Wealth firms lag on unified, tax-optimized managed accounts

Cerulli Associates found that 19% of large wealth management firms have built a unified managed-account architecture capable of firmwide tax optimization, while roughly half of firms surveyed said they are still working on that goal despite recent M&A and technology investment. The findings appear in Cerulli’s U.S. Managed Accounts 2025 report, based on a survey of managed-account sponsors and interviews with industry executives.

Cerulli identified eight core tax-efficiency capabilities and rated firms’ progress. Integrated tax planning, Social Security optimization and multiaccount rebalancing were rated rare. Tax-smart client transitions, asset location and tax-efficient client withdrawals were described as growing. Tax-loss harvesting and tax-savings documentation were the most common features. The report said some firms have pockets of tax-smart tools but few have converted those tools into a unified account-level solution available across advisor networks.

Firms cited several obstacles to building a unified managed-household model. Technology complications topped responses at 88%, followed by data-aggregation challenges at 52% and budget limits at 40%. Training advisors on unified accounts was named by 36% as a barrier, while 20% pointed to difficulty communicating tax savings to clients, 16% flagged incomplete knowledge of clients’ external holdings, and 12% said customer demand was insufficient. No surveyed firm identified advisor resistance as the primary issue.

Scott Smith, senior director of advice relationships at Cerulli, contrasted the industry’s focus on security selection with the limited use of tax tools. He said, “All of the time we spend on security selection would probably be better spent on tax optimization in many cases,” and added, “Taxes aren’t sexy, but taxes are actually sexy. It’s reliable outcomes.” Smith told Cerulli that many firms are choosing incremental, lower-cost upgrades instead of broad platform overhauls and warned that expectations of resolving the challenges in less than two years are likely to disappoint.

Technology vendors report rising demand but uneven adoption. Michael Camp, head of client solutions at 55ip, a tax-focused investment management and technology firm, described the industry as being in the “earlier innings” of adopting tax-smart portfolios. Camp noted that 55ip’s assets under supervision grew from about $330 million in 2020 to more than $138 billion, with thousands of advisors and hundreds of advisory firms using its platform, and emphasized that having the technology does not ensure immediate advisor uptake.

Cerulli’s survey showed a shift in technology priorities: 82% of managed-account sponsors listed improving tax management capabilities as a technology goal for 2025, compared with lower shares for portfolio construction support in prior years. The report noted that pretax outperformance can be substantially reduced by higher effective tax rates on gains.

The report described practical differences in firms’ work: some advisors execute straightforward tax-loss harvesting after market swings, while others need more complex processes to onboard new clients without triggering large tax bills, place assets in tax-advantaged accounts appropriately, and coordinate withdrawals to limit tax drag. Cerulli said improving platform-wide tax optimization will be an operational process that takes years for many firms to complete.