Tax optimization comparison: PortfolioPilot vs Parametric

According to the IRS, the deduction for net capital losses against ordinary income is generally capped at $3,000 per year - carryforwards take time to use (IRS Topic No. 409). That limit often surprises investors who think “more harvesting today” automatically solves next year’s tax bill. The real conversation is broader than TLH: asset location, wash-sale rules, distribution control, and the 3.8% Net Investment Income Tax (NIIT) all matter, too (IRS Topic No. 559; IRS Pub. 550).

This article compares PortfolioPilot (software-guided tax optimization across a household’s accounts) and Parametric (advisor-implemented direct indexing with daily tax-loss harvesting). It focuses on how each approach tackles taxes in the real world, beyond harvesting alone, and who each model may fit.

Key Takeaways

1. “Tax optimization” goes beyond TLH. Asset location, tax-aware rebalancing, distribution control, tools designed to identify potential wash-sale scenarios, and NIIT thresholds all influence after-tax outcomes.
2. Parametric offers advisor-implemented direct indexing with daily loss harvesting and customization; typical minimums are higher (often around $75,000 via advisors). 
3. PortfolioPilot uses software workflows across existing brokerage and retirement accounts: tax-loss harvesting playbooks, wash-sale guardrails, asset-location analysis, and projected tax impact before trades. 
4. Fit often comes down to implementation style (SMA vs. keep current ETFs/funds), minimums, and whether a person wants a hands-off, advisor-run solution or do-it-with-software guidance.

Parametric: direct indexing with daily tax management

Parametric is known for direct indexing - owning hundreds of individual stocks to track an index with daily tax-loss harvesting and custom constraints (values, sectors, legacy holdings). The firm emphasizes after-tax outcomes and long-term tax-aware portfolio design. 

What this can mean in practice

• Granular harvesting: individual positions create more harvest “lots” than a single ETF.
• Customization: screens and tilts are implemented at the account level.
• SMA structure: assets are held in a separately managed account; operational details (trading, rebalancing, substitutes) are handled by the manager.

Trade-offs some investors consider

• Minimums & manager relationship: higher starting point and advisor involvement.
• Household coordination: optimization typically occurs within the SMA; aligning across a spouse’s 401(k) or IRAs may require additional planning tools.

PortfolioPilot: software-led, brokerage-agnostic tax workflows

PortfolioPilot offers software tools that can help self-directed investors coordinate taxes across their existing brokerage and retirement accounts without moving assets. The platform highlights:

• TLH playbooks and alerts with wash-sale guardrails and suggested substitutes.
• Projected tax impact before trades.
• Asset-location analysis and tax-aware portfolio insights that consider distributions and dividend tax drag.
• Planning workflows (for example, Roth conversion modeling, withdrawal sequencing) to evaluate timing against income and NIIT thresholds.

What this can mean in practice

• Keep current funds/ETFs: no SMA required; suggestions aim to work with what the investor already holds.
• Household view: software can help coordinate across taxable accounts, 401(k)s, IRAs, and cash - useful when decisions in one account affect taxes in another.
• DIY with guidance: the person remains in control; monthly recommendations can be executed at their chosen broker.

Trade-offs some investors consider

• Execution discipline: outcomes depend on following the workflows.
• Granularity: Without direct indexing, harvesting depth may be bounded by the number of ETF/fund positions.

Hypothetical: one portfolio, two paths

Hypothetical Scenario: A 42-year-old professional with $400k taxable ETFs, a $300k 401(k), and $60k in cash wants to reduce tax drag in 2025 while staying near a total-market allocation.

• Parametric path: move taxable assets into a direct-indexing SMA. The manager runs daily TLH, uses substitutes to avoid wash sales, and maintains index-level exposure. The 401(k) and IRAs remain outside the SMA, so asset-location and withdrawal planning may require separate tools.
• PortfolioPilot path: keep the ETFs in place; use software to flag harvest windows, project tax impact before placing orders, suggest substitutes to avoid wash sales across accounts, and analyze asset location between the 401(k) and taxable account to cut distribution drag. NIIT thresholds are monitored in planning workflows. 

Lesson: The first path emphasizes automated execution inside a managed account; the second emphasizes household coordination with software-guided steps the investor controls.

The comparison is based on publicly available information from each provider’s website as of 11/19/2025. Features, fees, and methodologies may change over time.