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Tax Planning

Tax Planning

Importance of Tax Planning

One of the fundamental components of financial planning is being efficient with your taxes. It is critical to consider taxes within the asset allocation process, strategy implementation, and asset location. The impact of

taxes are likely to play a more important role for investors. 


In collaboration with our Accounting Firm partners, Arrowroot Family Office spends valuable time preparing and implementing tax effective strategies.


Our Tax & Accounting Services:


  • Business Advising and Planning
  • Business Best Practices
  • Income Strategies
  • Tax Efficiency Analysis
  • Succession Planning
  • Fringe Benefit Planning

Our Process:


  1. First, we incorporate the asset class tax characteristics during the portfolio optimization process.
  2. Second, we incorporate specific manager tax efficiency characteristics into our due-diligence and manager selection process.
  3. Third, we identify the most appropriate place in a client’s portfolio 

based on the return profile. For example, all else equal, a strategy expected to deliver 6% gross returns taxed as ordinary income will be less optimal for a high tax-bracket individual than a strategy expected to deliver 4% tax-free returns unless there is an ability to place in a tax-advantaged account. While these differences may seem subtle when looking at gross returns, the differences can be meaningful when evaluating after-tax returns.


Within equity allocation, we favor tax-efficient vehicles with the ability to add to returns through tax-alpha by harvesting losses while maintaining minimal tracking error to the benchmark. This tax alpha is correlated with volatility, so investors actually earn higher after-tax returns during volatile times. These harvested losses are used to offset income in other parts of the portfolio, or carried forward indefinitely to offset future capital gains, a value that will increase with higher tax rates.

Arrowroot Family Office is here to offer Tax & Accounting services that help you retain as much of your income as possible and meet your financial goals.