General
Data
Trade Generation
- What is LifeYield?
- LifeYield develops and provides software for advisors to help minimize taxes and maximize returns for a client during both the accumulation and retirement phases. LifeYield's management team has deep experience building easy-to-use financial software solutions.
- What is LifeYield ROI™?
- LifeYield ROI suggests the most tax efficient trades across multiple taxable and tax-advantaged accounts every time a client needs to invest or withdraw cash.
- What is LifeYield Illustrator™?
- LifeYield Illustrator allows advisors to show clients and prospective clients the increased retirement income and returns that may be achieved by consolidating assets with an advisor using LifeYield ROI.
- Do I need to use specific financial products with LifeYield ROI or LifeYield Illustrator?
- No, LifeYield is product neutral. You and your client decide on your product and asset selections and allocations; LifeYield ROI helps minimize the taxes you pay when growing and withdrawing those assets.
- Does LifeYield ROI offer any benefits for households with only tax-advantaged accounts?
- LifeYield ROI does not offer the client benefits for single tax-advantaged account management. Rather, where an advisor manages just a tax-advantaged account for a client, LifeYield Illustrator offers the advisors the benefit of allowing him/her to show a client why consolidating additional accounts with that advisors can increase returns and retirement income.
- What is the definition of Pro Rata?
- "Pro rata" means that all accounts owned by a household, taxable and tax-advantaged, follow the same asset allocation without regard to placing the most appropriate assets in the most appropriate type of account.
- What investment assumptions are used in LifeYield ROI and LifeYield Illustrator? Can they be changed?
- LifeYield ROI and LifeYield Illustrator consider historical returns of different asset categories and inflation projections when making its trade suggestions. All such assumptions can be changed by a firm or by an advisor, depending on permission levels.
- What categorization system is used?
- The default categorization system used by LifeYield ROI and LifeYield Illustrator is provided by Morningstar®. However, an advisor or firm is free to provide LifeYield a categorization system of its own choosing.
- Does LifeYield Illustrator show pre- or after-tax results?
- LifeYield Illustrator presents after-tax results.
- What advantage does LifeYield ROI offer for pre-retirement accounts?
- When used during the accumulation phase as well as during a household's retirement period, LifeYield ROI can provide significant additional tax savings and resulting retirement income. Through independent research, Ernst & Young found that when used just during retirement, the LifeYield ROI methodology can increase retirement income by up to 20%. When used during an additional 15-year pre-retirement phase, Ernst & Young found that income during retirement could be increased by up to 33%.
- What is the target range for households that benefit from LifeYield ROI?
- LifeYield ROI provides material benefits to households with $200,000 in assets all the way up to ultra high net worth families
- For households that start with just $200,000 15 years before retirement, Ernst & Young found that the LifeYield ROI methodology could increase retirement income by up to 10%. As beginning household balances increase, so does the increase in retirement income, all the way up to 33% for a households that start with $1 million 15 years before retirement.
- For ultra high net worth families where household assets can provide more income than is needed, Ernst & Young considered a constrained retirement income model, i.e. one that was limited to $1 million per year, and found that bequests for this household can be increased by up to 139%.
- Because LifeYield saves significant time for an advisor in generating or investing cash for a client, LifeYield ROI makes even smaller households profitable for advisors to serve.
- How do you handle managed accounts?
- LifeYield ROI looks across all accounts within a household to identify the best loss harvesting opportunities, potential wash sales, and potential improvements to asset location while maintaining the household-level asset allocation. With a managed account as part of a household, LifeYield ROI is able to produce cash withdrawal and/or tax harvesting requests for communication to the SMA/UMA manager, resulting in the optimal tax outcome for the household; something the SMA manager would not be able to do in isolation. In addition, LifeYield ROI can help advisors identify household-wide wash sales situations which individual SMA managers would not be able to see. Lastly, LifeYield ROI's analysis of asset location may drive the advisor to reallocate funds between managed accounts and other accounts in the household, helping minimize taxes going forwards.
- How is loss carry forward managed?
- LifeYield Illustrator supports loss carry-forwards by allowing the advisor to adjust the overall cost basis of taxable accounts. This allows the advisor and client to estimate the impact of a loss carry-forward over the entire retirement timeframe.
- LifeYield ROI always defers the realization of gains as long as possible even when a loss carry-forward exists, and so currently does not require loss carry-forward information as an input.
- What do you do if missing tax lots?
- An advisor can set a default assumption, e.g. the tax lot has been held for more than one year, can manually enter the tax lot information, or can exclude the missing tax lots from being considered by LifeYield ROI when order suggestions are generated.
- What data sources do you connect to now?
- Currently, LifeYield ROI is integrated with Pershing's and Fidelity's National Financial custodian services, as well as Albridge, Inc.'s account aggregation services.
- Can the illustrator integrate into planning tools?
- Currently, LifeYield is not integrated with any planning tools. For a professional services fee, LifeYield can do so.
- How are Required Minimum Distributions (RMDs) handled?
- If the advisors custodian can provide them, LifeYield ROI will consider RMDs when making trade suggestions.
- How is data loaded into LifeYield ROI? When is data updated?
- LifeYield ROI is integrated with the custodian services of Pershing and Fidelity's National Financial, as well as the account aggregation services provided by Albridge, Inc. Data from these services is loaded automatically into LifeYield ROI. Typically, LifeYield loads data nightly, but more frequent data loads can be accommodated.
- Can specific tax lots be restricted such that they are displayed in LifeYield ROI but excluded from any trade suggestions?
- Yes. Any tax lot, security, or account can be restricted.
- Will LifeYield Illustrator make recommendations on location of assets?
- Yes, LifeYield ROI helps you make sure that the most appropriate assets are located in the most appropriate type of account, e.g. a tax free municipal bond will be located in a taxable account.
- Will LifeYield Illustrator or LifeYield ROI make recommendations on types of products to purchase, or percentage to be held in a household, e.g. annuities, what kinds, what percentage of household assets?
- No. As an advisor, you do that best. After products and allocations are agreed upon between you and your client, LifeYield makes sure that the on-going management of those products and allocations is tax optimized in order to maximize returns and retirement income.
- Does LifeYield ROI consider taxes when considering buying and selling of assets for relocation?
- Yes, when making buy and sell suggestions, LifeYield ROI weighs the pros and cons of longer term tax benefits relocating the assets versus the short term tax consequences of doing so.
- What are trade routing options?
- LifeYield ROI delivers suggested trade lists in Excel, CSV, or PDF form. For a fee, LifeYield will integrate with any order management system.
- How are orders handled for accounts where advisor lacks trade authorization?
- If an account is non-discretionary, the advisor may discuss the suggested trade list generated by LifeYield ROI with the client.
- How are orders handled with multiple trade destinations, i.e. multiple custodians, held away accounts, mutual funds?
- If LifeYield has been integrated with a firm's order management system, it will be in that OMS's trade blotter that routing destinations would be chosen. If LifeYield ROI has not been integrated with a firm's OMS, then LifeYield ROI provides a trade list in Excel, CSV, or PDF form and it is up to the advisor to send the orders to the correct executing broker.
- How are wash sales handled?
- LifeYield ROI does not suggest trades that will violate the Wash Sale Rule. LifeYield ROI will keep track of securities that are sold where the advisor indicates the express intent to re-purchase after 30 days.
- Do taxes always drive the optimizer?
- Of course, tax considerations are the primary driving force behind LifeYield ROI trade generation process. However, maintaining, or moving toward, a desired asset allocation is also considered. LifeYield ROI is configurable by an advisor to put more or less emphasis on considering taxes or asset allocations.
- If Required Minimum Distributions (RMDs) are not required, will optimizer always take from taxable accounts only?
- Not necessarily. In some cases when a person is nearing the end of retirement and has large, unrealized capital gains, it may be preferable instead to sell assets in a tax-advantaged account so that the estate, eventually, will enjoy a step-up in cost basis of those taxable assets instead of having to realize a large capital gains tax.
- Are reasons for order suggestions captured and stored? If so, where?
- Yes, all trade suggestions and all reasons for them are stored by LifeYield in its data centers and can easily be downloaded by an advisor.
- If trade is edited, can reason for change be captured?
- LifeYield ROI records that the trade was a "manual" one in that it was not a specific trade suggested by LifeYield ROI.
- If a trade is rejected, will LifeYield ROI recalculate next best sell to make?
- Yes, if a trade is rejected and a new trade suggestion is requested by the user, LifeYield ROI will not suggested again the rejected trade and will instead suggest the next best trade option.
- If account, or a particular security or tax lot, is set for "not harvestable" are the holdings still considered when calculating allocation?
- Yes, even if an account, security, or tax lot, is restricted, LifeYield ROI will consider it when calculating current and projected allocations.
