The Wealth Advisor

(Adhesion) The primary goal of financial advisors is to create value for clients and guide them toward financial prosperity. One strategy to help achieve this is tax loss harvesting (TLH), a method that can potentially enhance after-tax returns. However, many financial advisors do not know that tax loss harvesting is actually a strategy that can be implemented throughout the year as an ongoing component of portfolio management, rather than simply addressing it at the end of the year.

Changes in market dynamics during the past decade called into question the effectiveness of a 60/40 portfolio. A closer look at volatility levels and returns by Bill Nygren, CFA^®, CIO-US, Portfolio Manager, and Adam Abbas, Head of Fixed Income, Portfolio Manager, at Harris Associates, adviser to the Oakmark Funds, shows why this asset allocation mix of equity and fixed income is alive and well.

Last year, the average client of SAM users saved or deferred taxes equal to 1.68% of the value of assets that were actively tax-managed.¹

The total taxes saved in 2023 was $13,615,148.36.

SAM's parent company, Smartleaf, Inc., conducted a study in cooperation with Altium Wealth Management, a user, like SAM, of Smartleaf's automated tax-optimization system. The study sought to answer the question “what percentage of accounts had tax savings or deferrals greater than their fees?"

If you’ve been curious about direct indexing and whether it’s a good fit for your clients, you’re certainly not alone. This investment strategy, once exclusive to high-net-worth individuals, has become more accessible in recent years, with advisors offering it at lower fees and minimums.