Many business owners find it difficult to free up capital that has been tied up in business assets, making liquidity a challenge, and often complicating wealth transfer efforts. Many strategies exist to help alleviate this issue: Initial public offering (IPO)….

Staged Diversification and Completion Portfolios Staged diversification refers to selling the concentrated position, paying the tax, and reinvesting the proceeds in a diversified portfolio. This is often done over several years and has the advantage of spreading out the tax…

The three main types of concentrated positions include: Public company shares. Private company ownership. Real estate. This learning outcome statement focuses on public equity ownership. There is no singular definition for a concentrated position in public equities. Anything that inhibits…

The following are several important topics for tax-aware portfolio management, each summarized in greater detail below: Selection of the investment vehicle (i.e., whether the assets are held in a partnership, fund, or separate account). Tax lot accounting. Tax-loss harvesting. Tax…

Financial Planning Clients often have a mixture of taxable, non-taxable, and tax-advantaged accounts, savvy wealth managers need to consider the interplay of these accounts, especially as clients approach retirement and begin to spend down their portfolios. The following are tax-savvy…

Tax-efficient strategies are those that sacrifice less return to a tax loss. Managers should always seek to provide the best after-tax returns possible, for any given client. Tax-Efficiency of Various Asset Classes and Investment Strategies The following return measures are…

Each jurisdiction globally taxes to discourage certain activities (i.e. short-term trading, gambling, etc.), and subsidizes activities it wants to encourage. The CFA is a global exam and does not test specific jurisdictional rules. Candidates need only learn the basic elements…

To make optimal after-tax investment decisions for clients, wealth managers focus on three crucial aspects: Component Returns Taxation: This involves understanding how different investment components, like dividends, capital gains, and interest, will be taxed. Account Taxable Status: Wealth managers determine…

Mass Affluent Segment The Mass Affluent segment is the largest among the three segments defined here. Clients in this segment have smaller portfolios comparatively, and are typically more focused on financial planning. This could include budgeting, tax preparation, retirement planning,…

The CFA Institute Code of Ethics and Standards of Professional Conduct are great places for investment professionals and candidates to begin building their knowledge of ethics for finance. This section focuses on the unique considerations of private wealth management. Fiduciary…