A Wealth Manager's Checklist: Financial Moves to Make Before Q4
As the fourth quarter approaches, the biggest risk for most investors is a breakdown in communication between clients and the professionals managing their money, leaving time-sensitive opportunities on the table until it’s too late to act.
Why Does Advisor and Tax Professional Coordination Matter Before Year-End?
The window before December 31 will close faster than most people expect, and some planning moves can’t be made after it does.
Financial events that happen outside of an investment account, like a home sale, a Restricted Stock Unit vesting or a business transaction, can materially affect an individual’s tax picture for the year. A wealth management team won’t automatically know about those events unless their client communicates them. That communication gap, left unaddressed, can result in unexpected cash needs or missed opportunities to offset tax exposure before year-end.
Sharing realized and unrealized gains, losses, interest and dividend information between a wealth manager and an individual’s tax professional allows both sides to see the full picture. Tax-loss harvesting, which involves selling underperforming investments to offset capital gains taxes, is one of the most common year-end planning tools, and requires that full picture to be effective. Unlike many planning strategies, it cannot be applied retroactively once the calendar turns.
How Should Investors Think About Election-Year Volatility Heading Into Q4?
Historical market patterns around elections are more consistent than most investors realize, and Q4 positioning should account for them.
Election periods typically bring heightened market volatility driven by uncertainty around policy outcomes. That volatility can feel like a reason to move defensively. The historical pattern that follows, however, points in the other direction. Post-election, the odds of the market moving higher have historically exceeded 90%, with gains that tend to run well above the norm.
The practical goal heading into a Q4 shaped by election uncertainty is to ensure near-term cash flow needs are covered so that any volatility in the lead-up doesn’t force a poorly timed decision. With that foundation in place, predicting election outcomes becomes far less relevant to portfolio positioning than making sure the plan can withstand the short-term noise and benefit from what historically follows.
What Should Businesses Know About Deductible Spending Before Year-End?
Recent tax legislation changed how certain capital expenditures are treated, and the timing of planned spending now carries more planning significance than it did before.
Under legislative changes from the “Big Beautiful Bill,” some businesses can now deduct the full cost of certain capital expenditures, such as equipment or machinery, immediately, rather than spreading that deduction across multiple years. For businesses that were already planning to make those expenditures, the change effectively converts spending that was already budgeted into an immediate tax benefit.
The structure applies across business types, including both pass-through entities and traditional corporations. For businesses evaluating the timing of planned capital investments, coordination with a tax professional before year-end is essential to determine whether accelerating or delaying a purchase changes the tax outcome in a meaningful way.
Frequently Asked Questions
Why is year-end coordination between a wealth manager and a CPA so important?
Each professional typically sees only part of an individual’s financial picture. A wealth manager sees investment activity, while a CPA sees broader income and tax events. Coordinating between the two before year-end ensures nothing falls through the gap, and that time-sensitive tools like tax-loss harvesting are used when they’re still available.
What is tax-loss harvesting and why does it have a hard deadline?
Tax-loss harvesting involves selling investments that have declined in value to offset gains elsewhere in a portfolio, reducing taxable income for the year. It must be executed before December 31. There is no mechanism to apply it retroactively once the tax year closes.
Should election uncertainty change how a portfolio is positioned heading into Q4?
Positioning should be driven by near-term cash flow needs and long-term objectives, not by predictions about election outcomes. Despite market volatility leading into elections, historically, the period following elections has been among the strongest for market performance. Ensuring adequate liquidity before Q4 is the more actionable preparation.
Who benefits from the capital expenditure deduction changes in recent tax legislation?
Businesses of various structures, including pass-through entities and traditional corporations, may benefit depending on the nature and timing of planned capital spending. A tax professional should be consulted to determine how the changes apply to a specific business situation.
What’s the most common mistake investors make heading into Q4?
Waiting. The deadlines that govern year-end planning are fixed, and the options available in October are not all available in December. Starting the coordination process early leaves room to act, starting late leaves room only to react.
For more insight from Fratarcangeli Wealth Management, visit www.fratarcangeliwealth.com.
Fratarcangeli Wealth Management does not provide tax or legal advice.
Securities offered through Thurston Springer Financial, a registered Broker-Dealer (Member FINRA & SIPC). Investment advisory services offered through Thurston Springer Advisors, a SEC-Registered Investment Advisor. Insurance products offered through Thurston Springer Financial, an Indiana Insurance Agency.
The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This is not intended to be a client-specific suitability or best interest analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities.