Insight
Much ADO About Taxes
Educating clients on the many options for tax-efficient diversification can be a powerful step in gaining comfort with moving away from a concentrated position that may be adding unnecessary risk to portfolios.
Key takeaways
- Concentrated stock positions can create unwanted risk in clients’ portfolios. A combination of factors including emotional biases and fear of built-in capital gain consequences can make investors less willing to diversify.
- Move the conversation forward by educating clients about tax-efficient strategies for diversification and remember that while each of these strategies is valuable on its own, they can be particularly powerful when combined.
- Tax-management diversification strategies can be thought of as being in one of these three buckets: Avoid, Defer, and Offset.
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