“We created a platform that helped advisors deliver more customization but [spend] less time doing it, and I would say that’s the reason why our platform has grown so much.”
To provide the tax-loss-harvesting help, the firm created algorithms that monitor various portfolios along with every tax position and tax law pertaining to those portfolios. After identifying the proper tax-loss level, the system decides when it makes sense to execute and move assets. Those assets will then be parked in some similar investment, though it can’t be identical, since the clients don’t want to run afoul of wash-sale rules, Gamble said.
“We created algorithms and worked with our partners to find things to invest in that are similar but not substantially similar so you can take advantage of that loss and put your money in a position that allows you to keep the integrity of the portfolio you originally wanted to be in,” he said.
The platform offers tax management for a variety of products including model portfolios, ETFs, direct indexing, and active separately managed accounts, he said. By using 55ip’s platform, advisors have expanded access to both tax-deferred and taxable accounts and they do not need to worry about the rebalancing.
“Advisors that use our platform will use model portfolios more broadly across their client base and for more of their taxable accounts than they would otherwise,” he said.
Gamble has extensive experience working on these issues, having spent 25 years of his career in advisory services, financial technology, investment management and retirement. His most recent position before 55ip was as the executive vice president at Sunnyvale, Calif.-based Financial Engines, one of the nation’s largest independent investment advisors. He led the firm from the time it was a financial technology startup until it was a publicly traded company.
Looking ahead, 55ip, will continue working on the areas it has specialized in. The first pertains to user experience, which means making sure advisors have something intuitive to help them manage their clients’ portfolios.
The firm will also continue to build out its algorithms to provide customization and tax management. Finally, the firm will continue to assume most of the burden of rebalancing its clients’ different portfolios.
“Our aim is to be the only platform to deliver custom tax management across all asset and client types,” Gamble said.
As far as improvements to the platform, 55ip is looking to add additional customization, including ESG screening and tilts in the portfolio.