A Tax Efficient Portfolio through Automation

Many financial firms grappling with whether to implement an automated platform are coming from a much more traditional platform that uses mutual funds to invest their client’s money. This long reliance on mutual fund portfolios as a firm’s value proposition creates the fear chasm many firms are unwilling to cross. However, given commoditization and the strong argument that the primary tool for analyzing mutual funds is faulty we would argue their very existence is at stake if they don’t.

With that in mind, it is our thesis at SWS Partners that automation is the future of the implementation of investment management insomuch as investment management’s intent is to provide clients with the best opportunity to reach their goals in the most tax efficient manner.

A tax efficient platform that utilizes low-cost indexes to manage diversified portfolios in real time renders a comparatively high fee, tax-inefficient investment vehicle as suboptimal and inappropriate. That’s not to say that a skillfully constructed portfolio is not important, it is. It’s just that asset allocation has become commoditized and lacks the value it once did.  When selecting automation platforms that utilize indexes, one must be considerate of how the combination of both will affect a client’s tax efficiency now https://www.cnbc.com/2017/09/26/tax-efficient-customizable-investments-try-a-private-portfolio.html and throughout their investing life.

We don’t consider platforms to be automated advice. Their primary value is providing rebalancing and tax loss harvesting in the most efficient and beneficial manner possible. So while automation takes responsibility for maintaining clients’ asset allocation, we take responsibility for product due diligence and investment selection, as well as portfolio construction. This allows our construction of investment portfolios to follow our bottoms-up approach to the construction of our investment portfolios. Because we only use ETFs and individual shares of stock in our portfolios, we have the ability to leverage our expertise across all platforms regardless of how they are managed and consider tax efficiency in every part of the process.

At SWS Partners we consider your financial plan, along with investment management and tax efficiency   https://www.thebalance.com/how-taxes-affect-your-stock-investments-3141279 before we make recommendations to you.  If you would like to visit about the strategy that we feel is best for you as the investor, based on your situation, we welcome your inquiry.