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For immediate release, 10/15/2013

More than 70% of RIAs and Fee-Based Advisors Say Tax-Deferred Investing Essential to Managing Volatility and Rising Taxes

Jefferson National’s New Survey Shows Roughly Two-Thirds of Advisors Continue to Increase Use of Alternatives, Tactical Management and Tax Deferral in Current Market

Louisville, Ky.—October 15, 2013—Registered Investment Advisors (RIAs) and fee-based advisors continue grappling with ongoing volatility in a time of rising taxes, and they see alternative investments, tactical management and the power of tax deferral as key to navigating the current market, according to a new survey conducted by Jefferson National.

“As concerns over the budget stalemate have become the latest catalyst for ongoing volatility, our research shows that advisors are increasing their use of alternative investments and tactical management—and when using these tax-inefficient strategies to add ballast to portfolios they recognize that tax deferral is more important than ever,” said Laurence Greenberg, President, Jefferson National. “Advisors understand how the power of tax deferral can help manage the impact of taxes and help clients accumulate more.”

According to Jefferson National’s latest survey, nearly two-thirds of advisors (64%) have increased their use of alternative investments over the past five years, and 55% see their allocation to alternatives continuing to increase further over the next 5 years.  Likewise, the use of tactical management remains strong. Nearly two-thirds of advisors (61%) are more likely to employ tactical strategies in the current market while only 39% would choose a buy and hold strategy.

When asked why they use alternative investments, roughly three-fourths of advisors (73%) indicate “managing volatility.” Often alternatives are tax-inefficient, generating ordinary income or short term capital gains which are taxed at higher rates, and 76% of advisors said they would consider increasing their use of alternatives if they could access them in a low-cost tax-deferred account. Research has shown that a low-cost tax-deferred vehicle can help alternative investments, tactical strategies and other tax-inefficient assets improve performance potential by an average of 100 bps—without increasing risk—to help clients accumulate more.1

The demand for tax deferral remains urgent as households are forced to grapple with rising taxes, and the nation’s tax bill has been forecast to escalate by $500 billion, or an average of roughly $3,500 per household, according to the nonpartisan Tax Policy Center. More than 90% of all respondents said that their clients are concerned about the rise in capital gains tax. To mitigate the impact of increased capital gains taxes, which can systematically erode long term accumulation, 71% of respondents are considering using a low-cost tax-deferred account.

Roughly 400 responses from RIAs and fee-based advisors were recorded in an online survey, which was conducted from September 18, 2013 through October 3, 2013. These most recent results are in line with previous findings from Jefferson National’s series of ongoing surveys addressing the issues that RIAs and fee-based advisors care about most. The margin of error in this survey was +/-5%.

Media Relations
JeffNat Deborah Newman 502.587.3858

1The Tax-Efficient Frontier: Improving the Efficient Frontier with the Power of Tax Deferral, by David Lau, published by Jefferson National, June 2010.

About Jefferson National

We are committed to serving RIAs and fee-based advisors with investing solutions that help their clients build wealth and achieve financial goals. Named the industry “Gold Standard” for our unique approach, we continue to invent new ways to help advisors take their seat on the client’s side of the table. We believe above all that consumer value is in everyone’s best interest.