Can I manually manage the transition?
Yes. Turn Scheduler OFF.
Can SMA accounts use the Transition Tool?
No. SMA-only accounts are not supported.
Are bonds and options included?
No. Bonds and options are excluded from transition calculations.
What happens if the budget is $0?
The system will avoid realizing gains unless offsetting losses exist.
Can I restart a transition?
A transition may need to be rebuilt if major allocation changes occur after implementation.
Does the tool reset budgets at year-end?
No. Budgets remain unchanged unless manually updated.
What happens to fractional shares?
Fractionals cannot be traded and are moved to the APM sleeve.
How are money markets handled?
Money markets without cost basis may need to be protected or liquidated manually.
General Transition Tool Use
Q: What does the Transition Analysis Tool do?
A: It evaluates potential transitions of an account to a new target allocation, considering tax implications, current holdings, and target weights.
Q: What is the purpose of the Tax Budget?
A: It sets limits on capital gains/losses during the transition, guiding which positions to liquidate. The transition tool applies tax budgets specifically to positions within the Transition sleeve or the Managed Portfolio sleeve (if used for the transition). Once an account is allocated to model sleeves, these sleeves operate independently and trade back to their respective manager targets. This independence means that the original transition budget no longer governs these trades.
Q: Can SMA accounts use the Transition Analysis?
A: No. SMA (Manager Traded) accounts are not supported.
Q: Are bonds and options included in the tax impact calculation?
A: No. They are excluded and cannot be placed in the transition sleeve.
Q: What is the difference between the Guided Tour and Self-Guided Route?
A: Guided Tour is a step-by-step walkthrough for new users. Self-Guided Route lets experienced users navigate independently.
Q: Can I manually control the transition instead of using the Scheduler?
A: Yes. You can set “Scheduler Off” to manage liquidations manually.
Q: What happens if a model needs a position that sits in the Transition Sleeve?
A: The system journals the position from the transition sleeve into the model sleeve automatically. Positions allocated to model sleeves trade freely to their manager targets if trading is enabled, without considering the transition budget. Moving assets between sleeves does not reset the transition, as the system treats positions outside the Transition sleeve as already transitioned.
Q: Does the system provide a time estimate for transitions?
A: No. Duration depends on budget settings and market conditions.
Q: Does the Transition Tool adjust the target allocation based on holdings in the Transition Sleeve?
A: No. It allocates funds into the target as defined, minus the value in transition.
Q: How does the system handle leftover budget from the initial transition?
A: Any unused budget is carried forward into the Transition Sleeve. Once exhausted, the system assumes $0 budgets unless updated. The only adjustment available without a full reset is changing the transition budget, which applies only to positions still in the Transition sleeve.
Q: How do I update the budget or settings (Target, Tax Budget, Scheduler)?
A: Use the Pencil icon to edit. Changes apply immediately. However, limitations exist when model sleeves are allocated, as the system does not allow transitions to be restarted or recalculated automatically after allocations have been applied.
Q: What happens at year-end to budgets set in the Scheduler?
A: They continue unchanged. Advisors must manually adjust if needed.
Q: How do I finalize and submit a transition?
A: Review the Tax Impact Summary and Sleeve Breakdown, then click Submit. A confirmation or error message will appear.
Q: What does the tracking error measure?
A: It compares the transition scenario allocation against the 100% target allocation.
Q: Can an account have multiple transitions?
A: No. Each account has one Transition Sleeve, which remains active until all positions are transitioned. If you need to fully restart a transition after allocating an account to model sleeves, you must remove all model sleeve allocations, consolidate the account into a single Managed Portfolio sleeve, and initiate a new transition from the consolidated state.
Lots & Sales
Q: Why are lots changing on the Tax Impact Report each time I run it?
A: When positions are placed into the transition sleeve, only the number of shares is allocated—not the specific lots. Lots are not tied to sleeves. Each time an analysis runs, the system looks across all available lots and selects one according to the account’s designated accounting method. Market prices and cost basis can shift between analyses, which may change which lot is “next in line.”
Key Point: Lot order is dynamic and recalculated each run. Changes are expected based on market values, cost basis, and the accounting method in effect.
Q: Why do I see Sales in my Transition Sleeve?
A: When a model can use a position already in the transition sleeve, the system moves those shares into the model sleeve. This movement appears as a “sale” in the Transactions tab, but it is actually an internal journal entry, not a market liquidation. The system will also show cash proceeds in the transition sleeve, which are then swept out to complete the journal into the model sleeve.
Key Point: These “sales” reflect internal reallocations of shares and cash between sleeves, not actual trades in the market.
Q: How does the system decide which positions to liquidate?
A: The system follows a step-by-step process to balance transition progress with tax efficiency:
Losses Are Prioritized – The system liquidates all loss positions first.
Offsetting Gains – Next, it identifies gains that can be offset by realized losses.
Highest Value Positions – Among remaining positions, the system liquidates the highest market value positions with the lowest gain first.
Lot Selection – Lots are chosen based on the account’s disposition method. (Future updates will add support for specific-lot selection for custodians that allow it.)
Key Point: The liquidation order is designed to maximize tax efficiency while progressing toward the target allocation.
Scheduler & Automation
Q: Is the Transition Opportunity Scan Scheduler just scanning for opportunities?
A: No. The Scheduler not only scans but also evaluates the transition sleeve to see if positions can be liquidated within the available budget. If opportunities are found, it automatically generates those liquidations and reinvests proceeds into the target portfolio.
Key Point: The Scheduler is both a scanner and an executor — it identifies and acts on opportunities within the set budget.
Q: What happens when an account in transition is using the Scheduler?
A: The Scheduler automatically moves positions with losses and offsetting gains, up to the defined capital gains budget. If the budget is $0, no gains will be realized. Proceeds are reinvested into the target portfolio.
Key Point: The Scheduler respects the budget but market price changes between generation and execution can cause realized gains to differ from expectations.
Q: Can transition trade sets be reviewed before execution?
A: Today, no. Transition trade sets auto-flow into the rebalancer.
Budgets & Year-End Handling
Q: Does the Transition Tool automatically reset capital gains budgets at year-end?
A: No. The tool has no concept of time or year-end. Advisors must reset budgets if needed. However, year-to-date realized gains/losses reset automatically based on the custodial feed.
Q: Can budgets be carried forward year over year?
A: Yes. Advisors may choose to maintain the same budget across years (e.g., $0 short-term, $10,000 long-term) until the portfolio is fully transitioned.
Q: What’s the best practice for firms with many accounts in transition at year-end?
A: Advisors should manage budgets directly. Firms can request a bulk reset (e.g., $0 across all accounts) through SMArtX support. This is a manual override, not automated.
Q: How does a bulk reset workflow work?
A:
Advisor or home office submits accounts via a “Get Support” ticket.
SMArtX tech support updates the budgets in bulk.
Client Success provides confirmation.
Key Point: Bulk resets must apply consistent rules across accounts. Advisor-specific logic is not supported.
Realized Gains & Budget Logic
Q: When does the Transition Tool take realized gains into account?
A: Only when a custom budget is used.
Q: What happens if realized gains at the custodian already exceed the budget?
A: The tool will not transition positions with embedded gains unless offsetting losses are available.
Q: Do the “0, 20, 40, 60, 80, 100%” transition options account for realized gains?
A: No. They are scenario starting points and do not include year-to-date realized gains
Q: If gains are realized away from the Transition Tool, are they reflected in the budget?
A: No. The Transition Sleeve budget applies only to transition-driven trades, not other account activity.
Operations & Support
Q: How does an advisor request budget updates?
A: Submit a ticket via “Get Support” with account numbers and the new budget settings.
Q: What if a firm wants all transition accounts reset at year-end?
A: They can request a bulk reset. SMArtX will apply the change consistently across accounts.
Business Considerations
Q: What happens if advisors set a $0 budget and never transition positions?
A: The account may remain in transition indefinitely. In that case, some assets won’t be actively managed in SMArtX or aligned with model portfolios.