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Morgan Stanley Takes the Lead in LifeYield Integration

All clients will be able to take advantage of tax-efficient allocation and withdrawals across multiple accounts.

Morgan Stanley Wealth Management has integrated LifeYield’s tax optimization software with its digital planning tools, ahead of other brokerages in automating tasks to improve advisor performance.

LifeYield CEO Mark Hoffman, who previously co-founded other financial software companies, said the company has been conversing with “virtually every major firm” and they have all been interested in using its tax optimization software.

But relative to other companies, Morgan Stanley is “really in the lead” in terms of technology and tools available to its advisors, Hoffman said.

“What we are offering with Morgan Stanley is a game changer not just because they are so big ... because they have a lot of sophisticated clients,” he said. “No one else at the other wirehouses are connecting all of their systems [like Morgan Stanley].”

At least, not yet. Hoffman and Jack Sharry, LifeYield’s executive vice president, said they expect to announce similar partnerships with other firms in the coming months. Brokerages, independent broker/dealers and registered investment advisory firms all have expressed interest in using LifeYield, they said.

Sharry said there is a need for software to aggregate information from multiple accounts and recommend the most tax-efficient asset allocation, withdrawals and Social Security income distribution. An independent analysis by Ernst & Young found LifeYield’s methodology could boost after-tax returns and income by as much as 33 percent over the life of a portfolio.

While some advisors might be providing a high level of tax optimization for select high-net-worth clients, the mass affluent market is underserved when it comes to taking advantage of tax efficiencies. Hoffman said some advisors track assets and analyze them in their own spreadsheets to best optimize regarding taxes, but LifeYield’s software would save advisors that time and reduce the possibility of error.

There are a lot of single-account tax services but Hoffman was not aware of any that can aggregate multiple accounts—including assets and accounts at different firms.

LifeYield declined to share the cost to Morgan Stanley for integrating its software. Hoffman said an enterprise agreement, like the one with the brokerage, is one example of the different service models it offers. The software company also offers its solutions to firms as small as one-advisor RIAs.

In a statement, Morgan Stanley Wealth Management COO Jed Finn called LifeYield an “important addition” to the firm’s Goals Planning System and in making the tools available to its advisors. He said it will give advisors a “quicker, more efficient method to review a client’s multi-account portfolio and recommend strategies designed to help improve after-tax returns.” Finn added the brokerage has invested significantly in technology, including partnering with other firms.

Morgan Stanley declined to comment further on the integration of LifeYield’s software.

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