Issue link: https://resources.envestnet.com/i/1533174
Frequently Asked Questions (FAQs) FOR ONE ON ONE USE WITH A CLIENT'S FINANCIAL ADVISOR © 2023 Envestnet. All rights reserved. 3 Q9: What are some of the additional considerations when deciding whether to fund an account with Mutual Funds, or to use an FSP Product that includes Mutual Funds as model holdings? • Mutual Funds trade differently than other security types like Equities or ETFs and generally have a unique taxlot accounting methodology that may be controlled by the Client with their Custodian • Mutual Fund companies generally discourage "frequent" trading, may impose trading restrictions, and may impose short term redemption fees • Mutual Funds generally cannot be traded Versus Specific Purchase (VSP) • There is less control over tax consequences when selling a Mutual Fund and less ability to perform loss harvest trading, therefore active tax management may not be as effective for Mutual Funds as it might be with Equities or ETFs • Envestnet attempts to accurately consider the tax consequences of Mutual Fund sales when determining trade recommendations, but does not guarantee a specific tax outcome nor adherence to a desired Tax Budget • Mutual Funds may consist of different share classes. Envestnet does not perform "non-taxable exchanges" between share classes, nor monitor mutual fund share classes, nor ensure that the portfolio owns only the lowest expense ratio share class Q10: I want my UMA account to use the Tax Overlay Service for my Equity SMA sleeves but I don't want my FSP sleeves in the UMA to be tax managed. How do I accomplish this? • Envestnet's Tax Overlay Service is applied at the account level – there is no ability to choose which sleeves participate in the Tax Overlay Service • Envestnet actively tax manages Equity SMA products and now FSP products • Envestnet does not actively tax manage other sleeve types • If the client's Firm has configured the applicable Brand Value to enable Tax Management of FSP Sleeves in a UMA, then FSP Products (which is defined at the sole discretion of Envestnet) included in the UMA Target Allocation Model will be tax managed • If a client does not want FSP Product Sleeves to be tax managed, they must not be included in the UMA Target Allocation Model • If the client's Firm has not configured the applicable Brand Value to enable Tax Management of FSP Sleeves in a UMA, then FSP products (defined at the sole discretion of Envestnet) included in the UMA Target Allocation Model will not be tax managed Q11: I have a question about the trade activity in my client's account, who can I talk to learn why a certain trade was executed? • Envestnet uses an optimization engine to determine trading activity, therefore individual trades must be viewed within the context of the overall risk level and tax situation of the entire portfolio • It is not appropriate to view individual trades in isolation. • The portfolio is reviewed on a routine basis and as models change, market pricing changes, loss harvest opportunities arise, risk attributes change, and many other considerations, then additional trading may occur in the portfolio • If being able to explain individual trades is of significant importance to the client, then this service may not be appropriate • Envestnet does not provide rationale for individual trade-level activity Q12: Why did the actual initial trading in my client's account not match the trades/tax expectations I was shown in the "PATS Analysis"? • Make sure you read and understand the important disclosures in the PATS Analysis, which state that the analysis is a hypothetical illustration only and the actual trades may differ. Some of the reasons actual trading may differ from the PATS Analysis are: • Changes in your portfolio's funding • Changes in your portfolio's holdings • Changes in your portfolio's taxlots • Changes in your portfolio's cost basis • Changes in your selected UMA Target Allocation Model • Changes in your selected UMA Target Allocation Model's model holdings █████████████████ Ì200001ATDpÎ