Thank you for 2022. Excited about the year ahead.

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Last year’s market declines drove advisors to look for new investment solutions and new ways to communicate with their clients. The market downturn also put tax-loss harvesting strategies front and center for clients to improve overall financial planning and create non-investment performance value. Let’s take a look back at the year while we move forward into 2023 together.

Market conditions in 2022 created an environment where 55ip was able to support advisors at a record-setting level. The number of advisory firms on our platform grew by over 50% for a total of 234 advisory firms with over $234 billion in discretionary assets, while the number of individual advisors partnering with 55ip grew by 122% last year. We are thankful for our community of advisors who put their trust in us to help break down barriers to financial progress.

Tax savings benefits hit an all-time high for clients on the 55ip Platform   

Many claimed that 2020, was “The perfect year for tax-loss harvesting1, but in actuality, 2022 saw a much larger tax savings benefit delivered to our clients. Across client portfolios, the 2022 tax savings benefit for model portfolios of ETF and Mutual Funds was 2.70%. Dating back to 2020, the annualized tax savings across clients in model portfolios on the platform was 2.66%. The savings demonstrate the value of ongoing harvesting within client portfolios throughout the year when compared to those not harvested for tax-losses.  

But the value provided goes beyond the tax savings benefit. We save you time and effort. Over the past year, we have doubled our trade volume and have enacted over 1,800,000 trade orders on behalf of our advisors with the average firm seeing 7,693 trade orders for the year. This volume of activity translates into over 500 hours in time saved for each firm using our platform

New partnerships drive our ability to serve an ever-expanding advisor audience 

We are actively looking to serve advisors, directly or through the platforms advisors use. At 55ip we seek opportunities with the right partners who can help us deliver high-quality custom models and SMAs that help advisors customize investment solutions for their clients. In the last year we have expanded to include leading asset managers like Frontier Asset Management, and we have secured partnerships with RIA platforms such as GeoWealth, OneDigital and InvestCloud among others.   

The addition of Direct Indexing and Actively Managed SMAs lead our commitment to personalized investment solutions 

In 2022, 55ip partnered with JPMorgan to launch a first of its kind digital SMA platform to allow advisors to create customized tax-efficient portfolios. Our technology is powering this platform. This allows advisors to offer custom index SMAs, and model portfolios of mutual funds and ETFs, in one digital portal, delivering seamless portfolio customization, tax management and reporting functionality. 

The demand for greater personalization drove us to improve upon our own ability to deliver custom model solutions at scale. 

This effort significantly increased our output of custom models while simultaneously driving the time to market down from weeks to days. We increased the amount of our custom models by over 134% in 2022. Custom model solutions account for over 45% of all assets under management on the 55ip platform. This enhanced capability improves advisor’s ability to combine customization with scale to grow their business.  

Investing in people to drive growth and innovation 

Last year we Invested heavily in the growth of the team here at 55ip. We’ve made strategic investments in new leadership in the areas, of Product, Marketing, and Advisor Solutions in addition to adding personnel to support the day-to-day operations of virtually every aspect of the business. That investment represents over 62% employee growth from last year and demonstrates our commitment to maintaining a high level of support to our advisors and their clients. 

As we look ahead to 2023, we are excited for the opportunities the new year presents. New strategic partnerships will bring additional investment choices. Our Advisor Solutions team will expand upon the Advisor Playbook to provide new practice management ideas to help you grow your business.  

We are looking to deliver enhanced cash management capabilities and improved reporting on tax savings benefits. Other planned product enhancements will improve efficiencies, accuracy, and quality as we help you scale your business.  

We take the trust our clients have given us seriously, and we will work hard to continue to be worthy of that trust. It is this motivation that puts the advisors and their clients at the center of everything we do as we seek to become the industry standard. 

Footnotes

1  http://wsj.com/articles/why-2020-was-the-perfect-year-for-tax-loss-harvesting-11604782408 

2.66% reflects the estimated annualized average tax savings for accounts which received a Tax Savings Report for period from Q12020 through current quarter using 55ip’s tax-smart technology. The estimated annualized average tax savings is based on an arithmetic average of each quarterly tax savings. The quarterly tax savings of all accounts in a respective quarter are summed and divided by the number of years represented. The aggregated percent tax savings for each quarter is taken as an average and annualized to determine the estimated annualized average tax savings referenced above.

2.70% reflects the estimated average tax savings for all accounts which received a Tax Savings Report for period from Q12022 through Q42022 using 55ip’s tax-smart technology. The estimated average tax savings is based on the aggregate of all account’s value saved in comparison to the aggregate of average account values through the above referenced period.

Calculation methodology: Average tax savings are calculated by comparing the client’s actual account activity with a shadow account created by 55ip. The shadow account has the same inception date and is invested in the same model as the client’s actual account, but does not incorporate 55ip’s tax-smart technology for rebalancing. Gains and losses are accrued for both the client’s actual account and shadow account to produce the estimated tax bill. The tax rate applied to the client’s actual account and the shadow account are provided by the client’s advisor. If no tax rate is provided, then the highest applicable federal tax rate (20% for long-term gains/losses and 37% for short-term gains/losses) is assumed and an additional 3.8% net investment income tax rate is applied to both accounts. The estimated tax bill of the client’s actual account is then compared to the estimated tax bill of the shadow account, and the shortage of the former amount is the client’s estimated tax savings. There is no guarantee that the estimated tax and subsequent projected tax savings will equal the actual tax liability/tax savings achieved by the client. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

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