What Does it Mean to be "Tax-Smart"?

Helping our clients implement “tax-smart” strategies is where I believe we provide a substantial amount of value. Anyone who is a DIY investor can open a Vanguard account and fund an S&P 500 Index Fund on a regular basis. Many of those that do this think they have just equaled the work of a financial advisor and saved themselves a lot of money in fees.

Respectfully, this is an incorrect assumption. Extracting value through tax-smart strategies across the many facets of our client’s lives is where we spend the great majority of our time as an investment management/financial planning firm.

It is simpler than ever to construct a globally diversified portfolio and rebalance on a regular basis. Because we know and understand our clients on such an intimate level, we can personalize our service to each client and extract great value as we help them achieve their goals through tax-smart financial planning.

What are some examples of tax-smart financial planning?

• Partial Roth conversions of traditional IRA assets
• Annual Roth conversions on non-deductible traditional IRA contributions
• Maximizing the standard deduction through Donor-Advised Fund contributions
• Maximize after-tax investment yield through sound portfolio management
• Reducing tax-liability on employer provided stock in retirement accounts

Each of these bullets and the others not listed could each be their own blog post in and of themselves. But I’m not here to describe each of these in detail. The purpose of today’s idea is to get you thinking about whether you implement tax-smart planning for your family. It pays compounding dividends that are quite valuable. You work too hard not to take advantage of them.

-Mark Hume-