Wealth management service provider SEI’s offering, SEI Wealth Platform, has now recruited over 7,400 FAs and raised the platform’s total AUM to $58.7 billion, the company announced. And part of its growing attraction might be because the platform offers straight-through processing and tax prediction features for client portfolios, unlike Charles Schwab, Fidelity, or TD Ameritrade, according to user Jennifer Hatch, president and managing partner of $500 million AUM Christopher Street Financial.
SEI launched the platform — which also counts 205 private investors and 48 banks as clients — in 2011.
On the Charles Schwab, TD Ameritrade, or Fidelity systems, advisors who want to calculate fees across client accounts or rebalance client portfolios must upload information quarterly, she says. But that’s no longer a concern with SEI’s system, which can rebalance portfolios and advice fees automatically across all portfolios based on the advisor’s own rate and time period preferences, she says.
“We don’t have to worry that someone isn’t going to show up to work and the needed rebalancing won’t happen,” Hatch says. Plus, the added efficiency also translates to increased tax planning efficiency for the firm, she says.
If you want to change a client’s portfolio and see what it would look like to buy and sell different investments, the system’s tax loss feature shows FAs what the potential tax implications would be, Hatch says.
Other advisors also think the platform’s tax planning function helps them better give clients a true picture of their portfolios.
“What you earn is important, but what is most important is how much money you get to keep,” Jereme Ransick, chief operating officer of $425 million Principled Wealth Advisors, says. The firm uses the tax planning feature to minimize the amount of capital gains tax its clients pay, and the system gives advisors “a really good window into the tax implications of portfolio changes.”
“No firm offers tax planning to the extent we offer it,” Wayne Withrow, executive vice president of SEI and head of its Independent Advisor Solutions, claims. With the tax planning feature advisors can run real time “what-if-scenarios” on “tax impact analyses” across all their client accounts. And this “strikes at a big industry trend,” he says.
“Advisors can’t maintain their fees with traditional management. They need to add services. And tax management is one of those services,” according to Withrow. To the extent SEI is offering tax management, the platform is differentiated from its competitors, he states.
SEI also says the platform lets advisors manage multiple models in a single account, view firm AUM and revenue, and streamline client communication.
“You can buy multiple platforms that each do one aspect of the planning process. But this platform supports all the operation infrastructure in one platform,” Withrow claims. “The entire technology stack is in one platform and there is no need to purchase and integrate ‘bolt on’ subsystems,” he says.
When asked about the rebalancing aspect of its platform offerings a Fidelity spokesperson says “at any point advisors can rebalance portfolios with just a click. But the click is there so it doesn’t happen without their awareness. It’s automatic, once they decide they want to rebalance.”
Regarding tax planning, “advisors can preview a rebalance, analyze proposed results and determine if they want to take action,” a Fidelity spokesperson says. “This includes the ability to set the desired tax depletion method, and the tool will show the estimated gains or losses that would result if the user were to rebalance the portfolio.”
A TD Ameritrade spokesperson says using “TD Ameritrade’s iRebal product, advisors see clients’ real-time gain and loss implications associated with each rebalance, submitted ad-hoc or automated through the scheduler. iRebal also offers a flexible tax harvesting feature letting advisors set various loss thresholds for taxable accounts, total loss targets for portfolios, and choose a replacement security for each harvested security. Once the thresholds have been set, iRebal identifies eligible losses in taxable accounts, and shows advisors the securities that fit the criteria that you have defined.”
Charles Schwab did not provide comment by time of press.