Cynthia de Fazio 00:28
Welcome to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, Sr. and Parker Capriotti of Empower Wealth and Tax. To our viewers at home, thank you for being with us today. Do you have questions about tax loss harvesting? Well, you have come to the right station and the right show, because we’re going to tackle that subject today. I have two brilliant men with me. I have Phil and Parker, and it’s going to be a great show. Thank you for being with us. Phil, how are you today, my friend?
Philip Capriotti Sr. 00:56
Oh, blessed as usual. Thank you so much for asking, Cynthia. It’s good to be with you again.
Cynthia de Fazio 01:01
So, so good to see you.
Philip Capriotti Sr. 01:02
And how special this is, we get an opportunity to have my son Parker on with us. You know, I’ll let Parker talk about it, but he spent three and a half years at our home office with our parent company, Foundations. For the viewing audience, my son asked me, right, he had a full scholarship… he has a full scholarship to any college he wants to go to. He’s got a five-year full scholarship, and he said, and this was during COVID. And he said, “Dad, I really want to come work with you in the office. You know, I followed you for the last 10, 11, years.” And I told him, I said, “Look, if you want to get involved in the family business, you need to know, you’re a Capriotti, you need to know more than I do. And so, here’s my recommendation, and this is what I’m going to throw out there: How about if we get you an internship at our home office, working with analysts, traders, the best of the best in the business, including BlackRock analysts,” because we do have our proprietary portfolios as well with BlackRock. and he said, “Sure, that’s a great idea.” He goes, “You know, how long? About six months?” I’m like, “No, that’s about three years, three and a half years you’ll spend out there.” And so, of course, his mom didn’t want to talk to me for a while. She thought I was trying to get rid of our son. I’m like, “No. I just, I want him to know, he can learn a lot here, a lot more than he can in three or four years of college. He can do the college later,” and so not only did he do it, but he exceeded my expectations. He absolutely, I believe, exceeded his own expectations.
Cynthia de Fazio 02:39
Ah. Parker, tell us about that. What was that experience like?
Parker Capriotti 02:43
Man, I’d love to call it fun, but they put me through the wringer.
Cynthia de Fazio 02:46
Did they really?
Parker Capriotti 02:47
Absolutely.
Cynthia de Fazio 02:48
But for a good reason.
Parker Capriotti 02:49
Yeah. So I spent about a year and a half working on the internals, stock market, going through trade blotters, working with money in, money out, getting a full feel for everything that goes on behind the scenes.
Philip Capriotti Sr. 03:02
Right.
Parker Capriotti 03:03
And then the last, I guess after year two, I got to start working on the trade desk.
Cynthia de Fazio 03:09
Oh wow!
Parker Capriotti 03:10
That was real fun.
Cynthia de Fazio 03:10
Okay.
Parker Capriotti 03:11
They got me in trade blotters. I got to sit down with BlackRock analysts, have full-on conversations with them for multiple hours, many times. I got to help build some of our models we use today.
Philip Capriotti Sr. 03:23
Right.
Parker Capriotti 03:24
Some of your favorites.
Philip Capriotti Sr. 03:25
Yes.
Parker Capriotti 03:25
And really, it’s just been fun. High intensity, constantly moving, no time to rest or breathe. So it’s…
Philip Capriotti Sr. 03:31
12-hour days.
Cynthia de Fazio 03:32
I love that.
Parker Capriotti 03:33
Yeah, it’s been fun.
Cynthia de Fazio 03:34
I have to ask you, just from your perspective, with everything that you’ve learned, what do you love so much about helping people when it comes to actual financial planning, building their portfolios, tax loss harvesting, everything that you do. What do you love so much about it?
Parker Capriotti 03:51
For me, I love to see families be able to support their kids, and then their kids grow up and be able to support their kids. It’s, it’s really awesome. I hope I can help our clients replicate for their children what my dad was able to replicate for me.
Cynthia de Fazio 04:05
Aww.
Parker Capriotti 04:06
That’s really the goal.
Cynthia de Fazio 04:07
Phil, how does it feel to hear that?
Philip Capriotti Sr. 04:09
I want to cry.
Cynthia de Fazio 04:13
I know, me too. That’s what I’m thinking. That was beautiful. And what an incredible role model you have, and I love your mom too. Just incredible! Thank you for being such a blessing, both of you, to our viewers at home. Where do we go from here? Tax loss harvesting!
Philip Capriotti Sr. 04:27
You know, I’d like to have him talk about his last six months, what he, what he did with his last six months at Foundations, and you know, one of the biggest issues that we’ve always had is tax loss harvesting for clients with taxable portfolios, and, you know, it takes a lot of time. And now in the age of AI, we have a lot of automation. And over the last five years, we were able to automate, and with the help of some companies, which I won’t I won’t discuss here for proprietary reasons, but fact of the matter is, we now have the ability to tax loss harvest literally daily. Now we don’t do it that frequently, but I like to help folks create… you know how passionate I am about tax free income and retirement. So Parker actually run, ran the tax loss harvesting model for the last six months of his development at Foundations, and I was extremely… His boss, you know, Darren, who is the chief investment strategist, said, “Hey, Cap, do you mind if I keep Parker for another six months? I want to teach him about this new platform, this tax loss harvesting. I want him to take it to Austin when you come and mentor him to become a, you know, a financial advisor. Not that, more than just that, but actually with the ability to run one or many of our offices.” And I said, “Sure, I’d love that. I’d love for him to do that.” So with that, I’d like Parker to go ahead and take it away. What did they teach you? Because when he took it back, we’re using it now for clients, and clients are literally saving tens of thousands of dollars in taxes yearly.
Cynthia de Fazio 06:13
Wow!
Philip Capriotti Sr. 06:13
Because we can create a tax-free revenue income stream from this tax loss harvesting software. But you’re the expert. I’m, this is where Dad becomes, I become the pupil, the, the student, and my son becomes the teacher. It’s a beautiful thing.
Cynthia de Fazio 06:33
I’m like that with my daughter. I so relate. Parker, take it away. Talk a little bit about that.
Parker Capriotti 06:36
So when I was with Darren Leavitt, we, he really wanted us to sit down with, at the time it was BlackRock, and I got to be on a couple meetings with these executives. And basically, what they like to do, they’ll open up as it’s called in the trading team, it’s called lots. So we’ll open up different positions the day they were bought, quantity that they were bought, and we’ll go into the cost basis and see where is it at now compared to where it was when we bought it. So if you buy a position, let’s say in 2022 during COVID, and it really kind of fell off, and the client’s been holding on to it because you don’t want to take a loss on that.
Cynthia de Fazio 07:15
Right.
Parker Capriotti 07:16
Where the tax loss harvesting comes in is as you start making gains in part of your accounts we’ll take those losses that you had in prior years and we’ll sell them off at the same time to make a net zero tax loss for the clients. So it’s really beneficial. It helps preserve income for people who may have been a little scared to sell.
Cynthia de Fazio 07:37
Okay.
Parker Capriotti 07:38
And it really creates a great opening for people worried about taxes.
Cynthia de Fazio 07:42
Wow, that’s incredible.
Philip Capriotti Sr. 07:43
And, and one of the things that I noticed is it allows our clients who really, they don’t want to take advantage of the income because they have enough income. It allows us to, to, to create a zero sum tax effect to diversify the portfolio in some of the newer models that we’re seeing, you know, the AI-driven models, mini nuclear, a lot. I won’t go through all of the new technologies, but it allows these old portfolios that they, that clients say, “You know, I’m not going to sell it. I’m going to I’m going to pass it off to my kids and grandkids and let them get a step up in basis.” Well, I would say, “What if they change the tax law like the last administration and want to eliminate step-up in basis and make the kids pay whatever the basis was when the parents or grandparents bought it?” So you never know what’s going to happen with tax laws in the future, which is which is the only certainty that we have. So why not take advantage of it now and diversify these portfolios, and/or create tax-free income?
Cynthia de Fazio 08:46
Most definitely.
Philip Capriotti Sr. 08:47
It’s great, and we’re implementing it left and right. And, and I again, I have my clients, “I work with, you know, so on and so forth, big block box retailer. Why isn’t my advisor doing this?” And, and it really comes down to like the, the show that we did previously, maybe they’re not using this, they’re not this far advanced. Working with BlackRock is the largest investment manager in the entire world. I think they manage over $15 trillion, with a T. Or maybe they’re not allowed to talk about taxes, period. So again, it comes down to what’s best for the client. How can we offer more service to the client? How can we be more valuable to the client? And this is why knowledge will set you, set you free.d
Cynthia de Fazio 09:34
Most definitely, Phil. Thank you so much, Parker. Thank you to our viewers at home. As you can see, this is the team that you want to work with. This is the office. Call in today: 888-818-6557. You are calling in to schedule your appointment with Empower Wealth and Tax. And why is that important? Well, we talk about generational wealth, if you will. Right now, you’re getting generational knowledge. Take a look at all of this that’s going on in today’s show and we haven’t even done a deep dive into tax loss harvesting. What you’re being offered today is priceless. A complimentary consultation with Empower Wealth and Tax at one of their many locations. Call in 888-818-6557, or we’ve made it even simpler. You can grab your smartphone and click on the QR code at the bottom corner of your screen. That is the fast track to get on the schedule of Empower Wealth and Tax. We’re going to take a very short commercial break. Don’t go anywhere. I have so much more with Phil and Parker when we return.
Philip Capriotti Sr. 10:31
Are you ready to take control of your financial future? At Empower Wealth and Tax, our tactical portfolio management services are designed to adapt to market conditions. By optimizing your investments, we create customized investment portfolios that limit market drawdown with the potential to increase your portfolio’s return. With our experience and expertise, we will actively manage your investments, allowing you to enjoy life without the worry of excessive market volatility. Don’t let market uncertainty hold you back. Schedule a free appointment with us today, and let’s take your investment strategy to the next level.
Cynthia de Fazio 11:15
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, Sr. and Parker Capriotti of Empower Wealth and Tax. We’re talking all about tax loss harvesting and why this is important for you and your overall financial plan. Viewers at home, thank you for being with us. I love today’s topic because obviously, Parker, you are so incredibly knowledged, and you are too, Phil. But Parker, you’re so fresh off of this that you’ve learned. It’s amazing to me to hear you speak about this. One of the things that we’ve talked about, even in the commercial break, is how it helps someone improve after-tax returns without increasing market risk when you’re using tax loss harvesting. Are you seeing this as a benefit for your many clients?
Parker Capriotti 11:56
Absolutely. Clients should really be looking towards this, especially in their taxable accounts. I mean, if you’re not tax loss harvesting, you’re leaving a lot of room for error on the table. And if your advisor’s not doing this for you, you should go have a conversation with them. I mean, there’s many, many benefits. Some of them, offsetting current capital gains is one of the biggest ones.
Cynthia de Fazio 12:17
Okay.
Parker Capriotti 12:17
You can create loss carryover. So if you’re moving accounts or have taxable accounts, you really can create a lot of room to get these accounts free.
Philip Capriotti Sr. 12:31
It also, not to interrupt, but it also, it complements doing the Roth conversion. So now we’re attacking their tax, an individual, especially a high net worth individual, we’re attacking their, their tax problem, because that’s what they have, a tax problem, from two different, from two different veins. And as far as I’m concerned, it’s just a beautiful thing. You know, active portfolio management is great because it allows us to get involved, and, and, and again, I’m going to kind of throw another topic in there because it all falls in line. On many of our stock models, so I’m not a big mutual fund guy, meaning I don’t sell mutual funds at all, okay. I can, but I don’t. And, and why is that? I don’t believe in buying 3,000 different companies in one mutual fund. I don’t believe in having 20 different mutual funds with different names that all hold the same positions in the same companies. Too much, there’s too much lack of diversification there. What I, and so what I like is active portfolio management and the way this works, and it works with tax loss harvesting, as well, is we’re using stocks, we’re using companies. I might want the only top 60 companies. What are, show me the top 50, 60, companies that are during this current economic cycle are having the best returns and have the best gains with the least amount of risk. Now. And now I’m going to proportion those folks with the best, with the highest value, and then come on down a little lower value, and so forth. As companies start to lose value, as they start to drop profits and lose value, we simply reduce the amount that are, that we have, are holding in that company, so it may go from ten thousand to nine to eight to seven, so it drops down while other companies move up. So by doing that, and then eventually, if a company is down 10, 15%, we’re taking it out altogether. We’re taking the money out of the account. So tax loss harvesting, along with active portfolio management, it’s like a marriage made in heaven, the way I see it. The way I see it. So, so it’s not just about tax-free gains. It’s really what works hand in hand with this active portfolio management, and our models did amazing last year. I mean, our, our large cap growth blew away the, the S&P 500 with as far as gains. Double digit gains over what the S&P did, over what the Nasdaq did. Our unconstrained model, another amazing. So active portfolio management, and I’ve learned most of this from Foundations, from, you know, our parent company in Phoenix, it’s wonderful. So I am blessed to have had the opportunity to send my son out to the home office to really learn about active portfolio management, tax loss harvesting, trading, working with some of the best analysts in the industry. You know, you, you know, a lot of folks say, you know, I don’t care, I don’t care how the gears work in my watch. I just want it to tell time correctly. Okay. And so, I want to know about the gears. And Parker knows about the gears now.
Cynthia de Fazio 15:54
Yes, you are the master of the gears, both of you. Fabulous.
Philip Capriotti Sr. 15:58
The other thing that I would say is, you know, many folks say, “What are you going to do when you, what do I do when you retire?” This is an opportunity, folks, for you to work with a financial services firm. And as I said on many shows prior, I have five children, and three of them are actively work in our firm. So we want your children, because your children are going to need advice, okay, to work with our children. So really, this is a generational wealth management company.
Cynthia de Fazio 16:32
Yes.
Philip Capriotti Sr. 16:32
I’m more of the old bull. This is more the young bull, and I put a lot of faith in the young bull, in their knowledge, their fresh brains, their fresh insights, and, I even, I even have grown, I’ve even grown accustomed to seeing some of them, you know, with the facial hair where I where I was brought up with, you know, the clean shave and all of that. So, and I understand that. So I know it’s a little off topic, but I thought I’d throw it out there.
Cynthia de Fazio 17:00
It’s fabulous.
Philip Capriotti Sr. 17:01
It’s a lot of fun having the opportunity to work together with my two sons and my daughter.
Cynthia de Fazio 17:07
Yes.
Philip Capriotti Sr. 17:08
It’s a lot of fun watching them grow. But more importantly, it’s a lot of fun watching them advise clients and giving them the wisdom. And actually, in so watching them work with clients, I’m learning watching them.
Cynthia de Fazio 17:20
I love that. I love that. The two of you together, the synergy, it’s just amazing to me. You’re such a powerhouse. What a great team that we have with us today. I love you two.
Philip Capriotti Sr. 17:30
Thank you.
Cynthia de Fazio 17:30
One of the things I definitely want to point out before we take our next commercial break, when you’re utilizing tax loss harvesting, one of the things I want to talk about is the avoidance to the buy and hope investing. Are you finding that to be true? Because it takes the emotional part of it, and it just makes it into kind of a business sense. Correct me if I’m wrong.
Parker Capriotti 17:47
Absolutely, you’re right. I’ve noticed a lot with some of, not our clients, but other clients when I worked with Foundations, where these people will just take their money and put it in, and they go, “Well, I’m gonna hold this for a year. I’m gonna hold this for two years. I know eventually it will go up, but I don’t know how much.” Or they buy it and they see it start to go down, and “I’m just gonna wait for it to turn around.”
Cynthia de Fazio 18:10
Right.
Parker Capriotti 18:11
And it really, it’s not a great way to manage. I mean, if you’ve got 30, 40 years to let this money grow, sure.
Cynthia de Fazio 18:18
Right.
Parker Capriotti 18:19
But a lot of our clients really only have 5, 6, 7 great years to let their money make them money.
Cynthia de Fazio 18:25
Right.
Parker Capriotti 18:26
And when you start doing portfolios like that, I mean, it’s going to hinder your clients more than it helps them.
Cynthia de Fazio 18:32
Makes perfect sense.
Philip Capriotti Sr. 18:33
Especially when you’re executing Roth conversions where you’re paying the government up front, and now you want this money to grow. You want to recoup the taxes you paid to the government, and you want a portfolio that’s going to grow in the future as the future changes. I mean, look at what we have: we have quantum computing, we have a lot of AI, we have mini nuclear, we have rocket labs. A lot of these companies aren’t in these old portfolios. Why? They’re afraid to do tax loss harvesting.
Cynthia de Fazio 19:01
Wow, makes perfect sense. Well, Phil, I know that you and Parker have a very special message to the viewers at home. I’m going to let you speak about that before we take our next break.
Philip Capriotti Sr. 19:09
Come on in and bring your son and daughter with you!
Cynthia de Fazio 19:15
I love it.
Philip Capriotti Sr. 19:16
Dial 888-818-6557. Come in for a Morningstar portfolio review and portfolio analysis. You know, one of the nice things about working with a large organization, especially one that takes the handcuffs off of us, is when we run these Morningstar reports we have a team of certified financial planners that actually run the reports, and we’ll explain it to you. And what we, what it does is it shows all of your internal fees. It helps us understand what the return is on each one of your investment. It also helps us understand how much risk you’re taking in a, in a particular position. It’ll come with a portfolio observation. This, the value is immense. I can’t mention dollar numbers on the air because it’s not compliant, it’s not compliant with our suitability rules. But I can tell you this: it’s free to thee, but not to me. And allowing a team of certified financial planners to get an independent, a second look at it, and then give you portfolio recommendations based on their observation, it’s priceless. So dial 888-818-6557. Come on in, or click the QR code, and let’s show you how we do things quite a bit different and help you understand what is inside of your portfolio.
Cynthia de Fazio 20:37
Phil, thank you so much. Parker, thank you so much. To the viewers at home, the number to call: 888-818-6557, 888-818-6557. If you want to be on the fast track, we’ve made it even simpler. Just grab your smartphone and click on the QR code at the bottom corner of your screen. That’ll take you right to the landing page of Empower Wealth and Tax. You can schedule your time accordingly. We’ll be right back momentarily on Retire Smart Austin. Don’t go anywhere. Stay tuned.
Philip Capriotti Sr. 21:03
Hello, folks. Think estate planning mistakes only happen to celebrities? Think again. Prince, Aretha Franklin, and even Ted Williams all left behind estates without a proper plan, leading to years of legal disputes and financial loss for their families. These mistakes aren’t just for the rich and famous. Without a solid estate plan, your assets could be tied up in probate, subject to higher taxes, or even end up in the wrong hands. The good news: these mistakes are avoidable. A well-structured estate plan ensures that your assets go where you intended, with minimal hassle for your loved ones. Have you reviewed your plan recently? Do you know how tax laws impact your estate? Don’t let your legacy become another cautionary tale.
Cynthia de Fazio 21:59
Welcome back to Retire Smart Austin. My name is Cynthia DeFazio, joined today by Phil Capriotti, Sr. and Parker Capriotti of Empower Wealth and Tax. We’re talking all about tax loss harvesting and why this is a benefit for you, especially as you’re getting into the retirement years. So thank you for being with us today. Park, I love the philosophy of tax loss harvesting because so often people will take a look and they see that maybe something has a loss, but they choose just to like, set it and forget it. But you’re being more proactive with that, and a lot of clients I think truly appreciate that perspective. It’s a fresh perspective. Talk about helping someone with that situation.
Parker Capriotti 22:36
Well, one of the things I’d like to get into, one of the ways we help clients is, as my dad mentioned earlier, we actively manage these things daily. The way our tax loss soft, tax loss harvesting software works, is we have AI run all the positions on a day to day basis. So when we manage these things weekly, we’ll buy and sell accordingly. We have AI doing all the math on it, so there’s no human error.
Cynthia de Fazio 23:04
Wonderful.
Parker Capriotti 23:05
And it really has been a major benefit. I mean, we’ve seen multiple clients come very close, if not 0% in taxes on these accounts.
Philip Capriotti Sr. 23:15
So we had a client come in, and she had a rather large portfolio. What I consider large. We’re looking at an eight-digit portfolio. We’ll just leave it at that. And she said to me, “Let’s see just how good you are.” And it was funny. I loved her, and she was a CEO with a company, still working, and she’s in her 70s, but still working. That, because they still, she’s still in, folks want her, they want her knowledge and expertise. So she said, “I have all of this income from earned income. I want to take more income. I want to, I want $450,000 a year in income. Now I’m getting 200 and change in taxable income from a… How can you do that? How can your, can you do that?” And so I actually did a little creative thinking, and I called my son Park, and I’m like, Dad, what do you think about this? He said, “Well, you know, why don’t we do this?” He said, “Why don’t we take weekly gains, sell them, take weekly losses, sell them, and then provide the client with that tax-free income.” I’m like, “Wait a second, we can do that? The software will do it?”
Cynthia de Fazio 24:32
Wow!
Philip Capriotti Sr. 24:32
And he said, “Yeah, absolutely, we do it all the time.” So basically, what we did is because the market’s volatile. You know, you’ll see one sector drop, another sector goes up. The next week, it’s reverse.
Cynthia de Fazio 24:42
Yes.
Philip Capriotti Sr. 24:43
So he said we can set it up monthly. We can set it up every two weeks. We can set it up weekly. We can set it up daily. I said really? I said okay. Let’s go ahead and try it. So what we want to do is we want to solve for $15,000 in extra income a month. Tax free. That’s what we want to solve for. So basically, what we’re doing is, out of this eight-digit portfolio, we’re selling $7,500 worth of gains, offsetting it with $7,500 worth of losses, cashing it out, giving the client $15,000 worth of tax-free revenue.
Cynthia de Fazio 25:19
Wow!
Philip Capriotti Sr. 25:20
And now doing that monthly, and now doing that monthly, and so we did it. We tried it. Just we, I said, let’s just try it for a year. Let’s see how it works, and it worked like a charm. It actually would, we had the ability to produce over $400,000 worth of tax-free income if we would have let it max it out, but we wanted to solve for a specific number, a specific value, dollar income value, and so I was like, “I’ve been in the business 30-plus years. This is great.” We used to have to do all these calculations manually. We would do tax loss harvesting, maybe what, we would do it at least once a year, sometimes two or three times a year, you know, four times a year, every four months, but because it’s so time intensive and we’re using technology. So we can use it to diversify the portfolio. We can use it to provide tax-free income. We can use it to divert assets to buy other assets. When you spent decades and decades saving in either a 401k or retirement plan that’s pre-tax, or in a taxable plan where you’re paying taxes on dividends, interest, and you’re afraid to sell these old stocks because of the issue with long-term capital gains, give us a budget, a tax budget. We’ll create a plan to make your retirement income plan tax efficient or tax free. Now I’m going to ask you all out there, all of you, everybody watching, how many of your advisors are providing you with that level of service?
Cynthia de Fazio 26:55
Wow.
Philip Capriotti Sr. 26:55
How many of your advisors are providing you with estate planning, complimentary interviews with a board-certified attorney to look at your wills, look at your trusts. How many of your advisors are CPAs doing your tax returns, talking to you about Roth conversions? And again, I’m passionate about this because I’ve paid taxes for the last 55, 60 years. For me, I’ve already done the tax planning for myself and my family, I want to meet all of those families out there that need tax planning and need these fresh new ideas to implement. Let us teach you. Let’s good look at the, the old young bull and the old bull, and let’s see if we can’t, let’s see if we can’t develop a plan together.
Cynthia de Fazio 27:38
Phil, thank you, Parker, thank you. To the viewers at home, as you can clearly see, this is the number that you want to call. 888-818-6557, or click the QR code at the bottom corner of your screen. Be safe, be happy, and be blessed. We’ll see you next week. Thank you for watching Retire Smart Austin.
Philip Capriotti Sr. 27:54
Thanks.