316: What High Earners Miss About Tax Strategy

[00:00:44] Hilary Hendershott: Imagine you could lower your tax bill without lowering your investment standards. Now, here’s the part most people don’t ask. If your income has grown and your investments have worked, are you actually keeping as much as you could? Or are you quietly giving away more than you need to? Because for most high earners, this is where things start to slip.

[00:01:10] Your career takes off. Your income grows. You do all the right things. You save. You invest consistently. And over time, your financial life gets more complex. More accounts, more moving pieces, more at stake. Maybe equity compensation, maybe positions that have done very well. And somewhere in the background, there’s a question most people don’t say out loud: Am I doing this as well as I could be?

[00:01:41] Because taxes don’t stay static. They grow with you. And over time, they start to take a bigger share of your results. Hi, I’m Hilary Hendershott, founder of Hendershott Wealth Management. We publish content to help you strengthen your financial life, grow your net worth, and feel supported through the moments that matter.

[00:02:01] If that’s the kind of guidance you’re looking for, take a moment to like this video and subscribe. So, what do you do about that? There are ways to be more intentional without lowering your standards, without taking on more risk. But they involve strategies that at first glance look sophisticated. And for a lot of investors, that’s where the hesitation starts.

[00:02:28] In investing, sophistication can feel like a warning sign, something hidden, something you’re supposed to be cautious about. And sometimes that instinct is right, but not always. And it doesn’t have to be the deciding factor because in some cases, that sophistication is there for a reason. It’s not to obscure what’s happening.

[00:02:52] It is there to work within the rules of the system more effectively. And that’s exactly what’s happening with tax-aware long-short investing. For a long time, most investors have treated taxes as a given, a cost of success, something you try not to think about too much. But today, there are strategies that can materially change that equation in your favor.

[00:03:19] And this matters even more if you’re sitting on significant gains, especially gains in your company stock or equity compensation, where the tax cost of doing nothing can quietly compound over time. Now, it’s true these strategies are more sophisticated. They involve more moving parts than a traditional index fund.

[00:03:42] But that’s not a flaw. It’s the point. Index investing is designed for simplicity. Tax-aware investing is designed to improve what you actually keep. The sophistication isn’t there to confuse you. It’s there to put the tax code to work for you rather than against you. When it’s done well, this is not about sacrificing returns, not about taking more risk.

[00:04:07] It’s about being more intentional with how your portfolio is constructed and managed so that you keep more of your money. Another way to think about this is this: from the outside, tax-aware investing can look complicated, but underneath it’s more like navigating effectively. You’re still going to the same destination, but the system is constantly adjusting the route to avoid unnecessary costs along the way.

[00:04:37] The goal isn’t to change what you’re trying to achieve, it’s to get there more efficiently. And that kind of coordination doesn’t happen by accident. It comes from designing and implementing the system to work that way from the start. This is where experience matters, because the difference between a powerful strategy and a costly mistake is almost always in how it’s implemented.

[00:05:05] That’s also why you don’t need to take a leap of faith. You just need to understand enough to know why it works and when it makes sense for you. If you’re curious about the mechanics, I’ve broken it down into far more detail in a few other videos here on this channel. You can see how those strategies behave, when they’re appropriate, and just as importantly, when they’re not.

[00:05:30] Because the goal here isn’t to ask you to trust something sophisticated. It’s to help you feel grounded in whether it’s worth exploring further. For the right investor, this isn’t about chasing something new. It’s about not leaving something valuable unused. And if you’ve built meaningful wealth, especially in taxable accounts, that distinction can matter more than you think.

[00:05:54] If you want to go deeper, I’ve linked a few videos below that walk through this step-by-step. And if at some point you want help thinking through whether this fits into your situation, that’s a conversation my team and I are always eager to have. Thanks for being here. If you’re thinking about your next financial chapter and want a partner who looks at the full picture, not just your investments, we’d love to connect.

[00:06:17] We’re a fee-only fiduciary team focused on after-tax outcomes and long-term planning, helping our clients keep more of what they earn, so their money can support the life they’re building. If that sounds like the kind of guidance you’re looking for, you can schedule a complimentary conversation with one of my lead advisors by visiting hendershottwealth.com/contact to see if our approach is the right fit for you.

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