BlackRock partners with tech vendor to help advisers embrace model portfolios
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The new platform automatically transfers asset to a BlackRock model portfolio in a tax-efficient manner, which the company hopes will encourage adoption in nonqualified accounts.
BlackRock Inc. is hoping to make it easier for registered investment advisers to embrace model portfolios with a new platform that alleviates the tax consequences of moving assets in nonqualified accounts.
Built in partnership with 55ip, a technology firm that helps advisers automate tax management, the new technology lets advisers select a BlackRock model portfolio for an existing client portfolio and automatically transition assets in a tax-conscious manner over time. The tool, which is co-branded by BlackRock and 55ip, also provides ongoing, automated trading and tax-loss harvesting across both qualified and nonqualified accounts.
[More: BlackRock pivoting to technology could serve as blueprint for other asset managers]
The tool is available to advisers who custody assets with Fidelity, TD Ameritrade Institutional and Schwab Advisor Services. Using the tool is free for RIAs; 55ip will receive a fee from BlackRock for the service.
[More: Pershing and Fidelity making it easier for advisers to use model portfolios]
Model portfolios are increasingly popular among advisers, but growth has largely been limited to qualified accounts, according to BlackRock head of model portfolios Eve Cout.
Roughly 70% of BlackRock’s model portfolio assets are in qualified accounts, Ms. Cout said in an emailed statement.
[More: New sources for data on model portfolios could help increase adviser adoption]
“It became clear to us that the most significant roadblock to further model adoption of nonqualified accounts [was] embedded gains,” she said. “One of the most frequent requests from advisors is to make it easier to use models with nonqualified accounts — specifically to reduce the friction of transitioning an existing portfolio into a model portfolio in a tax-aware manner.”
While other technologies offer advisers automated tax management features, 55ip CEO Paul Gamble said they require advisers to set the assumptions and configurations.
The partnership with BlackRock is the latest of example of BlackRock partnering with technology vendors to ensure advisers have easy access to its investment products.
The asset manager acquired a 4.9% equity stake in fintech giant Envestnet, provides risk analytic software to Morgan Stanley and owns the white-labeled robo-advice platform FutureAdvisor. The company also has a product partnership with Betterment and integrated its iRetire income calculator with Fidelity-owned financial planning software eMoney Advisor.
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