Earlier this year, the markets gave investors a high-stakes window of volatility to manage. Tariff headlines triggered a double-digit drop in the S&P 500 before quickly snapping back. For many advisors, the speed and scale of the drawdown made effective tax-loss harvesting nearly impossible. For those equipped with real-time execution and household-level coordination, however, it was an opportunity to create value for their high-net-worth clients.
Financial advisors have long recognized the importance of incorporating tax-aware strategies into their clients’ investment decisions. By selling securities at a loss, advisors can offset capital gains, including from the sale of a business or other appreciated assets, and increase their clients’ after-tax returns. But tax-loss harvesting during periods of market volatility carries real risk. Rapid selloffs followed by sharp recoveries can leave investors with tracking error, unfavorable reinvestment outcomes or an unintended shift in exposure.
For clients with large, embedded gains, the opportunity to realize losses and materially reduce future tax liabilities can outweigh those risks if executed with coordination, real-time insight and a portfolio-wide view that spans managers, accounts and legal entities.
What does it really take to deliver that kind of result? Our Chief Technology Officer and Investment Partner Dan Burke recently shared three considerations in an article in Financial Advisor Magazine.