Moving Beyond Tactical Tax-Loss Harvesting
Many advisors acknowledge the importance of tax efficiency in client portfolios, but few are equipped to execute it with the consistency and precision that true tax-managed investing demands. In too many cases, tax-loss harvesting is treated as a reactive, end-of-year tactic rather than a foundational strategy integrated into portfolio management. And while that approach may provide marginal benefits, it fails to capture the full value of what tax-managed investing can offer.
Systematic Tax Management as a Core Strategy
The difference between tactical tax-loss harvesting and a systematic, year-round strategy is profound. At Great Lakes Advisors, tax efficiency is not an afterthought. It is a primary input into portfolio construction and management designed to work in concert with investment discipline, risk management, and client customization. This integration enables advisors to offer not just performance, but precision and personalization at scale.
The Power of Real-Time Oversight and Precision
At the core of GLA’s offering is a quantitative framework that continuously monitors tax lot characteristics, wash sale windows, and short- versus long-term gain dynamics across thousands of securities. This is not a simple task. Managing thousands of tax lots across hundreds of client accounts requires advanced systems, deep expertise, and rigorous oversight. GLA’s proprietary technology infrastructure enables its portfolio managers to track securities approaching long-term holding periods, identify losses before they expire in rising markets, and proactively evaluate when and how to reposition holdings.
One of the critical advantages of this approach is the ability to optimize both tax outcomes and investment outcomes simultaneously. For example, when harvesting a loss, GLA doesn’t just replace a security with a placeholder ETF or low-correlation asset. Instead, they actively identify replacements that align with the client’s target exposure and offer a reasonable expectation of future return. This ensures the portfolio remains on track while preserving valuable tax benefits.
Timing Matters And So Does Transition Management
Timing is everything. Consider the 2020 market environment. When the S&P 500 dropped sharply in Q1, many advisors scrambled to harvest losses, some too late, others not at all. GLA’s portfolios, on the other hand, were able to harvest during the drawdown and position clients to benefit from the recovery later that year. That level of responsiveness, made possible through ongoing monitoring, is what distinguishes systematic tax management from reactive tax maneuvers.
Transition management is another area where GLA’s process earns attention. Many clients come to an advisor with existing positions that contain embedded gains in stocks and ETFs. Rather than liquidating those assets to fit a new model portfolio, GLA takes a tailored approach, transitioning holdings incrementally in a way that minimizes realized gains while aligning the portfolio with long-term objectives. This thoughtful onboarding process avoids forcing clients into a costly “reset” of their tax exposure.
Customization That Reflects Each Client’s Unique Needs
Crucially, GLA’s process is designed to support a high degree of customization. Advisors can incorporate client preferences, restrict specific stocks or industries, budget capital gains around income events, and accommodate legacy holdings. Rather than being forced into static models, clients receive portfolios built around their specific tax profile and investment goals.
Helping Advisors Quantify and Prove Value
From the advisor’s perspective, tax-managed investing offers a compelling narrative that goes beyond performance. With GLA’s Transition Analysis tool, advisors can show clients a before-and-after view of their portfolio, including estimated tax savings and loss-harvesting opportunities, providing a tangible value story that supports client retention and prospect conversion.
A Disciplined Strategy for a Tax-Conscious Era
Tax management is not a one-time decision; it’s an ongoing discipline. And when executed with the rigor and intentionality that Great Lakes Advisors brings to the table, it can be one of the most powerful tools in an advisor’s arsenal.
To see how systematic tax management can enhance your client outcomes and elevate your advisory practice, download The Advisor’s Guide to Tax-Managed Investing.
