were previously available only through outsourced services. The goal is to meet advisors wherever they are—whether they want to be fighter pilots or prefer to hand over the controls.
Tax alpha is no longer a luxury reserved for high-touch, complex accounts. With the right technology, tax-aware portfolio management becomes table stakes across the practice. The question isn’t whether advisors will adopt optimization-driven workflows. The question is how quickly they’ll move.
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