Wealthtech Addepar has shared an update focused on how to drive tax efficiency and growth with householding in Addepar Trading.
Wealthtech firm Addepar explained that successful advisors help clients reach their financial goals while creating “opportunities for business growth for themselves, and their firms.”
Addepar Trading’s householding solution streamlines portfolio management, enabling advisors to seamlessly “aggregate multiple client accounts under a unified investment strategy.”
Addepar noted in a blog post that with this solution, advisors can “optimize projected after-tax performance, meet diverse financial targets efficiently and demonstrate value that opens the door to business expansion.”
As noted in the update from Addepar, householding lets advisors combine multiple accounts into “a single portfolio — a household — and manage them under one overarching asset allocation strategy.”
This mirrors the common industry practice of “creating households to address different financial objectives, such as retirement, education or major purchases.”
For example, Addepar explained that a client saving for retirement might use an IRA, “a Roth IRA and an investment account, each with distinct tax characteristics.”
Addepar Trading allows advisors to unify these accounts under “a single investment strategy based on the client’s life stage, risk tolerance and financial goals.”
Addepar Trading has partnered with LifeYield to “integrate its proprietary asset location engine — and enhance tax efficiency.”
This algorithm optimizes projected after-tax returns by “strategically locating trades within the appropriate accounts based on their taxability and the tax consequences of various asset types.”
For example, assets with higher income tax implications can be placed in tax-deferred accounts, while “tax-efficient investments may remain in taxable accounts.”
This approach maximizes household-level “projected after-tax returns and ensures the portfolio aligns with the client’s broader financial goals.”
Householding offers more than just investment efficiency — it provides an opportunity for advisors to “demonstrate the success of their investment strategy and the value they bring, potentially helping to cultivate growth for their business.”
Addepar further noted in a blog post that many advisors only “oversee a subset of their client’s wealth.”