Correction: A previous version of this story mistated the number of 55ip customer accounts and its growth rate.
55ip, a Boston-based investment technology developer, says that a significant number of advisors have been taking advantage of the proprietary tax-loss-harvesting system the firm implemented three years ago, and that this demonstrates a growing need for the service among advisors.
The firm, which launched in 2016, introduced its platform in late 2017 and early 2018. Its original mission was to provide a variety of services to advisory clients. However, 55ip saw there was a demand for tax-loss harvesting and pivoted to meet the demand, said Paul Gamble, CEO of 55ip.
“At that time, the platform had many different capabilities,” he said. “It was really around 2019 that we focused the capabilities on customization at scale with a primary focus on tax management and ongoing tax-loss harvesting [and that’s when] the business really started to take off, when we focused on tax management on model portfolios.”
The firm’s success has been steadily growing, and 2022 has been a banner year. 55ip had about 24,000 accounts with $7.85 billion in assets under management as of September 30, which is up by 343% from two years ago, according to the firm.
The number of advisory firms that 55ip works with has also been increasing dramatically. It has seen a 125% increase in those firms in the first nine months of this year, and reached 205 advisory firms as of September 30, 55ip said.
The firm’s success has not abated with this year’s market turmoil, since investors are still looking for tax advantages within their investment portfolios, Gamble said.
“In a year like this where the markets have been going up and going down, we’ve been helping advisors help their clients deliver better after-tax outcomes,” he said.
The firm’s success comes at a time when advisors have been turning to model portfolios, which allows them to provide clients specific investment strategies without having to take up time conducting research. It’s been easier to use models for tax-deferred portfolios, since there’s a bigger burden rebalancing in taxable accounts. Those sales can trigger bills to the IRS.
Advisors are being called upon to do more with less, Gamble said. They are no longer just investment managers, but planners, tax specialists and estate planning consultants. They have less time to do everything a client expects them to, which is why Gamble said his firm’s platform has attracted them.