Investors are trying to hold on while global markets continue their roller coaster ride this year. Given these ups and downs, your clients’ portfolios likely include both realized gains from early in the year and unrealized losses from the recent downturn. Now is the time to review a client’s realized gains and plan for tax-loss harvesting (TLH), which is to sell investments that have lost money to offset realized gains with losses, and shave your clients’ capital gains tax obligations for 2023.
Unfortunately, many advisors conduct tax-loss harvesting via spreadsheets and manual workarounds. But this approach is difficult to scale and involves more risk, time and complexity than anyone would want. It’s important to be able to perform tax-loss harvesting for your clients in an effective, scalable and automated manner.
Today’s built-in system capabilities can advance your tax-loss harvesting process. For example, here are some tangible improvements that the SS&C Global Wealth Platform delivers:
Automatically presents all client positions in an intuitive TLH template that offers a point-and-click harvesting capability; avoids manual calculations, spreadsheets and human errors.
Provides year-to-date aggregated realized gain/realized loss value by account.
Allows losses to be targeted based on any of three options:
Value–total amount targeted to harvest, e.g., $20,000.
Threshold–sell all lots that have an unrealized loss of a certain minimum amount, e.g., $2,000.
Percentage–sell lots that have drifted furthest from the model portfolio.
Can target losses or gains, depending on clients’ individual needs.
Aligns client accounts with governing tax requirements, so that short- and long-term losses can be managed according to local tax laws.
Deploys cash during the vesting period by selecting and purchasing proxy securities.
Systematically disallows wash sales/superficial losses during the vesting period via corresponding compliance rules.
The capability to conduct annual tax-loss harvesting in a scalable, automated and risk-averse manner is a valuable service offering for your firm and your clients – especially against the backdrop of market turbulence.