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SEI
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Press

Apr
18
2011

SEI Quick Poll: When It Comes To Tax Management, Clients Don't Ask, Advisors Don't Tell

Despite Disconnect, Majority of Advisors Can Save Clients Money

OAKS, PA., April 18, 2011 – According to an SEI (NASDAQ:SEIC) Quick Poll released today, more than 90 percent of financial advisors say their clients rarely or occasionally ask about ways to minimize taxes on their investments, yet more than two-thirds of advisors say they can help preserve more than 3 percent of their clients’ wealth through specific tax-management strategies. Additionally, more than three-quarters (79 percent) of advisors say that proactively managing for taxes is a consideration when making investment decisions for clients.

“It’s clear that clients aren’t frequently asking their advisors about tax management as it impacts their investments,” said Kevin Crowe, Solutions Unit Leader of the SEI Advisor Network. “On the other hand, the majority of advisors have said they can preserve significant amounts of tax savings for their clients. As a result, advisors should proactively communicate with their clients and discuss the advantages of deploying tax-management techniques. It’s not enough to only provide tax-efficient strategies, advisors need to communicate these strategies to clients and demonstrate the positive impact it has on the investors’ total wealth and meeting their goals. Ultimately, this will provide additional value in building the client-advisor relationship.”

Advisors are in agreement they can preserve at least some of their clients’ wealth through effective tax-management strategies. Nearly all of the advisors (98 percent) are using tax-management strategies in some capacity for their clients. Additionally, nearly 1 in 3 advisors say they can preserve more than 6 percent of their clients’ wealth annually – the equivalent of more than $60,000 on a $1 million portfolio. The primary techniques used to deliver tax management include: tax-managed mutual funds (40 percent), tax-efficient separate accounts (27 percent), tax-exempt investments (13 percent), and harvesting losses at the end of the year (10 percent).

The SEI Advisor Network recently hosted a Tax Management Webinar to help advisors understand the latest techniques to maximize returns and minimize the tax impact on investor portfolios. Additionally, as part of its practice management solution, the SEI Advisor Network offers advisors a tax observation service, which highlights various ways an investor can potentially save more in taxes. SEI recently identified five simple steps every advisor can take to help their clients increase their tax savings:

  1. Gift appreciated securities instead of cash
  2. Take advantage of investment vehicles that provide tax-free income
  3. Fund qualified accounts (IRAs, 401K’s, 403B’s, and others) to the maximum amounts, including catch-up provisions
  4. Maximize loss harvesting opportunities within taxable (non-qualified) accounts
  5. Pay attention to “asset location” by placing less favorable securities in qualified accounts and more tax-efficient securities in non-qualified accounts

“It’s not surprising that investors aren’t thinking as much about tax management right now, but within the next few years that is likely to change,” said Todd Moll, Director and Chief Investment Officer of Provenance Wealth Advisors, LLC in Miami, Florida. “Advisors should use this as an opportunity to discuss the benefits of tax management with their clients and highlight specific opportunities realized for tax savings. It is a good way for advisors to differentiate their practice by seamlessly integrating tax management considerations into every investment decision and walking their clients through the process on an ongoing basis, not just at the end of the year.”

To learn more about the SEI Advisor Network, please visit www.seic.com/advisors.

About The SEI Advisor Network

The SEI Advisor Network provides financial advisors with turnkey wealth management services through outsourced investment strategies; administration and technology platforms; trust, banking, and institutional services; and practice management programs. It is through these services that SEI helps advisors save time, grow revenues, and differentiate themselves in the market. With a history of financial strength, stability, and transparency, the SEI Advisor Network has been serving the independent financial advisor market for more than 16 years, has more than 6,000 advisors who work with SEI, and $31.1 billion in advisors’ assets under management (as of Dec. 31, 2010). The SEI Advisor Network is a strategic business unit of SEI. For more information, visit www.seic.com/advisors.

About SEI

SEI (NASDAQ: SEIC) is a leading global provider of investment processing, fund processing, and investment management business outsourcing solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of December 31, 2010, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $416.0 billion in mutual fund and pooled or separately managed assets, including $172.3 billion in assets under management and $243.7 billion in client assets under administration. For more information, visit www.seic.com.

Neither SEI nor its affiliates provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein: and (iii) you should seek advice based on your particular circumstances from an independent tax advisor.