Issue link: https://resources.envestnet.com/i/1533175
FOR ONE ON ONE USE WITH A CLIENT'S FINANCIAL ADVISOR © 2024 Envestnet. All rights reserved. 2 What level of capital gains realization can I expect to see if I use the Tax Overlay Services? • Every client's situation is unique, so there is no general answer to this question. However, it is important to note that the Tax Overlay Services cannot provide permanent tax avoidance, in other words, a $0 Tax Budget is not sustainable long term. When gain/loss matching or tax loss harvesting is performed, how are the proceeds invested during the wash sale period? • How proceeds are invested may differ based upon the type of sleeve. When a security in an Equity SMA sleeve is sold for loss harvesting purposes, the proceeds are invested into other model securities and/or cash. When a security in an FSP sleeve is sold for loss harvesting purposes, the proceeds are invested into a replacement ETF security specified by the FSP manager, or if one is not specified, then into other model holdings and/or cash. When a money manager changes their model portfolio, will all accounts invested in that manager's model trade the same? • Tax Overlay uses a risk based optimization engine which considers a large number of variables to deliver a customized solution at the client level. It's not a simple rules based approach treating all accounts the same. Therefore, accounts invested in the same model might trade differently based on the client-specific circumstances. Differences may occur due to the client's unique cost basis, tax budget, legacy securities, or other unique attributes. Why is the 50% requirement to managed products important? • For Tax Overlay Services accounts in particular, the lower the allocation to managed product sleeves, the greater the difficulty of the risk optimizer to adhere tightly to the intended model while meeting the client-specific tax budgets. Can mutual funds and/or ETFs be used within an Overlay Services account? • Envestnet will fully invest to the target allocation of mutual fund/ETFs sleeves at account inception. • Mutual funds/ETFs can be held as part of the UMA if identified in the asset allocation. • Additionally, for mutual funds/ETFs that are not part of the asset allocation, they may be able to be retained as a non-model holding if an eligible managed product sleeve exists in the asset allocation. For more information on what is an eligible managed product sleeve, please contact the Overlay Services team. Can fixed income SMA managers be used with an Overlay Services account? • Yes, certain fixed income SMA strategies are UMA eligible and can be used within an Overlay Services account. • Fixed income SMA sleeves must be fully funded at account inception and are not actively Tax managed. █████████████████ Ì200001R2N1Î