Tax Management for RIAs, Without Giving Up the Relationship
When a client’s concentrated position, embedded gains, or portfolio transition comes with a tax bill, Opal can help you evaluate a tax-aware approach while you remain the client’s advisor.
Opal Capital, an SEC-registered investment advisor in Boca Raton, Florida, provides tax management for RIAs and independent advisors with tax-sensitive client situations, including concentrated positions, embedded gains, and portfolio transitions. Advisors keep the client relationship while Opal’s investment team provides tax-aware portfolio management, from year-round tax-loss harvesting to a Capital Gain Deferral SMA.
What Client Situations Can Opal Help With?
Most advisors come to us with a client problem, not a strategy name. These are the situations that typically start the conversation.
A concentrated, low-basis stock position
“We need to diversify, but selling could create a substantial tax bill.”
A tax-aware way to diversify gradually, offsetting gains with harvested losses along the way.
A portfolio change involving appreciated holdings
“How do I move toward the right portfolio without realizing every gain at once?”
A transition plan that manages realized gains as the portfolio is repositioned.
A liquidity event on the horizon
“My client’s private company shares are heading toward a sale. Can we prepare?”
Losses harvested ahead of time can help offset the gain when it is realized.
A client asking about after-tax results
“Are we doing enough beyond investment selection?”
Year-round tax-loss harvesting and tax-efficient vehicles built into the portfolio.
How Can Opal Help?
Opal brings tax-aware strategies to the table. See how it works.
Tax-Efficient Vehicles
Model portfolios use ETFs with in-kind redemption mechanisms that help minimize capital gain distributions.
Year-Round Tax-Loss Harvesting
Tax-loss harvesting and tax-lot management are part of portfolio construction from day one, building a loss carryforward bank that can offset future gains.
Capital Gain Deferral SMA
A long-short equity overlay for low-basis holdings that helps defer capital gains and diversify concentrated positions over time.
How Does Tax Management Work With My Practice?
Tax management runs inside the same platform you use for models and reporting. You keep the client relationship and the planning conversation. Opal handles the portfolio-level execution.
Integrated from day one
Tax-loss harvesting and tax-lot management are part of portfolio construction, not an add-on applied at year end.
Modular
Use tax-aware strategies alongside Opal’s model portfolios and actively managed ETFs, or on their own. Use what you need and leave the rest.
Customized by client
The Capital Gain Deferral SMA can be funded with cash, low-basis public stock, multi-asset portfolios, or private ownership. Leverage can be adjusted as risk tolerance and liquidity needs change.
Your control
You decide which clients, which strategies, and when. Institutional resources, independent control.
Which Clients Need Tax Management Most?
Tax management matters most when a client’s embedded gains are large and the exit is still ahead.
Concentrated stock positions
Long-held public stock with a minimal cost basis. A gradual, tax-managed exit helps diversify and reduce risk without one large tax event.
Founders and early employees
Private company shares facing a buyout, IPO, or other liquidity event. Losses harvested ahead of time can help offset the gain when it is realized.
Portfolios with embedded gains
Multi-asset portfolios carrying unrealized gains across many holdings that need a more tax-efficient structure going forward.
How Does the Capital Gain Deferral SMA Work?
The SMA adds extended long and short sleeves of 100 to 400 stocks each around a core sleeve. Because it holds positions in both directions, it can harvest losses in rising and falling markets. Those losses offset gains as the concentrated position is sold down over time. It is not a bet on market direction.
What Are the Trade-Offs?
The long-short overlay offers more loss harvesting potential at higher risk. Leverage increases both exposure and risk, and fees and margin costs are higher than for traditional vehicles. Performance may deviate from the benchmark, tax costs may arise when exiting profitable short positions, and tax benefits vary with each client’s circumstances. It suits clients with a multiyear horizon.
| SMA 145 | SMA 200 | |
|---|---|---|
| Target leverage | 45% | 100% |
| Target divesting period | 8 to 11 years | 4 to 6 years |
| Minimum investment | $1 million | $3 million |
Tax Management FAQ
Opal’s tax management includes tax-efficient ETF vehicles, year-round tax-loss harvesting and tax-lot management within model portfolios, and a Capital Gain Deferral SMA for clients with concentrated, low-basis positions.
No. Opal’s platform is modular. Tax-aware strategies can be used alongside Opal’s model portfolios and ETFs or on their own.
High-net-worth clients with low-cost-basis public stock, private company shares expecting a liquidity event, or multi-asset portfolios with embedded gains. Minimums are $1 million for SMA 145 and $3 million for SMA 200.
SMA 145 targets a full divestment within 8 to 11 years and SMA 200 within 4 to 6 years. Actual timelines depend on market conditions and each client’s circumstances.
Cash or cash equivalents, low-cost-basis public stock, multi-asset portfolios, or private ownership.
No. Opal does not provide legal or tax advice. Advisors and clients should consult a tax professional before implementing a tax-aware strategy.
Bring Tax Management to Your Clients
Tell us about a client situation and we will show you how Opal’s tax-aware strategies could fit, from year-round harvesting to a multiyear plan for a concentrated position.
Explore the Investment Platform →Important DisclosureThis material is provided for informational and educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective client. It is not investment, legal, or tax advice, and is not a recommendation or offer to buy or sell any security. Opinions are as of the date shown and may change without notice. All investments involve risk, including loss of principal. Leverage and short selling increase risk. Past performance is not a guarantee of future results. Illustrative examples are hypothetical and do not represent any actual client outcome; actual tax outcomes vary. All investment management services are provided by Opal Capital, LLC (“Opal”), an SEC Registered Investment Advisor. Registration with the SEC does not imply a certain level of skill or training. Additional information is available in Opal’s Form ADV Part 1A, Form ADV Part 2A Brochure, and Client Relationship Summary at adviserinfo.sec.gov (SEC # 801-126398). Opal does not offer legal or tax advice. Please consult your attorney or tax advisor.