Biz Briefs: Vanguard's tax-loss harvest yields a caveat• Vermont green with envy ... of red states? • CFP Board spends $12 million on bungee metaphor • BlackRock isn't neutral on Credit Suisse • Women are the Goliath of 'David' in UK finance

It takes money to make money, and even more resources to realize gains from harvested losses.

The Vanguard Group appears to be the latest investment manager to infer tax loss harvesting that includes a big DIY aspect that rarely happens.

The Malvern, Pa., giant says its retail RIA, Vanguard Personal Advisor Services automatically harvests tax losses (TLH) so retail investors can cut taxes, costs and risk, and make a profit. See: Vanguard Group kills it (again) in 2022 with winning formula -- low fees and low service.

If the harvest happens, it doesn't have much – if any – economic benefit, according to Jeff DeMaso, editor of the Independent Vanguard Advisor, who watches Vanguard's every move on behalf of his readership.

The mathematics shows those benefits only occur if an investor books a paper loss, then immediately invests the same amount back into the security.

“The proponents of automated TLH are mostly doing it wrong, and investors aren’t getting the full – if any – benefit. People should add cash from an outside account to really benefit from tax loss harvesting. That, or you need to keep more in your portfolio," DeMaso says, via email.

“When Vanguard automatically executes a tax swap, [it isn't] pulling in money from another account as ‘tax savings’ to invest … Vanguard can't automatically do this,” he adds.

But Vanguard maintains that TLH will bring retail investors gains “equivalent to almost an entire percentage point of return," or 95 basis points, according to a Mar. 14 article and 2020 research paper.

If an investor does match realized losses, they will likely make roughly 2% over-and-above an investor without access to TLH, according to DeMaso's calculations.

Fair point

Vanguard is also not the only firm to promote its ability to use losses to cut investors' tax bills. Many asset managers, and even robo-advisors have made similar claims, but, likewise, TLH is often botched, according to DeMaso.

Investors who fail to invest a sum equivalent to realized losses -- by selling an investment at a profit or investing new money -- gain almost nothing, as if the investor did nothing at all, DeMaso notes, in an article.

In its 2020 report, Vanguard also accepts that without reinvesting, or covering realized losses through sales, tax savings may be “consumed." Its retail RIA can not automatically reinvest client cash.

“This isn’t unique to Vanguard. Few investors or advisors take this second step of explicitly investing their tax savings … [but] Vanguard knows it isn’t exactly doing the best job of harvesting and reinvesting,” DeMaso explains.

Vanguard did not respond to a request for comment.

Investors can deduct up to $3,000 of annual losses from their tax bill without offsetting them with new investment or realizing a taxable return.

Where some spend, others slash

The CFP Board is spending $12 million to sell investors the idea that it will – at the very least – throw them a bungle cord to stop them from plummeting off a cliff.

The Washington,  D.C. accreditor of certified financial planners has launched an advertising campaign to convince retail investors that planners who lack its CFP mark are more likely to get investors into sticky "high risk" and “uncertain” situations.

Brokers and RIAs alike can earn a CFP, hence a suitability standard is the high common denominator.

The new advertising campaign comes as the Board battles to protect its trademark CFP title after a number of high profile financial advisors continued to use near-identical titles without its consent. See: CFP Board hits back at brokerwashing.

The tagline: “It's gotta be a CFP."

The spending takes the Board's total advertising bill since 2013 to roughly $150 million. See: How the CFP Board is getting its $40 million's worth from its advertising campaign and how it isn't

Not at that price

The presumed nutty-crunchy Vermont Pension Investment Commission is the latest to wonder whether the “G” in ESG stands for "greed."

The Montpelier, Vt, committee is asking state legislators to exclude index and private equity funds from a bill that will require state pension funds to divest from fossil fuels by Dec. 31, 2030. 

The committee argues ESG fund managers levy excessively higher fees – often at “twice the price” – for the state's $5.5 billion of assets in pension funds for teachers, municipal workers and other state employees.

"It would put Vermont at a significant disadvantage if we weren't able to access traditional indexing products," committee chair Thomas Golonka said in February testimony.

It's a stance red states have made popular. See: Texas just pronounced BlackRock guilty of pandering to sustainable investing interests -- and BlackRock is having none of it

The difference in annual fees the Vermont pension system would have to pay for an ESG portfolio ($9.35 million) and a conventional portfolio ($6.6 million) is striking, if it were to move all its assets into index funds.

Put simply, the committee doesn't want to pay a whole lot of green to go green.

The difference between conventional funds and ESG funds is also more superficial than many initially presume. 

ESG funds duplicate non-ESG fund holdings 68% of the time yet cost "three times" more, in real terms, according to a new Harvard Business School study.  

Average US ESG ETFs also charge 17 basis points in annual fees, or 5 basis points more than conventional funds, according to Morningstar data.

California lawmakers are pressing ahead with a similar bill to that proposed in Vermont, and Maine passed its own bill in 2021.

Model Portfolio Marketplace Gets a Lift

Advyzon is launching a marketplace for one of the fastest growing categories of investment products that's growing largely because it's not actually a product.

The Chicago RIA software outsourcer and TAMP is launching – somewhat derivatively – its own model portfolio marketplace, Nucleus, where RIAs can pick-up and apply third-party investment portfolios.

Model portfolio marketplaces have become a dime a dozen among RIA outsourcers big and small in recent years.

Black Diamond added its own late last year, and Orion Advisor Solutions and Envestnet launched their own model marketplaces in 2020. See: Black Diamond lands punch at T3.

Masttro snares $43 million raise

Masttro just raised $43 million from FTV Capital, which recently banked Riskalyze winnings. See: Riskalyze de-risks by cashing out investors at a $300-million-plus valuation.

The Zurich, Switzerland start-up announced its Series-A raise earlier this month. 

Originally based in Zurich, Masttro, which sells performance reporting software, moved its headquarters to New York City in 2020, largely because almost half its clients are now based in the United States. 

Although not well known in many RIA circles, 45 of Masttro's 90 clients are US-based, including RIAs and family offices.

Aussie CRM's market-cracker nets CEO role

Adrian Johnstone's prize for cracking the US market to the tune of 175 RIAs is the CEO spot at the Australian CRM company he co-founded.

After just under two years as the company's president, Johnstone, Mar. 17, replaced his long-time partner, Glenn Elliott, as chief executive of Sydney-based Practifi – a Salesforce CRM overlay,

"[It] puts me in a position to keep driving the client service and innovation that have already carried Practifi so far since we founded it together," says Johnstone, via email.

Johnstone's ascent follows his role in Practifi's bid for marketshare among US RIAs, initially as chief commercial officer, between the company's 2013 founding and August 2021. He became Practifi's president in September 2021.

The CRM market is brutally competitive and yet, wide open as players like Wealthbox and Redtail keep spending to grow RIA marketshare; former top-dog Junxure is bidding for a renaissance under new ownership and Salesforce -- and overlays like Practifi and Salentica -- remains a force.

Johnstone's success – over 5,500 advisors and back-office staff use the firm's software, typically those with more than $2 billion under their management – and Elliott's desire for change also drove the former's promotion.

"This shift lets Glenn focus on his passions, and … after a lot of conversations together, we realized we had a chance to make a change to really lean into our individual strengths," Johnstone explains.

Practifi will not appoint a new president for the time being. Elliott will remain on the firm's board.

Corporations step back from retirement offerings

One out of every one hundred US companies stopped contributing to employees' retirement accounts at the end of 2021, according to a new Vanguard report – although the change is minimal.

The number of companies that stopped offering some kind of employee match rose to 5% from 4% in 2020, according to the report. 

Plan sponsors offered a matching contribution in 85% of those companies surveyed. Another 46% offered a non-matching contribution, and 36% offered both, the survey showed. 

The shift hit workers in the IT, publishing and legal professions hardest, Vanguard reports.

Fink-ing

UBS beat BlackRock to the punch to buy troubled Swiss bank Credit Suisse for $3.3 billion, 

But BlackRock now asserts it never even tried, and it tweeted the fact, Mar. 18, just to make sure word got out.

"BlackRock is not participating in any plans to acquire all, or any, part of Credit Suisse, and has no interest in doing so," the company stated, in the tweet.

The tweet struck a note of confusion, too, given BlackRock CEO Larry Fink previously expressed his desire to buy Credit Suisse, according to The Financial Times, citing sources.

There are many reasons BlackRock might have balked at buying Credit Suisse, from a poor track record of corporate governance and a balance sheet loaded with excessive risk, to a client list of tax-evaders that range from vanilla cheats to drug dealers.

Fink also forecasts that recent turmoil in the banking markets is unlikely to end quickly, stating that a "slow rolling crisis ... with more seizures and shutdowns" is likely.

Yet Fink's fixation on Credit Suisse, which owns the recently revived First Boston brand, may be sentimental.

The BlackRock chief got his head in finance in 1976 at First Boston as one of the country's first mortgage-backed security traders.

Human resources financial faux pas

Autistic people may make excellent drivers, but they may make even better financial advisors.

Indeed, the financial sector may (mostly) be depriving itself of access to a ready pool of top talent by failing to adequately support neurodivergent employees – a failure that may be just as bad for business as it is unfair. 

Many with autism, dyslexia, and ADHD, for instance, are particularly suited to the fine grain detail work common in the financial services industry, according to Maria Hamdani, associate professor of management at the Ohio-based University of Akron.

Morningstar shines light on the deep-sixing of Dave

Meanwhile, Goliath is finally beating David at UK investment funds, after the number of women managing UK funds finally surpassed the number of men named Dave doing similarly.

The name David hit the height of its popularity in the 1950s and early 1960s, and until recently you were more likely to find a David managing a fund's portfolio than a woman, according to Morningstar data.

Today, Daves manage 8.6% of UK fund assets, or £71.8 billion through 133 funds, or 7.2% of all UK funds; whereas women manage 20.8% of UK fund assets, or £173 billion through 329 funds, or 17.8% of all UK funds.

Yet the triumph of women over David is less clear-cut than it appears. 

The popularity of the name David has been declining since 1960, and it fell out of the list of top 10 most popular names entirely in 1993. 

Morningstar also altered its research methodology to discount double Daves – at least 12 funds have two Daves in charge.

Fresh moves

Meanwhile, Gainesville, Fla., RIA custodian TradePMR just appointed Bill Coppel, former Wells Fargo Clearing exec and the founder of St. Louis, Miss., consultancy The Coppel Network, as its new VP for practice management. 

Through training and strategic planning, Coppel will help RIAs wrangle growth in the downmarket, according to a release.

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And RIA M&A consultancy, DeVoe & Co. just added three new staff, including one formerly CEO David DeVoe's one-time stomping ground, Charles Schwab Advisor Services.

Former Schwab managing director, Shawn Lapean, is now DeVoe's chief of staff; former Sun Mergers and Acquisitions associate Ian Kravitz is a new senior associate and experienced administrator Jean Curler is David DeVoe's new executive assistant.