How A Financial Advisor Can Help You Manage Your Tax Exposure

To build and maintain wealth, you must actively manage your investments with tax efficiency in mind. Tax season highlights the need for high-net-worth individuals and families to find an experienced financial advisor in Marin County who can assist in building a portfolio that is optimized specifically to address your financial and tax situation.

An experienced financial advisor can help you manage your tax exposure by creating a comprehensive wealth management plan on your behalf and working closely with you and your Certified Public Accountant (CPA).

A Financial Advisory Firm Has a Comprehensive View of Your Financial Life

Implementing tax strategies can proactively lower your tax bill each year. An experienced wealth management team can plan and execute efficient tax strategies using a comprehensive view of your finances.

With financial planning and an in-house investment research team, more thoughtful choices can be made that have a long-term financial impact on your current and future tax returns. For example, devising a tax-efficient withdrawal strategy as a retiree should consider your lifestyle, cash flows, income sources, and more. A wealth manager can advise you when to withdraw money from appropriate accounts to minimize your tax liability.

At Fairview, since our firm has a comprehensive view of your financial life, we will work closely with your tax accountant to answer higher-level financial questions as they prepare your taxes each year.

How Do You Maximize Tax Efficiency?

Thoughtful financial planning includes deciding what type of investment accounts to use. There are two with which you should become familiar.

Taxable Accounts vs. Tax-advantaged Accounts

Taxable accounts are used for assets not eligible for tax-deferred or tax-exempt accounts. These accounts have fewer restrictions than tax-advantaged accounts, so you can easily withdraw money without penalties. At Fairview, we always consider tax implications when making a purchase, sale, and/or portfolio rebalancing decision.

Tax-advantaged accounts include tax-deferred or tax-exempt assets, such as a 401(k), IRA, or Roth IRA. You should have a specific plan for managing these types of accounts, given the nature of tax consequences once you reach retirement age. Early withdrawals are subject to various penalties. Retirement accounts like these should be discussed with a wealth manager since there are many variables to consider.

A well-devised wealth management plan should incorporate details that address both your taxable income and investments and your tax-deferred investments, as mentioned above.

Diversifying By Tax Treatment

Ideally, your comprehensive wealth plan addresses the proper diversification you need for your specific financial situation.

Here are components of a well-thought-out investment plan:

  • Tax-loss harvesting
  • Asset allocation
  • Withdrawal strategies
  • Managing capital gains
  • Managing distributions

You can remain in a more advantageous tax bracket by strategically allocating taxable and tax-exempt income. As the tax code shifts, a wealth manager can recommend what’s best for you.

It is also important to consider tax implications for the following transactions. These actions don’t necessarily reduce taxes, but considering tax implications in advance can help you avoid mistakes.

  • Retiring
  • Selling your small business
  • Setting up funds to cover college for children or grandchildren
  • Giving gifts to children or grandchildren

The possibilities are vast, complex, and dependent upon your financial assets which drive the need to partner with a highly qualified wealth management firm like Fairview Capital.

Manage Your Tax Exposure with Fairview Capital

Your unique financial goals serve as the foundation for the long-term financial planning process. We will start our relationship with you by analyzing your existing holdings to help us understand your complete financial picture: assets, liabilities, income, expenses, and cash flow.

Your comprehensive wealth management plan will be built with consideration of any tax-related consequence that may arise when circumstances change.

At Fairview, we consider our clients’ tax bracket, philanthropic commitments, and capital gains or losses from other assets.
Note: many wealth management firms outsource investment management to third parties, contributing to higher client fees, potential tax inefficiencies, and lack of oversight and portfolio control. At Fairview, we have a highly-experienced, in-house investment research team. This enables you to own a portfolio of top-quality businesses that should increase in value over time.

Next Steps

Decisions around tax-smart financial management are best handled by a financial advisory firm that can work closely with your CPA.
Delegate tax-efficient investing to a fiduciary financial advisory firm that puts your best interests above their own.

We are tax-sensitive from the moment we start to manage your accounts. Call us to discuss Bay Area comprehensive financial planning today.

Fairview has provided wealth management advice in Marin County since 1995. We currently manage over $1.6 billion in assets for families, individuals, trusts, and institutional investors.

Our team is dedicated to providing exceptional advice and service to you.

Schedule a no-obligation appointment with Fairview Capital.

The information contained in this communication is provided for general purposes only, and was prepared in reliance on independent, third-party sources that Fairview Capital Investment Management, LLC (“Fairview Capital”), an SEC-registered investment adviser, believes are reliable. Nevertheless, Fairview Capital does not guarantee its accuracy or timeliness of any information provided herein. The information reflects subjective judgments, assumptions and Fairview Capital’s opinion on the date made and may change without notice; Fairview Capital is not obligated to update this information. Nothing in this communication should be construed as investment or tax advice, a solicitation, offer, or recommendation, to buy or sell any security. Investment management services are offered only pursuant to a written investment management agreement, which investors are urged to carefully read and consider in determining whether such agreement is suitable for their individual needs and circumstances. The information in this communication should not be construed as an endorsement, recommendation or sponsorship of any company or security. If this post mentions a specific investment or security, we or our affiliates may have a position in that security (either long or short), and we may profit from a price change in that security.

Investment management and advisory services–which are not FDIC insured–are provided by Fairview Capital. Any links provided to other sites are offered as a matter of convenience and are not intended to imply that Fairview Capital or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. Please see Fairview Capital’s Form ADV Part 2A and Form CRS for important details.

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    Greenbrae, CA 94904
    (415) 464-4640

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    Pittsburgh, PA 15215
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Nothing in these materials should be construed as investment or legal advice or a recommendation to purchase or sell securities. The information is not intended as an offer to provide advisory services in any state or jurisdiction where such offer would not be permitted under applicable law.

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