Bill Harris publishes guide to investing and taxes

The former CEO of Personal Capital, Intuit TurboTax, and PayPal is spreading a simple message to financial advisors and investors: “It’s not what you make, it’s what you keep.”

Entrepreneur Bill Harris shares the 2024 edition of “investment tax guideIt is a broader version of his 2017 book of the same name. This phrase includes his views that “taxes are the single most important driver of investment performance” and that “tax strategy is often more important than investments” in an interview. , he suggested that advisors and investors read 50 or 60 or maybe 80 pages rather than the entire book.

“It’s 300 pages, but it’s not meant to be read.” [straight through]. “The idea is to be selective. You should get everything that’s relevant to you out of it,” Harris said.

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The intersection of asset management and tax services Promoting large-scale M&A transactions in the industry methods have become more widely adopted. loss harvesting and Donor Recommended Charitable Funds.Harris — resigns as CEO of digital advice provider Personal Capital in 2017, 8 years after company establishment and Three years before Empower Retirement acquired the company for $1 billion. — and other proponents of tax-focused investing argue that many focus too much on pre-tax yields and too much on the impact of payments to Uncle Sam.

For example, the largest wealth holders pay taxes at a 40% federal rate when they transfer money to the next generation, said Ray Morrill, senior director of wealth management in the Los Angeles office. choreowas pointed out in the interview.

“Most people simply don’t consider the importance of taxes in their after-tax returns and investment decisions,” Morrill said. “Especially as the years go by, the amount you save becomes very important. Its importance is going to be much more dramatic than whether your income is 5% or 7%. But as individuals become more It’s the latter that I often want to focus on.”

In this book, Harris provides a quick tutorial on 10 tax strategies. The table of contents recommends reading this before skimming the more detailed sections on topics such as state and federal obligations, investment assets, deductions, and loans. The 10 tax strategies are: recovering losses, deferring tax gains, tax-exempt securities, tax-advantaged accounts, lodging assets, avoiding short-term gains, avoiding mutual funds, tax-efficient credit, education, Gifts, real estate.” and donor-recommended funds. ”

“With the right tax strategy, you can reduce taxes on your investments by as much as 50% to as low as zero,” Harris writes. “This may surprise you, because no one in the investment industry tells you about taxes. Not your broker, not your financial advisor, not the company that sells mutual funds or ETFs. We talk about returns, the money you make before you pay taxes.” No one talks about after-tax returns, the money you actually keep. ”

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While Harris acknowledges that advisors are likely to be familiar with municipal bonds and individual retirement accounts, many are not tax experts, so it’s important for planners to have access to all the strategies at once. “We need better technology,” he said.

“This is a very serious issue for investors,” Harris said. “Most people don’t understand that, and that’s because the U.S. tax code is unique among developed countries and is very complex.”

Banking and investment platform Evergreen, the eighth financial technology group Harris has launched in his 30-year career, aims to build software that helps advisors and investors optimize their portfolios for tax savings. Masu.

“The hurdle is that it is difficult to design a well-diversified portfolio of 100 to 200 individual assets and then manage all the tax considerations throughout the year,” Harris writes in the book. I’m writing this. “Therefore, you need to look for a financial advisor that offers fully tax-aware managed accounts. They are few in number, but worth finding. Along with a team of technology veterans and financial experts, I have developed this into an automation-based “And so do one or two other people. You can think of this as a hyper-personalized, tax-minimized version of index investing. We believe this is the future of investing.”