Smartleaf is an automated rebalancing solution that enables wealth advisory firms to effortlessly deliver unprecedented levels of customization and tax management while simultaneously empowering client-facing advisors to focus on their unique role of creating a human connection and serving as a coach for their clients.
The Advisor Portal
Watch a short demo of how to onboard and customize a new account using Smartleaf’s Advisor Portal. We’ll replace an ETF with a direct index, add a tobacco screen, add a security constraint, configure custom cash management settings, and then set up a multi-year, tax-sensitive transition.
All in about six minutes.
About the Advisor Portal
Smartleaf provides investor-facing advisors with a dedicated portal for setting up accounts, entering customization and tax management preferences, and notifying the trading group that the client wants to withdraw cash. As the advisor sets up the portfolio, the portal gives them and their clients real-time feedback on the tax and risk implications of their customization choices, helping clients make informed decisions. For example, if you add a social screen, the portal will tell you how much of the current portfolio would be liquidated and the tax consequences. And, for new accounts, the system will, in real time, show you proposed first trades and provide you with a projection of a multi-year tax-optimized transition plan.
Direct Indexes as Easy as ETFs
Smartleaf makes direct indexes – where investors directly own a basket of stocks to track the performance of an index – easy. Really easy. As easy to work with as an ETF. For the investor-facing advisor, replacing an ETF with a direct-index is simply a choice on a pull-down menu. There is no separate SMA account opening or closing process; no separate communication channel; no extra steps to implement cash-in or cash-out requests; no extra steps to avoid wash sales. No extra steps at all. Just a choice on a pull-down menu.
The tax and customization choices that make direct indexing attractive are also simple menu choices. Tax budgets? Year round tax loss harvesting – all just menu choices. Implementation of all customization and tax management preferences is automated.
By making direct indexes as easy as ETFs, Smartleaf makes direct indexing available to all your clients, regardless of account size.
Daily Rebalancing Workflow
In this video, we illustrate Smartleaf's primary workflow by rebalancing, in less than six minutes, an entire book of business with high levels of customization and expert tax management.
Automated implementation of customization requests: Custom asset allocations — Custom product selection — Security constraints — Environmental, social and governance (ESG) constraints — Religious values constraints
Automated tax management: Tax loss harvesting — Tax sensitive transition — Wash sales — Short-term gains avoidance — Long-term risk appropriate gain deferral — Tax budgets — Optimal tax lot selection — Documentation for each client of the taxes you save or defer through active tax management
Easy direct indexes: Direct indexes, including those with fractional shares, as easy to manage as ETFs — Easy access to direct index models from Smartleaf Asset Management and third parties
Model Distribution Service: Asset allocation model updates — Security model updates — Alternate product choices — Access to third-party models — Access to third-party asset allocation models. See full list of third party investment models and strategies here.
Advanced householding: Multiple accounts in one household jointly managed to a common target, with tax-deferred accounts used as tax-free rebalancing centers — Tax sensitivity — Wash sales — Trading and turnover optimization
Automated cash management: Min cash — Max cash — Regularly scheduled withdrawals — Overdraft prevention — Reserve cash — “Accumulate cash”
What Makes Us Different
Smartleaf is more than a rebalancing engine. It is an enterprise platform that enables firms to divide responsibility for managing portfolios among different groups, the client-facing advisor, the investment policy committee, and the central rebalancing group, allowing each to focus on what they do best.
We manage the entire portfolio – every asset class and any combination of mutual funds, ETFs, individuals equities and ADRs – holistically in a single account to achieve the optimum balance between tax and risk.
There is no need to create and maintain subaccounts. We manage the entire portfolio – every asset class and any combination of mutual funds, ETFs, individual equities and ADRs – holistically in a single account to deliver greater efficiency, lower dispersion and greater customization.
For many advisors, customizing a portfolio requires making ad hoc trade decisions for each account, adding time and complexity to the rebalancing workflow. But with Smartleaf’s menu-driven customization, optimized tax management and meeting the unique investment goals and values of every client become easy. Once you enter your choices, implementing and maintaining them takes no extra time or effort.
Standardized, Uniform, Daily Rebalancing Workflow
The Smartleaf system analyzes every portfolio daily and, as appropriate, suggests trades. These trades seek to ensure that the portfolio is compliant with all mandates (cash-out requests, security restrictions, ESG/SRI screens, etc.), while minimizing taxes, transaction costs and risk (asset class-, sector-, industry- and security-level drift). Firms can customize this workflow to suit their investment program, and then, once they’re set up, efficiently implement the same workflow, the same set of filters, every day.
Models-Based Intellectual Capital
Each portfolio follows a blend of one or more models, but "models-based" doesn't mean "cookie-cutter." Instead, models are just one input into an approach that radically increases customization and tax management. Asset Allocations can be proprietary or sourced from third-parties, with a firm’s own product choices and preferred substitutes. The Model Distribution Service provides access to third-party models (securities and weightings) that can be easily added to any asset allocation to support IPC and client preferences.
How We Do It
The client-facing advisor, the person who knows the client best, sets the risk, customization and tax-management preferences for each account.
The investment policy committee (IPC), the group responsible for the investing views of the firm, sets default asset allocations, product choices (including 3rd-party models, if desired), alternate product choices, and compliant boundaries on customization.
The central rebalancing group, the one- or two-person trading group that reviews all accounts daily for fidelity to the customization parameters of the client-facing advisor and the investment parameters of the IPC, trading accounts that are out of alignment with either. They also act on cash withdrawal requests and implement tax optimization strategies.
This specialization is key to creating a scalable workflow. Advisors spend zero time reviewing, rebalancing or trading portfolios. This allows advisors to both spend more time with clients and prospects, and increase the level of customization and tax management they provide.
(See “The Smartleaf Overview” for a more detailed description of these roles)