Portfolio Rebalancing + Tax Management: Adding Real Value to Client Portfolios

Whether you’re looking to build deeper relationships with existing clients or preparing to take your practice to the next level, there’s no better time to explore opportunities to enhance the value you deliver. In fact, RIAs using Envestnet | Tamarac® for portfolio rebalancing and tax management understand how critical active rebalancing and tax efficient strategies can be when it comes to the value they add to client portfolios.

But don’t just take our word for it. Envestnet | PMC® research quantifies the value that select sources, including systematic rebalancing and tax management, can add to client portfolios. From the study, Capital Sigma: The Advisor Advantage, (link below) we find that for advisors to deliver the most alpha to client portfolios, you need to focus on five sources: systematic rebalancing, tax management, financial planning, asset selection and allocation and investment selection. The combination of successfully implementing these five sources has produced around 3% of value add annually—results that are consistent with PMC research first published in 2014.1


In this post, we’re focusing on two pillars of advisor-created value—systematic portfolio rebalancing and tax management—and how Tamarac’s cutting-edge technology can help you add more value to client portfolios.

Systematic Rebalancing: Essential to Portfolio Efficacy

According to PMC research, systematically rebalancing a diversified portfolio should be carried out every year rather than the naïve approach of rebalancing once every three years. PMC believes two key benefits arise from a carefully constructed and systematic rebalancing policy: greater risk control and enhanced returns. The process of systematically rebalancing a diversified portfolio annually can add 30 basis points of value each year.

Tax Management and Tax Loss Harvesting Really Matter

Because efficient tax management in an all-equity portfolio can add approximately 100 basis points of value annually, it’s a component of advisor-added value that simply can’t be ignored. Focus on an informed tax management approach that looks at all available options, including a buy-and-hold strategy, tax-loss harvesting and tax optimization alpha.

How Tamarac Can Help You Serve Your Clients Better

 A Leader in Portfolio Rebalancing

Whether you’re using a passive or active management strategy, Tamarac Trading® can help you provide that extra value. We understand the importance of data quality and the impact it has on trading and reporting. Our innovative technology dramatically abbreviates the trading process while adhering to your investment strategies, custom account settings, restrictions, and tax sensitivity.

And our technology delivers so much more than portfolio rebalancing. You can automate your model portfolio construction and management, monitor your accounts for trading triggers, make tactical trades, execute your trades directly, and reconcile trades from the previous day with the click of a button.

Tax Management Expertise

With Tamarac, you can also automate different loss harvesting strategies at the individual security level or across entire accounts. In addition, reinvestment of cash generated from harvesting activities is automated so that accounts can stay fully invested, while taking the benefits of the tax loss harvesting opportunity.

Enhance the Value You Deliver With Tamarac

To learn about how Tamarac’s comprehensive technology solution can help you run your business with greater efficiency and scale give us a call at 866-525-8811.

For more on PMC’s updated research study, Capital Sigma: The Advisor Advantage, read the full report. [link to white paper]
1 Envestnet | PMC’s Quantitative Research Group “Capital Sigma: The Advisor Advantage” 2014.

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