We at Quorus are passionate about helping advisors offer more tax-efficient active portfolios for their clients.
Adding tax-aware, multi-account householding builds upon our separately managed account tax-management solution. This new feature allows advisors to incorporate integrated tax management across multiple accounts from an individual or married couple.
Taking this integrated approach has the potential to improve the risk and return characteristics of a client's total portfolio and reduce the individual's tax liability.
Multi-account householding explained
Householding means jointly managing multiple accounts (e.g., individual taxable accounts, non-qualified trusts, Roth RIA) to a single asset allocation. Contrast this with a non-household view, which views every individual account as a single asset allocation.
This approach allows advisors to minimize unintentional drift from a client’s target allocation and align the portfolio to a single, client-level risk measure.
Now make it tax-aware
In addition to traditional portfolio construction benefits, integrated household management is even more critical for taxable accounts.
It ensures that the account with the highest-value tax management trades is sequenced first. It also prevents accounts under a single household from making trades that trigger wash sales.
Valuable but complex
Implementing tax-aware, multi-account householding with actively managed, separately managed accounts is operationally complex.
To determine optimal trades for a client account, the advisor must maintain a target asset allocation across multiple investment portfolios, maximizing the potential tax deferral benefit and controlling for unintended impact to the active manager’s investment signal.
This requires the advisor to know all open and closed tax-lot information about all client portfolios and conduct a multi-account tax-aware portfolio optimization. This optimization must consider client-specific constraints (e.g., tax budget) and strategy-specific constraints to determine the best trades.
Research on tax management has demonstrated that to maximize the after-tax value of a portfolio, it should be checked daily for opportunities to generate tax savings.
As the number of accounts an advisor oversees increases, the recordkeeping and portfolio management process gets increasingly complicated.
Householding with Quorus
Now, every portfolio Quorus runs automatically considers any other accounts tied to the same household when checking for tax-management opportunities.
Our daily process optimizes each account individually and as part of the household to determine the best possible trades to improve tax efficiency and portfolio exposure. Once the optimal trades are identified, Quorus executes the trades on behalf of the advisor.
With Quorus, there is no software to check, no tax lots to reconcile, and no optimizer tuning to preserve active signals. Just seamless, sophisticated tax management executed automatically for your clients.
Disclosures
Investing in securities involves risks, including the risk of loss, including principal. Quorus Inc., is an RIA registered in the States of Connecticut and Pennsylvania. Neither regulator has approved this message.
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