Download the 4.17.25 Dynamic Portfolio Perspectives for advisors’ use with clients 

By Lucas Felbel, CFP®, CIMA®, Director, Dynamic Client Portfolio Management

Many advisors favor a single investment strategy that aligns with their core philosophy — a trusted approach they understand deeply and can communicate knowledgeably to clients. But as client needs become more nuanced and long-term planning more complex, there’s growing value in diversifying not just within a portfolio, but also across investment strategies.

Incorporating multiple strategies can help optimize tax efficiency, further mitigate risk, and provide more flexibility to support a range of financial goals. As an advisor, whose greatest value-add is a deep understanding of your clients, implementing more than one model portfolio can allow you to align dynamic portfolio construction with your clients’ life goals – be it saving for retirement, funding education, leaving a legacy, or traveling the world.

Here are three primary reasons why taking a multi-strategy approach to portfolios is emerging as a best practice for goals-based investing.

1. Enhanced Diversification through Strategy Themes

Diversifying by style: Combining growth and value investing styles provides exposure to different economic and market cycles. Growth stocks tend to outperform in strong markets, while value stocks historically outperform over longer time periods, particularly during recoveries or inflationary cycles.

Avoiding overlap: Multiple strategies with slightly different themes help reduce concentration risk in similar sectors, company sizes, and asset classes. For instance, value and growth often dominate different industries (e.g., financials vs. tech).

2. Strategy-to-Account Alignment for Tax Efficiency

Growth strategies in taxable accounts: Growth investments typically produce low or no dividends, with gains realized only upon sale. This allows for tax deferral, which can be particularly beneficial for high-income clients seeking tax-efficient accumulation outside of their retirement accounts. This strategy can offer less taxable income annually, capital gains taxed at favorable long-term rates, and more control over the realization of gains and losses with consideration to other aspects of a comprehensive plan.

Value or dividend strategies in tax-advantaged accounts (IRAs, 401(k)s): Value stocks and high-dividend payers generate consistent income, which is taxed annually if held in a taxable account. Value stocks often outperform growth over longer periods, making them suitable for retirement accounts with a long horizon. When working with clients seeking growth with income later in life, this strategy can offer dividends to be invested tax-deferred or tax-free. It can also help to avoid annual taxation on dividend income at ordinary income levels and supplement Required Minimum Distribution (RMD) needs in retirement.

Income strategies in tax-free accounts (Roth IRAs): Income-producing assets, such as real estate investment trusts (REITs), dividend-paying stocks, or high-yield corporate bonds, can create significant tax drag in taxable accounts. For younger investors who have a lot of time to let compounding work its magic, this strategy can allow interest and dividends to grow tax-free and provide tax-free withdrawals in retirement. Roth IRAs also have no required minimum distributions, which can provide flexibility in retirement.

3. Additional Planning Flexibility

Opportunistic tax-loss harvesting: Using different strategies across accounts creates more opportunities to harvest losses without violating the IRS wash-sale rule[1], a transaction where an investor sells a losing security, capturing a capital loss, and purchases a “substantially similar” investment 30 days before or after the sale to try and reduce their overall tax liability.

Tailored risk management: Different strategies help align with client-specific risk tolerance and life stage — growth for younger clients, income/value for those nearing retirement.

Dynamic rebalancing: This strategy allows advisors to shift allocation between styles based on economic cycles, tax needs or changes to the client’s goals.

By thoughtfully integrating growth, value and income strategies across appropriate account types, advisors can:

• Improve after-tax returns
• Increase overall portfolio resilience
• Offer clients tailored solutions that evolve over time

This kind of strategic portfolio construction goes beyond traditional asset allocation — transforming it into a multidimensional tool that weaves together investment style, tax efficiency and time horizon. By layering growth, value, defensive, and income strategies across the right account types, you can deliver portfolios that are not only more resilient, but more aligned with your clients’ lives.

Invest with intention.

At Dynamic, we’re here to help you take a flexible, personalized approach to growth investing — and uncover the opportunities that can make all the difference. Let’s talk about how we can support your clients’ success.

For more information, contact Dynamic’s Asset Management team at (877) 257-3840, ext. 4 or assetmanagement@dynamicadvisorsolutions.com.

As Director of Client Portfolio Management, Lucas Felbel, CFP®, CIMA®, serves as Dynamic Advisor Solutions’ lead resource for financial planning thought leadership, driving advisor education and practice development in collaboration with the Asset Management team to help advisors fully leverage Dynamic’s platform for improved client outcomes.

Disclosures

For advisor use only. This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.

This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.

All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed as to its accuracy or reliability. These materials do not purport to contain all the relevant information that investors may wish to consider in making investment decisions and is not intended to be a substitute for exercising independent judgment. Any statements regarding future events constitute only subjective views or beliefs, are not guarantees or projections of performance, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond our control. Future results could differ materially and no assurance is given that these statements or assumptions are now or will prove to be accurate or complete in any way.

Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed.

To the extent that this material concerns tax matters, it is not intended to be used by a taxpayer as tax advice. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.

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[1] IRS Publications Wash Sales