By Ryan Brooke, CERTIFIED FINANCIAL PLANNER® Professional, CIO
A Thoughtful, Tax-Aware Investment Transition Strategy
When you transfer after-tax investment accounts to a financial advisor, you might expect them to immediately sell everything and reinvest according to their preferred strategy.
But that’s not how we operate.
At Searcy Financial and Allos Investment Advisors, we take a measured, customized, and tax-aware approach to managing after-tax assets. We know that each investor comes to us with a unique story, a legacy of financial decisions, and very real tax consequences to consider. The goal is never just to make changes quickly, it’s to make smart, aligned decisions over time.
Here’s what really happens behind the scenes when we onboard your after-tax accounts.
Why After-Tax Assets Deserve Special Attention
Unlike retirement accounts (like IRAs or 401(k)s), after-tax brokerage accounts don’t offer tax-deferred growth. That means every decision we make, whether to hold, sell, or reinvest, can carry real-time tax consequences. Liquidating a portfolio without a plan can trigger unexpected short- or long-term capital gains, drive up your tax bill, and potentially throw off your charitable giving strategies. That’s why we don’t treat your assets like puzzle pieces to be reshuffled, we treat them like a living part of your financial journey.
Case Study: Meet Lisa and Greg
Lisa and Greg came to us after managing their own investments for years. They had about $850,000 in an after-tax brokerage account, including individual stocks, sector ETFs, and a few mutual funds purchased years ago. They also had an active charitable giving plan and several large unrealized capital gains.
Their concern?
“We know we need more diversification, but we don’t want to pay a huge tax bill just to fix the allocation.”
What we did next is what we do for every client who brings in after-tax assets.
Step 1: Refer to Your Investment Policy Statement (IPS)
Before recommending any moves, we revisit your Investment Policy Statement, a document we create during onboarding. This outlines:
- Your risk tolerance
- Your investment goals
- Your time horizon
- Your preferences and values, such as maintaining legacy holdings or avoiding concentrated risk
This becomes our north star. But it doesn’t mean we force your holdings to match a pre-set model overnight. Instead, we work toward alignment on a smart timeline, guided by your goals, not just market conditions.
Step 2: Review Your Current Holdings, With Context
We take a deep dive into the assets you’ve transferred to us. This includes analyzing:
- How long you’ve owned each asset – to determine whether they’d be subject to short- or long-term capital gains
- Legacy holdings – such as company stock, inherited securities, or sentimental investments you may wish to retain
- Cost basis – to understand your tax exposure, which becomes the foundation for any liquidation strategy
- Concentration risks – like holding too much of one stock or sector, which can impact your overall financial health
This process is not about judgment, it’s about clarity.
Step 3: Build a Tax-Smart, Long-Term Transition Plan
Now comes the fun part: strategy. 🥸
We never “blanket sell” your portfolio. Instead, we build a step-by-step plan to transition toward your ideal allocation, while minimizing the tax impact. This may include:
- Holding certain assets temporarily – waiting for them to qualify for long-term gains or until market timing and taxes align better
- Offsetting gains with losses – pairing appreciated assets with those that have declined in value for a net-zero tax impact
- Staggered sales across multiple years – if you’re close to year-end, we may wait until January to defer taxes
- Using carryforward losses – from previous years to absorb gains without triggering additional taxes
For Lisa and Greg, we sold just a portion of the portfolio initially, enough to diversify into our preferred holdings without exceeding their capital gains threshold for the year. Then, we set a 2-year plan to unwind the rest of their concentrated positions while watching the markets, monitoring tax brackets, and evaluating gifting opportunities.
Step 4: Incorporate Charitable Giving and Gifting Strategies
If you’re charitably inclined, appreciated securities can be a powerful tool. Donating them directly to a nonprofit allows you to avoid capital gains taxes and still deduct the fair market value if you itemize your deductions. For clients who give regularly, we may discuss:
- Donating appreciated stock instead of cash
- Replacing the value of the donated stock with cash in your portfolio, which we can then invest according to your ideal allocation
In Lisa and Greg’s case, they donated over $30,000 in highly appreciated tech stock to their donor-advised fund. They avoided thousands in capital gains taxes and used the cash they had earmarked for the donation to reinvest in diversified holdings that matched their long-term plan.
Step 5: Monitor, Adjust, and Communicate
Markets shift. Your life changes. Tax laws evolve. So we don’t “set it and forget it.” We continue to:
- Monitor your holdings and the tax landscape
- Check in about life changes that may affect your goals
- Revisit your IPS annually to make sure it still reflects your intentions
Our advisors communicate regularly with clients to ensure transparency and shared decision-making at every stage.
Why This Process Matters
You’ve worked hard to build your wealth. You deserve a transition plan that reflects that. Our approach is designed to:
- Protect you from unnecessary taxes
- Respect the history of your investment journey
- Align your investments with your long-term goals
- Honor your values and charitable intentions
No two clients are the same, and no two portfolios should be treated the same either. This is your life, your plan, and your future, we’re just here to help make it work for you, Where You Stand.®
Your Next Step
If you’ve recently transferred assets to our firm, or are considering making a move, schedule a meeting with your advisor. We’ll walk you through our transition strategy, answer your questions, and help you feel confident about what comes next.
Because in the end, this isn’t just about portfolio performance. It’s about building trust, honoring your values, and making decisions that support your full financial life.
Let’s build a plan together.