Tax Optimization Is a Priority: What Data Do You Need?

For decades, wealth managers pursued alpha through manager selection. Alpha represents the excess return an investment generates relative to a benchmark, reflecting the skill of the investor or fund manager after adjusting for risk. Wealth managers spent hours of due diligence to find security picks that might outperform by a few dozen basis points. But there was no guarantee those gains would persist. Tax optimization offers something different: a source of post-tax return a platform can deliver reliably, year after year, regardless of market direction. 

Client expectations have shifted accordingly. People increasingly expect financial advisors to answer questions like: Are you able to help me save on taxes? Does your analysis consider my full household? Capabilities that were once differentiators — like coordinating tax management across a client's full household — are quickly becoming baseline expectations, and platforms that lag risk losing assets to providers built to deliver stronger tax optimized outcomes. 

The numbers show why this matters. High earners pay up to 37% in taxes on ordinary income, but only about 23.8% on long-term capital gains. That gap means there's real money to be saved by holding the right investments in the right types of accounts and selling losing positions strategically to offset gains. Research from Vanguard and Parametric puts the payoff at around 1% or more in extra after-tax return each year.  

J.P. Morgan has also found that portfolios checked daily for these opportunities capture more of that benefit than ones reviewed just once a month. That's concrete value advisors can show clients, whether markets are up or down. 

Investors are already voting with their dollars. Separately managed accounts give advisors the control needed to do this kind of detailed tax work They are growing faster than mutual funds and collective investment trusts. FUSE Research Network expects SMA assets to pass $5.1 trillion in 2026. 

• Tax-loss harvesting: Selling securities at a loss to offset gains elsewhere. 
• Asset location optimization: Placing tax-inefficient assets, like taxable bonds, in tax-deferred accounts, and equities in taxable accounts. 
• Tax-efficient transitions: Onboarding a client's legacy portfolio while modeling the tax impact of each trade. 
• Tax-smart withdrawals: Sequencing retirement distributions across accounts to minimize tax drag. 
• Client tax-savings documentation: Quantifying tax management's dollar value for clients. 
• Household-level optimization: Managing assets across a full household as one tax-aware portfolio. 
• Wash sale compliance: Avoiding the IRS rule disallowing a loss deduction when a substantially identical security is repurchased within 30 days. 

If tax optimization is this valuable, why isn't it universal? Survey data points to infrastructure, not advisor appetite.  

Orion's 2026 Advisor Wealthtech Survey found only 3% of firms report fully unified, free-flowing data across systems, with 60% calling their data "mostly unified but still requiring manual steps"; better tech integration and data use was 2026's most-cited strategic priority, at 61%. The same survey found roughly seven in ten advisors already use a third-party tax optimization service, with more than half planning to adopt or expand it — demand is real even where implementation lags. 

Held-away assets compound the problem, and it's worth being precise about the distinction: 

• Custodial accounts are accounts an advisor manages directly. The advisor has trading authority, executes rebalancing and loss-harvesting trades, and holds a direct or aggregated feed relationship with the custodian. 
• Held-away accounts belong to the same client or household but sit outside the advisor's management — an old 401(k) with a former employer, an outside brokerage account, a spouse's individual account. The advisor can't trade these accounts, but the assets in them are still part of the household's tax picture. 

Advisors routinely underestimate how much client wealth falls into that second category. Without visibility into it, even the most sophisticated tax optimization platform works from an incomplete picture — it might harvest a loss in a managed account without knowing that an identical position, held away, will trigger a wash sale, or place a bond fund in a taxable custodial account when tax-advantaged room already exists in a spouse's outside 401(k). The bottleneck usually isn't the optimization logic; it's getting complete, structured data — from both custodial and held-away accounts — in front of it. 

A platform needs four types of data at the account and household levels to turn tax theory ito a working plan. To get this data, take the following steps: 

1. Include account data, including what is held away. Decisions made without visibility into a client's full household will systematically misplace assets. An advisor can only complete tax optimization when they can view the entire client's financial picture, with data on every account, not just the ones managed on-platform. 
2. Open tax lot data. The raw material for forward-looking decisions: purchase date, cost per share, and total cost basis by lot. Without lot-level detail, a platform can't identify which shares to sell for a target gain/loss outcome, or know whether a lot has crossed the one-year mark separating short- from long-term treatment. 
3. Closed tax lot data.  Realized gain or loss, cost basis, close date, and holding period from completed sales support wash-sale compliance. They also feed short- and long-term gain or loss reporting and client tax-savings documentation. 
4. Uniform, "fit-for-purpose" formatting across custodians. An advisor's book rarely sits at one custodian, and raw data varies in structure from feed to feed. Without normalization, aggregation becomes an ongoing cleaning exercise rather than a turnkey input to tax optimization. 

This is exactly the gap ByAllAccounts addresses with its premium tax lot aggregation capability. Rather than each wealthtech platform building custodial feeds from scratch — a painstaking, costly process — ByAllAccounts delivers over 150 direct custodial feeds plus detailed open and closed tax lot data, standardized and enriched: account number, CUSIP, purchase and close dates, cost basis, realized gain/loss, and holding-period classification — the fields a wealthtech platform needs to run wash-sale checks, calculate gain/loss, and harvest losses automatically. 

Today, that open and closed tax lot detail is available for private banking accounts in addition to advisor managed accounts — sourced through the 150-plus direct feeds described above. ByAllAccounts separately closes the other half of the household picture: aggregating held-away account data — cash, investments, crypto, credit, loans, and mortgages — from more than 15,000 sources, so advisors can see the full household even in accounts they don't manage. As tax lot data becomes available from more institutions, ByAllAccounts will extend that same lot-level detail to held-away accounts, closing the remaining gap between accounts advisors can see and accounts they can fully optimize. 

Outsourcing the data layer lets development teams redirect budget toward the optimization logic and advisor experience that actually differentiate their platform, rather than toward endless custodial connectivity work. 

Sources: Cerulli Associates, U.S. Managed Accounts 2026; Vanguard Research, "Tax-loss harvesting: Why a personalized approach is important" (July 2024); Parametric Portfolio Associates/Morgan Stanley; J.P. Morgan Asset Management; FUSE Research Network; Orion 2026 Advisor Wealthtech Survey.