The Problem
Advisors are manually calculating trade scenarios in spreadsheets to align portfolios with targets while attempting to minimize tax impact. Because this process is labor-intensive, firms default to calendar-based rebalancing (e.g., quarterly) rather than opportunity-based rebalancing, causing them to miss critical windows for tax-loss harvesting during interim market volatility.
Revenue Impact
Lost 'Tax Alpha' (est. 0.50% - 1.00% annually) results in lower net performance and higher client churn.
Cost Impact
Portfolio Managers spend 15-20 hours/week on manual trade calculations during volatility.
Risk
Manual spreadsheet errors lead to trade corrections, wash-sale violations, and regulatory scrutiny.
Portfolio Drift Monitor
AI AgentContinuously watches all client accounts to identify when asset allocation drifts beyond set tolerances or when specific tax-loss thresholds are met.
What The AI Does
Connects to custodian data feeds to read daily positions
Compares current weights against target model allocations
Identifies positions with unrealized losses suitable for harvesting
Checks cash availability for potential buy orders
Flags accounts that require immediate attention based on volatility
Trade Scenario Engine
AI AgentCalculates the precise buy/sell orders needed to rebalance the portfolio while maximizing tax efficiency and avoiding wash sales.
What The AI Does
Selects specific tax lots to sell (e.g., Highest Cost First)
Identifies suitable 'swap' securities to maintain market exposure
Calculates estimated tax impact of proposed trades
Drafts trade files compatible with custodian upload formats
Validates trades against client-specific restrictions (e.g., ESG exclusions)
PM Trade Approval
Human ReviewThe Portfolio Manager reviews the AI-proposed trade scenarios to ensure they align with the broader investment thesis before execution.
Review Criteria
Expected Impact
Moving from calendar-based administration to opportunity-based active management.
Before:
Quarterly rebalancing cycles; missed tax opportunities; hours spent in Excel calculating trade lots.
After:
Daily monitoring; instant capture of tax-loss opportunities; advisors review high-level strategy rather than row-level math.
Result:
Recover 50-80bps in annual 'Tax Alpha' for clients