The managed account unit of Raymond James hired an investment technology firm owned by JPMorgan Chase to boost tax savings across a platform spanning $144 billion in assets.
Raymond James Asset Management Services picked JPMorgan Asset Management's 55ip — a company acquired by the megabank three years ago — to help financial advisors using unified managed accounts, separately managed accounts and model portfolios make more tax-smart transactions, rebalancing and loss harvesting moves in client accounts, the firms said on Oct. 16. The managed account unit oversees 350 investment strategies that collectively have $71 billion in taxable assets out of their total holdings. The firms expect 55ip's software to upgrade Raymond James' managed accounts technology by the middle of next year.
"Continuing to enhance our managed account platform, with an emphasis on providing customized solutions to match client needs, is one of our most important strategic growth initiatives," Erik Fruland, the president of Raymond James Asset Management Services, said in a statement. "The ability for our advisors to offer tax-smart management with 55ip is a significant step forward in this regard."
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The appeal of potential tax savings through harvesting losses is fueling the continuing rise of direct indexing, which is a method of investing in the individual stocks that comprise an index rather than in an overarching mutual fund or ETF. Since JPMorgan acquired 55ip three years ago, the assets managed by the firm have soared to more than $20 billion at the end of the third quarter from less than $2 billion at the time of the transaction, according to the firms. The bets on direct indexing and tax-loss harvesting by the largest wealth management firms come as a recent survey suggested that advisory practices have yet to meet clients' demand for tax advice.
"Incorporating technology to customize investment portfolios is key to improving financial outcomes," George Gatch, the CEO of JPMorgan Asset Management, said in a statement. "The demand for tax management capabilities will only continue to rise. Our partnership with Raymond James is an example of how leading asset management and wealth management firms can partner beyond investment products by providing value added technology."
