I’ve been thinking a lot about strategies to improve efficiencies in managing client assets. What brought me to this point was the price of oil falling below $70 a barrel. You see, I had exited my oil position several months earlier after the price rose to $71 from $35; it was one of those times to take some profits off the table. Now, I’m considering getting back in. My challenge is doing this for several clients without entering the trades one account at a time. TradePMR, my custodian, offers the capability of creating model portfolios, assigning each account to a model, then buying the new position in each account with a few clicks of a button. A better option may be to create a “basket.” With a basket you can purchase a security for several accounts and each client receives the same price. However, some accounts need 3%, some 4% and some 5%. To facilitate this, I have created three account groups: conservative, moderate, and aggressive. Then, I can create a basket for each account group as they have a different allocation percentage for oil.
The Tax Angle
Another account group I created is entitled “taxable accounts.” At the end of the year, I need to know what the tax ramifications are for each taxable account. For instance, if an account has a $10,000 gain, is there a position I can sell to create a loss and minimize the tax due? The information I need consists of interest and dividends, realized and unrealized capital gains, for the year and whether the gains are short or long term. The bottom line is that I don’t want my clients getting a big tax bill.
My question to you is, how are you managing this process in your practice?
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