Morgan Stanley has partnered with technology platform LifeYield to enable its approximately 16,000 financial advisers to manage client accounts at the household level.
The LifeYield software, which is built around tax-management efficiencies, is expected to help advisers develop comprehensive perspectives on the various accounts and investment portfolios included in most households.
"Most advisers in the industry manage account by account and do not coordinate the five or six accounts typically found in a household portfolio," said Jack Sharry, executive vice president of strategic development at
LifeYield.
"There might be two or three advisers involved with little or no coordination for accounts and products that might have been purchased over decades," he added. "Those few advisers who do make an effort to create tax alpha have to comb through portfolios to optimize the coordination of all the holdings in a household to improve investor outcomes."
PORTFOLIO ANALYSIS
Mark Hoffman, LifeYield co-founder and chief executive, said the platform analyzes portfolio holdings down to individual positions to determine things like whether something should be held in a taxable or tax-deferred account, where to take capital gains and how to manage withdrawals.
"We are sitting on top of all the different systems that a large wirehouse like Morgan Stanley has," he said. "The industry has always thought of tax management as tax-loss harvesting at year end, but that's not what we're doing. We're trying to locate the most tax-efficient assets and most tax-inefficient assets in various accounts."
ADVISER SUPPORT
The partnership with LifeYield, which has been in the works for several months, will be announced Thursday morning. It reflects Morgan Stanley's plans to "invest more heavily in its world class advisers and their teams," which the company stated as part of the late-October announcement that it was exiting the protocol for broker recruiting.
"Our financial advisers can now seamlessly leverage cutting-edge tax optimization software to drive better client outcomes," said Jed Finn, chief operating officer at Morgan Stanley Wealth Management.
"We have invested significantly in technology, partnering with a network of cutting edge firms to assist our financial advisers as they help their clients achieve their financial goals," he added. "This [LifeYield] technology gives a financial adviser a quicker, more efficient method to review a client's multi-account portfolio and recommend strategies designed to help improve after-tax returns."
The companies did not disclose the financial terms of the partnership.
