WealthTech on Deck Why Tax Optimization Is the New Alpha in Wealth Management with Scott Smith
Scott Smith is the Senior Director of Advice Relationships at Cerulli Associates, where he leverages deep research and analysis to define challenges and deliver solutions across the wealth management landscape. Known for his clear-eyed insights, Scott studies market trends, advisor behavior, and platform innovation to help firms navigate an increasingly complex industry.
This week, Jack talks with Scott about his latest research on U.S. managed accounts and why tax optimization has emerged as the top priority for firms, surpassing even portfolio construction. They dive into strategies like tax-loss harvesting, asset location, and tax-smart withdrawals, exploring both the progress being made and the challenges that remain. From compliance and legacy systems to advisor adoption and third-party solutions, Scott highlights what firms must do to make tax-smart investing accessible, effective, and essential for client success.
In this episode:
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(00:00) - Intro
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(01:56) - Cerulli’s latest research on managed accounts
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(04:29) - Surprising findings from the study
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(05:46) – Why asset location has seen little progress
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(06:45) – The reasons asset location remains underused
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(09:18) – Walking the fine line between tax planning and tax advice
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(11:18) – Making tax optimization simple and straightforward
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(12:38) – Tax-loss harvesting and transition management
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(14:14) – Coordinating multi-account households for tax efficiency
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(19:31) – The complexities of managing dynamic households
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(21:14) – Scott’s recommendations for better tax planning
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(24:42) - Scott's key takeaways for firms and advisors
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(26:00) - Scott's interests outside of work
Quotes
"Our goal isn't to educate advisors on every line of the tax code. But letting them know what the fundamentals are, what each of these steps is doing, and then giving them the tool to do it is the most important part." ~ Scott Smith
"A lot of the advances in this industry are limited by advisor adoption. So it's most important to create this path of least resistance to tax optimization." ~ Scott Smith
"Trying to steer a legacy portfolio accounting or advisor workstation into a better place and redoing the whole thing on the way while still trying to do business is not easy for anyone. So the firm setting up systems to take care of this and making it as easy as possible for advisors to do that is the only way to compete long term." ~ Scott Smith
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