Most of our clients are invested in the globally diversified model portfolios our investment team builds. For some, the tax situation calls for more: a large position in a single stock, years of built-up gains, or a high enough tax bracket that every realized dollar counts. For those clients, we add a layer of tax management through direct indexing.
Direct indexing means owning the individual stocks that make up an index, in a separately managed account (SMA) held in your name, rather than through a single fund. Owning the stocks directly is what opens up everything below. Losses can be harvested one position at a time. Specific companies can be left out. The portfolio can be shaped to your values, and moved in or out without an avoidable tax bill. Because a CPA is on our team, the tax impact stays in view at every step.
A mutual fund can hand you a tax bill even in a year it lost money. When enough investors sell, the manager has to sell holdings to pay them, and the resulting capital gains get passed on to everyone still in the fund, you included.
Direct indexing removes that problem. You own the individual stocks yourself, so another investor's exit doesn't create a taxable event for you. And when a holding drops below what you paid, we can sell it, use the loss to offset gains elsewhere, and buy a similar position so your market exposure doesn't change. That's tax-loss harvesting, and owning the stocks directly is what lets us do it stock by stock instead of all or nothing.
We manage the gains just as deliberately. We hold winners long enough to earn the lower long-term rate instead of the higher short-term one, and we time gains around your bracket instead of realizing them all at once. When the tax law changes, we adjust the portfolio to it rather than finding out in April.
Moving to a new portfolio usually means selling what you already hold, and that can trigger a large tax bill in a single year, especially if you're carrying years of gains or a big position in one stock.
It doesn't have to happen all at once. Because we work security by security, we can bring your existing holdings over in stages: sell the lots with losses or small gains first, hold the highly appreciated ones until the timing is right, and spread the rest across tax years so no single year takes an outsized hit. You move into the portfolio we've designed on a schedule built around your tax situation, not in one taxable jump.
Direct indexing treats the index as a starting point instead of a finished product. Because you own the individual stocks, the portfolio can be shaped to your situation: leave out your employer if you already hold a large position in its stock, trim a sector you're overexposed to elsewhere, or lean into one you have real conviction about. You can also screen out an industry you'd rather not own, or weight toward businesses that meet the environmental, social, and governance standards you set. It still tracks the broad market closely. None of this is stock-picking to beat the market; it's shaping a portfolio that still tracks it, around your tax situation and what you want to own.
We'll also tell you plainly what a given screen does to expected risk and return, so you decide with the trade-offs in view. Every change is documented, and we show you what it does to the portfolio before we make it.
When you give to charity, the most tax-efficient gift is rarely cash. It's the stock you've held for years that has grown the most. Because a direct-indexed portfolio holds the individual stocks rather than a single fund, we can see exactly which shares carry the largest gains and give those directly to the charity or your donor-advised fund. You avoid the capital gains tax you'd owe if you sold them first, the charity receives the full value, and you can generally deduct the market value of the gift, up to the limits the IRS sets for gifts of appreciated securities.
The same detail lets your giving reflect what you care about. We can choose shares from a particular company or sector, so the gift carries your intent as well as the tax advantage.
If you're retiring with a large position in one company's stock, built up over a career and carrying years of gains, we can move it into a diversified portfolio over several tax years, harvesting losses along the way to offset the gains we realize.
If you're bringing an old brokerage account with large embedded gains, we can stage the transition instead of selling all at once, so no single year takes an outsized tax hit.
If you want to keep broad market exposure but leave out a specific industry on principle, we can build the portfolio to track the market while excluding those companies.
Whether you're holding a concentrated position, years of built-up gains, or looking for continuous tax-loss harvesting, we can help you build an exit strategy on your terms.
Schedule a Portfolio Review