When ultra-high-net-worth families evaluate investments, performance reports often highlight the gross return. But in reality, what truly matters is not the return you see on paper. It is what remains after taxes. For UHNW investors and family offices, the difference can be measured in millions over time. This gap is where Tax-Alpha comes in.
At Finley Davis Private Wealth, we recognize that true wealth preservation goes beyond chasing performance numbers. Our role is to help families and family offices bridge the gap between gross return and after-tax return by integrating strategies that are designed to align investment outcomes with broader wealth and legacy goals.
What is Tax-Alpha?
Tax-Alpha refers to the additional value created by managing investments in a way that reduces tax drag. It is not a single product or strategy, but the cumulative effect of making tax-efficient choices across an entire portfolio.
For UHNW families with complex holdings, these decisions may include:
- Structuring investments to take advantage of favorable tax treatments
- Utilizing tax-loss harvesting opportunities
- Coordinating trust and estate strategies with portfolio management
- Strategically placing assets in taxable versus tax-deferred accounts
The difference between a portfolio with and without Tax-Alpha can be significant, especially over decades of compounding wealth.
Why Gross Return Can Be Misleading
A portfolio showing a 10 percent annual return may look attractive. But if 40 percent of those gains are lost to federal, state, and potential estate taxes, the actual result is far less compelling.
UHNW investors often face more layers of taxation than the average investor. This may include higher federal tax brackets, net investment income tax, state and local income taxes, and potential exposure to estate and gift taxes. Without proactive tax-aware management, wealth preservation goals may not be achieved.
Strategies That May Create Tax-Alpha
While every family office and UHNW investor’s situation is unique, several strategies may contribute to Tax-Alpha:
- Tax-Loss Harvesting
Selling investments at a loss to offset gains elsewhere, reducing current tax liability. - Asset Location
Placing income-generating assets in tax-deferred accounts while positioning long-term growth assets in taxable accounts to benefit from capital gains treatment. - Charitable Giving Strategies
Leveraging donor-advised funds, charitable trusts, or direct gifting of appreciated securities to reduce taxable income while achieving philanthropic goals. - Estate and Trust Planning Integration
Coordinating portfolio management with trust structures to optimize wealth transfer and minimize estate taxes. - Customized Withdrawal Strategies
Timing distributions across different accounts to minimize lifetime tax exposure.
Each of these requires careful coordination with tax professionals and investment managers, but together they can significantly increase after-tax wealth.
The UHNW Advantage: Planning Across Generations
For UHNW families, Tax-Alpha is not just about this year’s returns. It is about creating a strategy that extends across generations. The ability to retain more capital inside the family structure provides greater flexibility for reinvestment, philanthropy, and long-term impact.
Family offices that integrate tax-aware investing into their governance model are often better positioned to preserve wealth, reduce intergenerational conflicts over money, and align investment choices with long-term family values.
Gross return may be the number that gets attention, but after-tax return is the measure that builds lasting wealth. For UHNW families and family offices, Tax-Alpha may be one of the most important drivers of long-term success.
At Finley Davis Private Wealth, we help families bridge the gap between investment performance and after-tax outcomes. Our approach is designed to work alongside your trusted tax and legal advisors, with the goal of bringing your wealth to life across generations.
Once Again Voted Best Financial Planning Firm in Eugene, Finley Davis Private Wealth continues to guide families and business owners with strategies designed around their unique goals.
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Award granted in August 2025 for the period 2024-2025. Receipt of an award should not be construed as an endorsement of the financial professional and is no guarantee of future investment success. No compensation was paid to apply for or receive the award.
Investment Advisory Services offered through RiskBridge Advisors, LLC d/b/a Finley Davis Private Wealth (“RiskBridge”) (RB) or Lion Street Advisors, LLC (LSA), registered investment advisers with the SEC. Registration does not imply a certain level of skill or training. Securities offered through Lion Street Financial, LLC (LSF), member FINRA & SIPC, through Finley Davis Financial Group, Inc. (FDFG). RB and FDFG are not affiliated with LSA or LSF.
The opinions / strategies above are for general information only, are not intended to provide specific advice or recommendations for any individual and may not reflect those of Lion Street Financial LLC. Diversification does not guarantee profit or protect against loss. Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, as well as economic and political risk unique to the specific country. This may result in greater share price volatility. Shares, when sold, may be worth more or less than their original cost.
Past performance is no guarantee of future results. Personnel of Risk Bridge Advisors, LLC (“RiskBridge”) prepared this material. The views expressed herein do not constitute research, investment advice, or trade recommendations. RiskBridge may, from time to time, participate or invest in transactions with issuers of securities that participate in the markets referred to herein, perform services for or solicit business from such issuers, and/or have a position or effect transactions in the securities or derivatives thereof.
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