Given today’s market conditions, we’re updating an article we wrote earlier in the year to reflect why this strategy is more timely than ever. For privately held business owners, market volatility isn’t just noise — it’s an opportunity.
The right investment strategy can help you capture capital losses to offset taxable gains, diversify away from your concentrated business risk, and still aim for strong, market-aligned returns.
When Can You Turn Losses Into Opportunity?
Many business owners know the value of reinvesting in their company — but fewer recognize how direct indexing combined with a tax overlay strategy can help diversify personal wealth outside the business, especially in unpredictable markets.
At Wealth Advisory Lab, we partner with a leading asset manager to offer Personalized Direct Indexed SMAs with a proprietary tax overlay — designed specifically to help business owners:
✅ Build tax assets you can use to offset taxable gains
✅ Target strong portfolio performance, even during volatile markets
✅ Diversify personal wealth without triggering massive capital gains
How It Works
Tailored Portfolios, Optimized Results
Direct indexed SMAs let you create a portfolio that mirrors a chosen index (like the S&P 500®) but offers flexibility: you can exclude specific stocks, sectors, or themes to match your personal goals, values, or business-related exposures.
Turn Market Swings Into Tax Savings
The proprietary tax overlay system uses a sophisticated, year-round tax-loss harvesting strategy. By selling positions with losses, we help offset taxable gains elsewhere — reducing your tax burden while keeping your investments aligned with market performance.
Real-World Results
In 2023, an account using this tax overlay strategy returned 25.97% gross of fees, nearly matching the S&P 500® Index’s 26.77%. While the portfolio stayed closely in line with the market, the key advantage was the accumulation of tax assets to offset future gains — giving investors flexibility and greater after-tax control.
Why It Matters for Business Owners
As a business owner, your personal wealth is often heavily tied to your company. By leveraging strategies like direct indexing with tax overlays, you can:
Maximize After-Tax Wealth
Access specialized tax-managed services designed to increase your net, after-tax results.Create a Tax-Efficient Transition Plan
Reposition your personal portfolio — even with low-basis or embedded gains — on a timeline that fits your goals.Align Investments to Your Values and Risks
Exclude industries or companies that overlap with your business or don’t align with your personal values.Diversify a Concentrated Position
Broaden your wealth beyond a concentrated company holding or business interest.Limit Additional Exposure
Restrict new investments in sectors or companies where you’re already heavily exposed, such as through ownership or restricted stock.
Ready to Take the Next Step?
Want to explore how you can capitalize on market volatility, reduce tax burdens, and diversify your personal wealth beyond your business?