Tax Aware Migration Strategies | Improvement

Improvement for advisors allows advisors to easily specify trading migration strategies to change their clients portfolio or investment allocation.

  • Advisors have three options when moving a client to a different portfolio or changing their allocations প্রত্যেক each with its own tax-optimization strategy.
  • Advisers can preview the tax-impact of their election before submitting changes.

Three options are available, each with its own approach to transition management.

Reduce short-term capital gains and wash out sales

When this strategy is selected, the client’s goal will shift in a tax-friendly way. For taxable accounts, we will sell tax fields that are in loss or have experienced long-term capital gains, but will continue to hold tax lots with short-term gains until they turn into long-term gains or losses. For tax-suspended accounts, we will transfer without considering the embedded capital gain. Regardless of the type of account, we will prioritize avoiding laundry sales that may result in permanently permitted losses for securities held in Betterment.

For this strategy, it is important to keep in mind that the account may have high drift in the short term, but betterment algorithms will generally balance the available loss or long-term profit, as long as the security sale is involved permanently. Permitted damage

Drift goals aimed at targeting the portfolio

For this migration strategy, the client’s goal is to gradually move to the target by buying underweight securities with inflows / deposits through dividend reinvestment, and selling overweight securities to raise funds. No securities will be sold as a result of this change. These selections often result in higher trends, especially if portfolio or assignment changes result in significant changes in the structure of portfolio holdings.

When “Drift Target Targeting Portfolio” is selected, an additional selection must be made to choose whether to turn off automatic rehabilitation. This is necessary because betterment Standard re-balancing algorithm Work independently from the selection of migration strategies. Disabling automatic relocation for targets will ensure that selecting “Goal from Drift Goal to Portfolio” will not rebalance due to high flow.

If the advisor chooses to re-balance, the Automated Rehabilitation Algorithm of Betterment may take the opportunity to reconsider the goal shortly after the portfolio or assignment change is completed. Re-balancing algorithms avoid sales that realize short-term capital gains or may result in permanently ineffective losses for securities held in betterment.

Balance without any tax-effect limitations

For this migration strategy, the client target will be rearranged into the target portfolio as soon as possible. Betterment will balance this as much as possible in a tax-optimized manner, but we will not delay in selling the shares, although doing so could result in higher tax results. Choosing this option can lead to a wash sale perception for recently sold securities. Upon completion of trading on the change, the account will generally be in 100% balance with the target portfolio.

After applying any of these changes, select the strategy Stays active until the next change.

For each of these migration strategy options, Betterment Tax-Impact Preview The feature is available so that the advisor can see an estimate of the effects of the selection.

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