Revolution Group founder and chief investment officer Ryan Fleischer was recently featured in ThinkAdvisor discussing advanced tax strategy for high-net-worth and ultra-high-net-worth clients. The Q&A, titled “How an HNW Advisor Engineers Tax Alpha,” covered a topic that sits at the center of how our firm approaches wealth. It follows Ryan’s recognition as ThinkAdvisor’s 2025 Luminaries Chief Investment Officer of the Year. Here is a deeper look at the thinking behind that conversation.

What Is Tax Alpha?

Tax alpha is the additional after-tax return a portfolio generates through deliberate tax strategy rather than market performance. Two investors can hold identical portfolios with identical gross returns and end up with very different outcomes, because one of them is quietly losing ground to taxes that better planning could have reduced or deferred.

Most investors focus on the return their portfolio earns. Fewer focus on the return they actually keep. For families with complex wealth, the gap between those two numbers is often larger than any fee, and unlike market returns, it is largely within your control.

As Ryan told ThinkAdvisor, thoughtful position-level tax management alone can be worth 2% to 3% per year for some clients. That is before more advanced planning enters the picture.

Why One-Off Deductions and Blind Tax-Loss Harvesting Fall Short

A common pattern in the industry is chasing the biggest deduction available today without modeling what it does to the client three, five, or ten years out. A large deduction this year can create a larger problem later if it is not coordinated with future income, liquidity events, and estate plans.

Automated tax-loss harvesting has a similar weakness. Software that harvests losses indiscriminately can disturb carefully constructed positions, generate unnecessary trading, and treat a tax decision as if it existed separately from the investment decision. At Revolution Group we do not use an automated harvesting system. We customize around position optimization, so that every tax move also makes sense as a portfolio move.

The principle behind both examples is the same. Tax strategy should never be a transaction. As Ryan put it in the ThinkAdvisor interview:

“With our tax strategy, it isn’t only that you get a big deduction today — which can come back and bite you three years from now — we’re trying to solve for a much bigger picture to make sure we’re doing the right thing for today, tomorrow, and five and 10 years from now.”

Tax Planning That Is Built In, Not Bolted On

Most advisory relationships treat taxes as someone else’s department. The advisor manages the portfolio, the accountant files the return, and the two rarely talk until something has already happened.

Revolution Group is structured differently. Our tax planning and complex financial planning are vertically integrated, and our CPA is part of the planning conversation itself. That structure is what allows tax strategy to shape decisions before they are made rather than explain them after the fact. When the person managing the portfolio and the person managing the tax picture are working from the same plan, opportunities stop falling through the gap between them.

Advanced Strategies We Evaluate for Clients

Every engagement starts with the same question: what is the client’s purpose? The strategy follows from the answer. That said, several categories of planning come up regularly in our work on ultra high net worth tax planning.

Intentionally Defective Grantor Trusts. An IDGT is an estate planning structure that allows assets to grow outside of a taxable estate while the grantor continues to pay the income tax on trust earnings. That tax payment is not a burden but a feature, because it allows the trust assets to compound undiluted for the next generation. For families focused on multigenerational wealth transfer, IDGTs can be a cornerstone of a tax-efficient estate.

Leveraged charitable deductions. For charitably inclined families, the timing and structure of giving matters as much as the amount. Structured properly, charitable strategies can align a family’s philanthropic goals with meaningful deductions in the years they are most valuable.

Energy investments. Certain oil and gas development investments allow a substantial deduction of invested capital, in some cases up to 100% over the early years of the investment, which can be powerful for clients with high current income. Similarly, solar projects can stack federal energy credits with bonus depreciation. One example Ryan described in the ThinkAdvisor interview is integrating a solar installation with agricultural land holding permanent crops, where the combination of credits and depreciation helps offset passive income. These are sophisticated, illiquid investments that fit as a small, purposeful allocation for the right client, never as a portfolio centerpiece.

Qualified opportunity zone investments. Opportunity zone investing allows capital gains to be reinvested into designated areas with significant tax benefits. The most powerful feature arrives at the ten-year mark: appreciation on a qualifying opportunity zone investment held for at least ten years can be excluded from federal tax entirely. Ryan is direct about how he ranks it: “It’s one of the best tax strategies that exist.” For a client who would otherwise face a large tax bill on exit, the alternative is paying a substantial tax at the moment they sell the property or interest. It is also a strategy where the underlying investment must be sound on its own merits, because no tax benefit rescues a bad asset.

Income Sequencing: Tax Strategy for the Drawdown Years

Tax alpha does not end when accumulation ends. How a client draws income from a portfolio, and in what order, has major tax consequences. A retiree drawing from bonds, private credit, or direct lending is generating ordinary income, and the plan should account for where that income lands. In some cases, pairing income-heavy holdings with strategies like opportunity zone investing changes the after-tax picture materially. One size does not fit all, which is exactly why sequencing is planned client by client rather than pulled from a model.

The Long View

Markets reward patience unevenly, but the tax code rewards it consistently. Nearly every strategy described above works because it is planned years ahead of the moment it pays off. That is the discipline behind tax alpha: not a clever move in April, but an integrated plan that compounds quietly for decades. It is also why tax strategy should never stand apart from the broader investment strategy a family is already pursuing.

Nearly 70% of affluent investors now say it is important that their advisor help them reduce taxes, according to research from Cerulli Associates cited in the ThinkAdvisor piece. We think that number reflects something clients have always sensed. Performance is what a portfolio earns. Planning is what a family keeps.

You can read Ryan’s full Q&A at ThinkAdvisor.

Frequently Asked Questions

What is tax alpha?
Tax alpha is the additional after-tax return generated by deliberate tax strategy rather than market performance. It comes from decisions like position-level tax management, deduction timing, estate structuring, and income sequencing, and it compounds over time the same way investment returns do.

What is an Intentionally Defective Grantor Trust(IDGT)?
An IDGT is an irrevocable trust designed so that assets are removed from the grantor’s taxable estate while the grantor remains responsible for income tax on trust earnings. Because the grantor pays the tax, trust assets grow undiluted for beneficiaries, making IDGTs a common tool in multigenerational estate planning.

How do opportunity zone investments reduce taxes?
Qualified opportunity zone investments allow investors to reinvest capital gains into designated zones. If the investment is held for at least ten years, appreciation on the qualifying investment can be excluded from federal capital gains tax under current law.

What are the tax benefits of oil and gas investments?
Certain direct oil and gas development investments allow investors to deduct a large portion of their invested capital, in some structures up to 100% over the early years, primarily through intangible drilling cost deductions. These investments carry meaningful risk and illiquidity and are generally appropriate only as a limited allocation for qualified investors.

What is solar energy credit stacking?
Credit stacking refers to combining federal solar investment tax credits with bonus depreciation on the same project, which can create deductions and credits that offset passive income. It is most often used by investors who own real assets, such as agricultural land, where a solar installation can be integrated.

How is tax planning different at a vertically integrated firm?
At a vertically integrated firm, investment management and tax planning operate inside the same team rather than at separate firms. Decisions are coordinated before they are made, which reduces the missed opportunities and unintended consequences that occur when a portfolio manager and a CPA work in isolation.