The RIA custodian said the feature will allow advisors to quickly run and analyze different scenarios to determine the best tax “harvesting” strategy.

Trust Company of America has launched a tax “harvesting” feature on its account management platform to help financial advisors manage the tax impact of capital gains on clients’ portfolios with no additional cost or paperwork.

The feature enables advisors to view and sort investments within an account by short-term or long-term losses or gains. By selectively selling specific investments, advisors can realize gains or losses in an account. Selling investments in a client's taxable portfolio that have dropped in value – i.e., “harvesting” those losses – will generate losses that can be used to offset gains the client has realized. Alternatively, advisors can help clients realize gains in their taxable portfolios to offset losses from other investments. 

Especially during volatile markets, tax harvesting can provide an effective way to use losses to enhance after-tax portfolio performance, TCA said in a statement.

Proceeds from the sales can remain in cash for 30 days or the advisor can choose to invest in an alternative security. TCA said its trading platform automatically restricts the harvested security from being repurchased within 30 days so as to satisfy wash-sale rules and avoid disallowed losses.

"With taxes being one of the largest drags on investment performance, advisors may not realize there is an effective solution available to help offset them," said TCA's president and chief executive, Joshua Pace. "TCA's technology gives advisors and their clients greater control over how they can realize capital gains and losses in an account, enabling them to better align their tax strategy with their investment strategy."