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Record Tax Savings in Model Portfolios Underscore an Ongoing Opportunity for Investors in Volatile Market Environments

Data from 55ip’s tax-smart technology reveals a silver lining among the clouds of a down market as advisors leverage solutions and fuel record growth on the platform

BOSTON, November 30, 2022--(BUSINESS WIRE)--55ip, the financial technology platform designed to deliver personalized, tax-smart investment management at scale, announced today that data from its platform this year reveals a record number of advisors taking advantage of tax-loss harvesting opportunities for their clients. Across client portfolios through Q3, the 2022 YTD tax savings benefit for model portfolios of ETF and Mutual Funds was 2.99 percent. Dating back to 2020, the annualized tax savings across clients in model portfolios on the platform was 2.82 percent. The savings demonstrate the value of ongoing harvesting within client portfolios throughout the year when compared to those not harvested for tax losses.

"The growth of model portfolios is one of the fastest growing trends in asset and wealth management, but concerns about the tax implication of transitioning and managing client accounts have been a major barrier to broad use by advisors," says Paul Gamble, Chief Executive Officer of 55ip. "Volatile markets can be emotionally and financially challenging for investors, but our data indicates they can also present potential opportunities for meaningful benefits from a tax perspective. During unstable market climates, we see advisors taking the opportunity to help their clients understand the importance and benefits of tax-loss harvesting strategically year-round."

As investors have looked to their advisors for answers, advisors have turned to 55ip for its automated tax management capabilities. Underscoring an increasing industry-wide need, growth on 55ip’s platform, since January 2021 reached record levels with a 125 percent increase in advisory firms that utilize the platform, a 357 percent increase in the amount of client accounts, and a 343 percent increase in total powered assets. In addition, the number of tax-smart transitions, using tax-loss harvesting to automatically move client accounts into model portfolios, reached record levels, given the market dynamics.

"Our growth speaks to the rising demand among advisors seeking tax-smart strategies in portfolios," says Gamble. "This year’s market volatility has clearly shown the value of solutions designed to help mitigate tax impacts. Investors should work with their financial advisor to determine the strategy that best fits their long-term goals and how tax-loss harvesting fits into that strategy. We’re well positioned to support advisors and their clients with year-round opportunities now and in the future based on whatever the market environment may bring."

About 55ip
55ip is a financial technology company purpose-built to break down barriers to financial progress. Setting the industry standard for automated, personalized, and optimized tax outcomes, the 55ip platform delivers efficient implementation of the investment process to the financial services industry. Combined with leading trading and rebalancing capabilities, we offer a full-service solution that meets the unique needs of advisors. At the heart of 55ip’s seamless, intuitive user experience is 55ip’s ActiveTaxSM Technology, including elevated portfolio design and delivery, tax-smart transitions, management, and withdrawals, all helping advisors save time and achieve better outcomes for their clients. 55ip is a wholly owned subsidiary of J.P. Morgan Asset Management, the asset management business of JPMorgan Chase & Co. Visit 55-ip.com for more information.

Disclosures

55ip is the marketing name used by 55 Institutional Partners, LLC, an investment technology developer, and for investment advisory services provided by 55I, LLC, an SEC-registered investment adviser. 55ip is part of J.P. Morgan Asset Management.

Results reported here are not related to investment performance. The impact of a tax-loss harvesting strategy depends upon a variety of conditions, including the actual gains and losses incurred on holdings and future tax rates.

The tax-loss harvesting service is available for an additional advisory fee and the results shown represent the net effect of the advisory fees but may not consider the impact of fees charged by others, including transaction costs or other brokerage fees. The information contained herein is subject to change without notice, is not complete and does not contain certain material information about the investment strategy, including additional important disclosures and risk factors associated with such investment and information about fees, trading costs and taxes. Neither the U.S. Securities and Exchange Commission nor any state securities administrator has approved or disapproved, passed on, or endorsed, the merits of this document. More information at www.55-ip.com.

2.99% reflects the estimated average tax savings for accounts which received a Tax Savings report from Q12022 through Q32022 using 55ip’s tax-smart technology. 2.82% reflects the estimated annualized average tax savings for accounts which received a Tax Savings Report for period from Q12020 through current quarter using 55ip’s tax-smart technology. The estimated annualized average tax savings is based on an arithmetic average of each quarterly tax savings. The quarterly tax savings of all accounts in a respective quarter are summed and divided by the number of years represented. The aggregated percent tax savings for each quarter is taken as an average and annualized to determine the estimated annualized average tax savings referenced above.

Calculation methodology: Average tax savings are calculated by comparing the client’s actual account activity with a shadow account created by 55ip. The shadow account has the same inception date and is invested in the same model as the client’s actual account but does not incorporate 55ip’s tax-smart technology for rebalancing. Gains and losses are accrued for both the client’s actual account and shadow account to produce the estimated tax bill. The tax rate applied to the client’s actual account and the shadow account are provided by the client’s advisor. If no tax rate is provided, then the highest applicable federal tax rate (20% for long-term gains/losses and 37% for short-term gains/losses) is assumed and an additional 3.8% net investment income tax rate is applied to both accounts. The estimated tax bill of the client’s actual account is then compared to the estimated tax bill of the shadow account, and the shortage of the former amount is the client’s estimated tax savings. There is no guarantee that the estimated tax and subsequent projected tax savings will equal the actual tax liability/tax savings achieved by the client. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221130005350/en/

Contacts

Media:

Rob Farmer
The Rudin Group
(415) 377-3293
rob@therudingroup.com