“Tax optimization is quickly becoming the new battleground for wealth manager differentiation,” Cerulli said Wednesday while announcing findings from the latest edition of The Cerulli Report — U.S. Managed Accounts 2026.
Many managed account sponsors spent decades concentrating on enhancing their security selection capabilities, Cerulli pointed out. However, now many have decided to pursue tax optimization, the research firm noted.
For the second year in a row, “improving tax management capabilities” was cited as the top priority of platform sponsors by a large margin, Cerulli said its research showed.
Among platform sponsors, 76% said tax management capabilities were a primary development focus, Cerulli said, noting that was followed by 42% who cited the addition of illiquid product options.
“Among the most interesting findings from this research is the progress firms have made in building tax-optimization services to bolster their platforms, including the varying levels of development and adoption across these services,” Michael Manning, Research Analyst, Wealth Management-Managed Accounts at Cerulli, told Wealth Solutions Report by email.
“Tax-loss harvesting has made the most substantial progress, as 79% of sponsor platforms indicate they have an automated tool available, but other features, such as tax transition assistance (43%), asset location optimization (29%), and tax-smart withdrawals (21%), have not made quite as significant headway,” Manning said.
He added, “The percentage of client AUM receiving these services remains limited.”
“Implementing and adopting tax management capabilities is likely to have a more obvious and profound effect on client portfolios,” Scott Smith, Senior Director at Cerulli said in a news release announcing the findings.
“While security selection is encumbered by the reality that ‘past performance is no indicator of future returns,’ tax optimization capabilities are a much more reliable source of post-tax alpha,” he said.
Tax Optimization A Necessity
Noting that several firms started offering integrated optimization features and unified managed household (UMH) platforms are emerging, Cerulli said platform sponsors that haven’t made significant progress with tax optimization now face a major competitive disadvantage.
“Firms in this situation must assess their current situation and implement a platform development strategy immediately before advisors and clients begin to move their assets to providers that allow them to realize their maximum net assets post-tax,” according to Smith.
Smith added, “Advisors reluctant to change may get on board once they realize it is the path of least resistance—and their clients will benefit and potentially better understand the value their advisors provide.”
“Firms that are unable to equip their advisors with platforms designed to facilitate meeting client expectations face declining appeal, reduced marketshare, and ultimately a threat to their ongoing existence.” — Cerulli
Key Takeaways
A “key takeaway” cited in the report is, “Firms that are unable to equip their advisors with platforms designed to facilitate meeting client expectations face declining appeal, reduced marketshare, and ultimately a threat to their ongoing existence.”
The report also said that wealth managers prefer to engage with clients through fee-based managed accounts, and Cerulli expects more concentration on fee-based platforms as brokerage engagement falls back to niche uses.
The report added that SMAs should see growth due to wealth managers seeking to optimize taxes via platform enhancements and investment products at the same time asset managers increasingly focus on products that produce tax alpha aside from direct indexing.
The findings were “largely drawn from our annual study surveying executives at wealth managers, asset managers, TAMPs, and technology providers across the industry,” Manning told WSR.
He said the survey was conducted in the first quarter of 2026 through an online survey engine, distributed by Cerulli. “This is coupled with research interviews with executives across the industry that occur on an ongoing basis throughout the year.”
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jeff.berman@wealthsolutionsreport.com.
