JofA branded podcast: Investment management at the intersection of tax and wealth services

In this Journal of Accountancy branded podcast episode, Clint Costa, CPA, J.D., LL.M., a senior wealth strategist at Choreo, talks with Matt Gotlin, Choreo’s chief investment officer, on trends in investment management and tips for CPAs to advise clients.

Play the episode below or read the edited transcript:

Introduction: Thank you for tuning in to this Journal of Accountancy branded podcast. This episode is from our sponsor, wealth management firm Choreo.

Clint Costa: I’m Clint Costa, senior wealth strategist here at Choreo. Today, we’ll be diving into investment management at the intersection of accounting and wealth services, a topic that sits right at the heart of forward-thinking wealth advisers. Before we get started, I’m joined by my colleague Matt Gotlin, our chief investment officer and managing director of wealth management. Matt, it’s great to have you here. Would you start us off by sharing a bit about your background?

Matt Gotlin: Hey, Clint. Thanks for having us today. It’s been really great. My career has spanned several decades now across private equity, hedge funds, investment banking, and ultimately leading to the journey in wealth management, and I’m excited to be here today.

Costa: Thanks, Matt. We’re glad to have you on. As I said, I’m the senior wealth strategist at Choreo. I get deeply involved in advanced planning with all of our advisers and clients and really leverage the 15 years that I spent working with high-net-worth and ultra-high-net-worth clients in the law firm setting on trust and estate, business succession, and other related planning matters to add just a little bit more to our planning capabilities.

Our heritage is deeply rooted in the accounting profession. Many Choreo advisers, including yourself, Matt, come from public accounting backgrounds. That means we understand how CPAs think, the emphasis on precision, compliance, and doing what’s in the client’s best interest. Our approach really lends itself to helping CPA firms grow, both in advisory capabilities and in the depth of service that they can offer clients. We do this through a collaborative partnership model, what we like to call a B2B2C model. That’s where we partner with accounting firms to jointly serve clients.

Our role isn’t to compete, it’s to complement. There are other models to implement this approach. Some accounting firms actually have and maintain their own internal wealth management firms. Others go with a classic referral model. Each CPA firm really has to find its own best fit, but, together, the goal is that we help firms deliver a more expansive client experience, strengthen their brand, and free up valuable time for strategic billable work.

Along these lines, earlier this year, Choreo partnered with Arizent to conduct an industry study in the accounting field. We surveyed 291 accounting professionals in March of this year to better understand the evolving role of advisory services within CPA firms. We found that advisory services now account for about 28% of firm revenue on average and that that share is growing. When asked how they plan to expand, most firms point to new client acquisition and cross selling to existing clients as their key strategies.

But interestingly, [it] mainly depends still on clients to initiate those conversations. That tells us there’s a big opportunity. Because when firms proactively identify cross-selling opportunities that broaden service, they’re not just increasing revenue, they’re deepening trust. Of course, one of the biggest barriers cited in the study was capacity — limited staff and the challenge of managing workloads. And that’s exactly where collaboration with a wealth management partner can help by expanding a firm’s reach without expanding their headcount.

As I mentioned, every firm has to determine what model is best fit. Some firms really like their internal wealth management businesses, and that makes those resources directly accessible and ideally aligned with the CPAs who are delivering tax and other services. What we hear from firms that have gotten out of that business, though, and frankly, Choreo is constituent of a few of those firms, is that it can be hard to maintain a growing RIA and a growing CPA firm at the same time.

Other firms do prefer to stick with the traditional referral model. They get to know wealth managers either nationally or in their specific local area, and they refer business to those wealth managers opportunistically. I think most of us have probably experienced this model at some point in our professional services career, sometimes to great effect. Sometimes it works really well.

The issue, though, we see, is that this model can sometimes leave the client feeling like they are quarterbacking an advisory team almost as a second job — that lack of cohesion that sometimes comes when you have multiple different organizations with potentially different models and different priorities.

Now, let’s talk a little bit about what we call the intersection of tax and wealth management. This is where the real value for clients is created. It’s when tax planning and financial planning aren’t separate conversations but [with] one integrated strategy. This can involve anything from equity-based compensation, wealth-transfer strategies, retirement plan funding, Roth conversions, charitable giving. Every one of these opportunities sits at the crossroads of tax and investment planning, and by coordinating across disciplines, we can help clients make smarter, more efficient decisions that compound over time.

For clients, the benefits of this integrated model, we think, are clear. They gain access to a family-office-like experience, one where their CPA, their wealth adviser, and other professional advisers work together toward unified goals. We think it helps to avoid conflicting advice. We think it helps to eliminate scope confusion and provide ultimate clarity to everyone. Most importantly, we think we surround the client with long-term team that understands their evolving needs year after year. While we place great emphasis on planning, we know that clients also come to us with need to invest their hard-earned money, and that’s exactly where my teammate Matt Gotlin comes in. Matt, handing the mic to you to talk about tax-smart and impactful investing here at Choreo.

Gotlin: Thanks, Clint. As we dive in a little bit on the unique availability of some of the strategies Clint touched on a little, we’d be remiss if we didn’t initially start out by talking about what’s going on in 2025 and where we are today. And 2025 has been marked by modest amounts of chaos throughout the year in the markets, but by a lot of resilience in the markets. Some of the opportunities that we see today are derived directly from that market chaos in areas such as geopolitics, technology transformation, policy uncertainty, inflation uncertainty, and broader economic uncertainty.

The world has actually become somewhat resource-constrained, given the limited availability of certain key minerals, key inputs in things like chips, data, data centers, obviously. Even currencies today have changed from where they once were.

A few quick thoughts about the broader economy. The year has been marked by uncertainty. In fact, as we look back on the year, following the tariff announcements in April, second-quarter earnings were marked by the largest use of the word “uncertainty” that we’ve ever seen, even greater than surprisingly during COVID or the great financial crisis. Companies exhibited a tremendous amount of uncertainty in the second quarter of this year. A lot of that has faded thanks to some of the uncertainties being dealt with, such as by the Big Beautiful Bill and, more recently, some other legislative and geopolitical developments which have really helped transform that.

At the end of the day, these are important angles to consider because a lot of our financial systems, at least domestically and really around the world, are led by central banks, and central banks or the U.S. Federal Reserve, at least, is focused on two primary components of their dual mandate: labor, ensuring we have a full employment situation, and inflation.

In recent years, the Fed’s fight has been largely focused on fighting inflation, as we’ve seen very elevated levels, particularly as of a couple of years ago. The inflation picture is not quite back to where the Fed would like it to be, but we are now seeing some slippage in the labor markets. There’s a lot of theories and concerns and questions of why labor markets might be weakening, but they are in the weakening stages. And, at the end of the day, that has led to Fed policy once again beginning to ease again from a period of where they were back in 2024 and paused for much of the beginning of 2025.

We saw initial rate cuts begin, and more rate cuts are expected throughout the rest of this year. Overall, the investment environment has been strong despite the chaos, very resilient. We’re seeing very strong performance in international markets and international developed and emerging markets, as well as with U.S. markets, which have rebounded very strongly since what was, at one point, close to 20% decline in U.S. markets as of the April time frame. All that being said, we just wanted to touch on a couple of our unique areas of the markets where we really see value and largely in private markets.

In a nutshell, I think the important parts of private markets to consider are when you do add private markets into a public-market portfolio, you have two things that traditionally will change. No. 1, your volatility will be dialed down depending on the strategy. I’m speaking broadly to all private markets right now. But, in general, private markets will dial down your volatility while at the same time potentially increasing your returns. That combination of an increase in returns with lowering of volatility, again, broadly speaking, that’s a broad generalization. It depends very much so on the mix of private-market strategies that you deploy, and we think that’s a very favorable outcome.

Specifically, the three or four major areas we really like, we really like private equity. We think there’s a chance for enhancing that risk/reward, as well as in infrastructure, private debt, and real estate. Just to give a quick example of right now, infrastructure as an example, everyone’s read about the buildout of data centers and all of the requirements for power generation, things like that. Well, a lot of that falls squarely in infrastructure where you’re buying into what is in many cases is an oligopoly, and infrastructure, broadly speaking, involves ports, and I mentioned data centers, digital infrastructure, railroads, shipping ports, even airports, things like that where there’s not usually many of them in place. There’s typically only one or two.

We like that. It adds favorable risk/reward to our portfolios, and where appropriate for the clients where we think those add value. We think that’s a big part of our portfolio. Even on the public-market side, however, where a lot of folks might suggest it’s difficult to beat public markets, we like to look beyond just the traditional alpha generation that you might see. Is this manager beating the market? Is that manager beating the markets? Take a traditional index as an example, where you’re just buying a low-cost strategy to invest in the liquid, public S&P 500 as an example.

Well, taking a year like 2023 where markets did have a really good year, up 20-plus percent. Beneath the surface of those markets, a lot of those securities traded down during the year. Take as a high-level example, perhaps a Coke traded down and you sold the Coke during the year and you bought a Pepsi as a replacement. You could use that tax asset as an advantage to offset future gains. If you’re just buying the low-cost index fund, you might miss out on those opportunities, but if you’re buying a sample of the S&P 500, which could closely track the same performance, whereas [at] the same time recognize a taxable benefit that you could use in the future. Well, that’s getting markets plus keeping more money in your pocket in future tax-loss offsets. That strategy, which is called direct indexing, [is] something we think adds some value to clients significantly.

In addition, it makes investing far more customizable in that if you chose to exclude certain sectors, certain ESG type of qualities, you could potentially exclude those from your mix of an index where it’s hard to do that, obviously, if you’re just buying the index. Finally, a big advantage that we are seeing today is the ability to do household-level allocations. In other words, if you’re trying to invest according to a 60-40 portfolio, and you have a taxable account and an IRA account as an example, we would suggest that if you’re investing across your household and markets run and you’re no longer 60-40, maybe you’ve gone up to 75-25 because markets have really rallied and now you have a lot more equity exposure than perhaps your risk parameters would determine, and you don’t want to sell your taxable account exposure because you don’t want to recognize the capital gain that might be inherent in that.

If you’re managing across households, you would potentially not recognize some equity in your IRAs, not recognize that capital gain, and reset your allocations accordingly back to something closer to 60-40. We’ve focused on an automated methodology of doing this, which we call Choreo Tax Advantage, and we think adds one of the many segments that we think adds a value above and beyond what we might otherwise see from traditional client portfolios.

From our perspective, linking private markets with very strong financial planning efforts and, on top of that, our Choreo Tax Advantage with some direct indexing, we think we get really favorable outcomes for clients, and we suggest that all of those types of things are things you consider using. Thank you, everyone, very much for your time today, and turn it back to you, Clint, for any final comments.

Costa: Thanks, Matt. I think it’s very informative. As we wrap up, here’s the key takeaway. When CPAs and wealth advisers work together, everyone wins — the firm, the client, and the broader financial ecosystem. I’m Clint Costa and, for my teammate Matt Gotlin, thanks for tuning in to this episode of the Journal of Accountancy podcast. Thank you.