Driven by Increasing Advisor Demand for Tax Efficiency and Personalization, 55ip Experienced Record Growth in 2022
Over a year of volatility, 55ip reached new records for platform adoption, custom models, tax savings, and company growth; new partnerships also enhanced capabilities and delivered more client value through expanded investment solutions
BOSTON–(BUSINESS WIRE)–55ip, the financial technology platform designed to deliver personalized, tax-smart investment management at scale, released 2022 year-end overall results, revealing the company saw record performance for the year across all critical metrics.
The growth was fueled strategically and environmentally, as market conditions last year put a spotlight on the value to advisors that 55ip was designed to provide. The 2022 resulting tax savings benefit for model portfolios of ETF and Mutual Funds was a record 2.70 percent (2.66 percent when annualized since 2020). Meanwhile market-driven demand helped increase the number of advisory firms on the 55ip platform by more than 50 percent, to 234 firms, representing $234 billion in discretionary assets under management (AUM) in 2022. Additionally, individual advisors partnering with 55ip grew by 122 percent. And in a correlating trend, growth of custom models on the platform increased 134 percent from 2022, now comprising 45 percent of all assets on the 55ip platform.
“We’re incredibly proud of the increased value we provided last year to our clients,” says Paul Gamble, Chief Executive Officer of 55ip. “The growth we experienced demonstrates that our value goes well beyond tax savings benefit to investors, which reached an all-time high last year. We doubled our trade volume last year as well, completing more than 1.8 million trade orders on behalf of our advisors. That translates to more than 500 hours in time saved for each firm using our platform – a benefit that is invaluable to advisors.”
Demand for personalization among advisors also increased in 2022, which led 55ip to significantly increase output of custom models while simultaneously driving the time to market down from weeks to days. The streamlined process increased the firm’s ability to implement custom models by more than 134 percent.
“Our custom model portfolio capabilities enhances advisors’ ability to combine customization with scale to grow their business,” says Gamble. “Our investments in tax-managed custom model capabilities led to strategic relationships with asset managers including BlackRock, Fidelity Investments, and JPMorgan to launch custom solutions at scale. We are continually looking to serve advisors, either directly or through the platforms they choose to best suit their needs.”
55ip also expanded its capabilities last year with additional strategic relationships to deliver high-quality models and SMAs that better allow advisors customized investment solutions for their clients. New relationships included leading asset managers such as Frontier Asset Management as well as advisor platforms GeoWealth, OneDigital, and InvestCloud—including integrating into its Financial Supermarket™.
To manage the growth trajectory and ensure continued quality client support, 55ip also invested internally last year. The company’s personnel grew by more than 62 percent in 2022, with strategic investments in the areas of advisor support, product development, marketing and virtually every aspect of day-to-day operations.
“The work our team has done over the past year supports our strategy to become the industry standard for automated, tax-smart investing,” says Gamble, “and we’re already underway to deliver more in the year ahead. New strategic partnerships will bring additional investment choices. We have several planned product enhancements and practice management solutions on our near-term roadmap, all designed to improve efficiencies, accuracy, and quality as we help advisors scale their businesses and serve their clients.”
55ip is a financial technology company purpose-built to break down barriers to financial progress. Setting the industry standard for automated, personalized, and optimized tax outcomes, the 55ip platform delivers efficient implementation of the investment process to the financial services industry. Combined with leading trading and rebalancing capabilities, we offer a full-service solution that meets the unique needs of advisors. At the heart of 55ip’s seamless, intuitive user experience is 55ip’s ActiveTaxSM Technology, including elevated portfolio design and delivery, tax-smart transitions, management, and withdrawals, all helping advisors save time and achieve better outcomes for their clients. 55ip is a wholly owned subsidiary of J.P. Morgan Asset Management, the asset management business of JPMorgan Chase & Co. Visit 55-ip.com for more information.
55ip is the marketing name used by 55 Institutional Partners, LLC, an investment technology developer, and for investment advisory services provided by 55I, LLC, an SEC-registered investment adviser. 55ip is part of J.P. Morgan Asset Management.
The impact of a tax-loss harvesting strategy depends upon a variety of conditions, including the actual gains and losses incurred on holdings and future tax rates. The results shown in these materials are hypothetical and do not represent actual investment decisions.
The tax-loss harvesting service is available for an additional advisory fee and the results shown represent the net effect of the advisory fees but may not consider the impact of fees charged by others, including transaction costs or other brokerage fees. The information contained herein is subject to change without notice, is not complete and does not contain certain material information about the investment strategy, including additional important disclosures and risk factors associated with such investment and information about fees, trading costs and taxes. Neither the U.S. Securities and Exchange Commission nor any state securities administrator has approved or disapproved, passed on, or endorsed, the merits of this document. More information at www.55-ip.com.
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.
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.
The direct index SMA tax alpha percentage reflects estimated returns for using ActiveTax Technology® measured as the difference between after-tax and pre-tax excess return. Pre-Tax Benchmark refers to S&P 500 Index and Post-Tax Benchmark refers to Post-Tax returns of the S&P 500 Index with cash flows that match that of the composite account. The deduction of a fee reduces an investor’s return. There is no guarantee that the estimated tax and subsequent projected tax alpha will equal the actual tax liability or tax alpha you achieve.
The Rudin Group