Erik Preus, Group Head of Investment Solutions for Envestnet, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the importance of taxes for high-net-worth clients and how changes in tax law affect future tax burdens.
Preus, who runs tax overlay services for Envestnet, states that it has always been fundamental for advisors to discuss taxes with their high-net-worth clients. Tax and investment management are the foundations of the services that advisors provide to clients. Investors in the highest tax brackets are especially tax sensitive. Investors seek to reduce tax drag, which is a key factor in after-tax portfolio returns. Preus recommends that advisors work with clients to set a capital gains budget, which provides clarity to the client on the current year’s tax burden.
Investors want personalized solutions from their advisors, which is becoming more feasible with technological advances. Personalized solutions include tax management and portfolio overlays reflecting client values. Direct indexing can be a powerful tool that allows clients to invest in a broad index while generating tax losses that can offset capital gains taxes. Even in markets with strong returns, such as 2023 and 2024, one-third of S&P 500 stocks can decline, which creates opportunities to harvest losses.
2025’s One Big Beautiful Bill Act (OBBB) extended the provisions of the 2017 Tax Cuts and Jobs Act (TCJA). While the TCJA made permanent cuts to corporate tax rates, the individual tax cuts were scheduled to expire at the end of 2025. The passage of OBBB extended these tax cuts, bringing clarity to individual income taxes. While the TCJA capped deductions for state and local taxes (SALT) at $10,000, the OBBB increased the SALT deduction for married couples with incomes under $500,000 to $40,000 with a scheduled expiration date after the 2029 tax year. Clients in states with the highest tax rates are likely to see larger deductions and lower effective tax rates in 2026.
WEBCAST – Building the Ultimate RIA Technology Stack
In this session, we’ll explore how RIAs are strategically assembling and deploying technology to drive efficiency, scalability, and superior client service.
What You’ll Learn:
- Why building a tech stack matters – Evaluate industry trends and essential tools for onboarding, CRM, planning, portfolio management, and more
- Deep dive into must-have platforms – client portals, reporting, trading, CRM, and integrations
- Real-world case studies – Hear how firms overcame tech challenges and scaled with the power of Envestnet and Tamarac
- Live Q&A – Get your questions answered by our team
Whether you’re just starting to build your tech stack or looking to optimize your current setup, this webinar will provide actionable insights to help you grow smarter.
Accepted for 1 CFP® / IWI / CFA CE Credit
Resources: Envestnet Tax Managed Overlay Services