Managing Director, Senior Investment Consultant | 2018Taxes
It’s important to understand the full picture of a client’s investment assets and take a personalized approach to building a tax-efficient investment portfolio.
Most high-net-worth clients have a need to reduce current tax liabilities, avoid unrealized taxes, and prioritize tax-advantaged assets. It’s important to understand the full picture of a client’s investment assets and take a personalized approach to building a tax-efficient investment portfolio. Do you currently address tax sensitivity with your clients?
We recommend the following process:
What follows is a case study illustrating how City National Rochdale was able to significantly reduce a client’s tax liability.
TAX-SENSITIVE PORTFOLIO ALLOCATION AND TRANSITION
A client portfolio had approximately $3.3M in total assets with embedded, unrealized capital gains of over $1.3M. An imminent tax burden was preventing necessary reallocation and diversification, so City National Rochdale created a plan to stage the exit of the existing portfolio.
As a result, a $269,000 tax consequence was reduced to approximately $51,000.
Following a strategic and disciplined process may help reduce a client’s tax burden and increase a portfolio’s long-term value. This approach may allow advisors to win the business of those who have the significant tax burdens that often characterize the working wealthy, as well as retain them with ongoing tax loss harvesting, asset location, and asset prioritization strategies.
For more information about how City National Rochdale can help reduce a client’s tax burden, please see our white paper, Tax Alpha: Enhancing Returns Through Active Management.
It’s important to understand the full picture of a client’s investment assets and take a personalized approach to building a tax-efficient investment portfolio.
