- Managing clients’ asset allocations is a core function for advisors. Solo advisors may direct these changes themselves or look to their home office or asset managers for guidance, while others may lean on their dedicated staff to advise on asset allocation changes. Unsurprisingly, nearly 90% of advisors rated changes in client goals/risk profile as a very important driver of allocation changes.
- Most remarkable is the importance that advisors place on tax considerations with close to 60% of overall advisors, and 62% of RIAs, deeming taxes to be a very important factor prompting asset allocation changes. By contrast, fewer than half advisors (48%) deemed the market/economic outlook to be very important in signaling the need for asset allocation changes.
- Advisors and their clients are eager to bypass the taxable toll road for a more tax-efficient motorway. Asset managers are witnessing the growing weight of taxes in the decision matrix in the shift of assets from mutual funds to active ETFs, SMAs, and other tax-efficient strategies.
