Stuck on Capital Gains: Year-end Client Conversations About Section 351 ETF

Help clients diversify low-basis portfolios

1 Hour CFP® CE credit available

Some of your clients would change an allocation tomorrow if it weren’t for the tax bill. Their low-basis stock and ETF positions have grown for years, and selling would trigger a large capital gain. So the positions stay put, and the concentration risk keeps building.

A 351 exchange gives those clients another option. It lets investors move low-cost-basis stocks and ETFs into a newly launching ETF without triggering an immediate taxable event. This fall, Treasury and the IRS issued new guidance that draws clearer lines around how 351 exchanges can be used. With year-end planning underway, now is the time to know which clients qualify and how to start the conversation.

First, find the gain.

H. Adam Holt, CFP®, ChFC®, Founder & CEO of Asset-Map, will show how to spot the households with low-basis positions across your whole book. Asset-Map puts a client’s full financial picture on one page, including where each account sits and how it’s taxed. Clients want their map to be accurate, so they tell you about the accounts held elsewhere. That’s often where the most appreciated, most outdated positions are hiding.

Next, understand the exchange.

Eben Burr, President of Toews Asset Management, will walk through the requirements, history, process, risks, and advantages of this part of the tax code. A 351 exchange lets the client carry their cost basis and holding period into the new ETF while gaining wider diversification, or even a hedged position. It defers gains rather than erasing them. Eben will cover which portfolios qualify, what the new guidance changed, and the practical steps involved in executing an exchange.

Then, make the move.

Shana Orczyk Sissel, CAIA, Founder & CEO of Banrion Capital Management, will show how to find and evaluate opportunities like these. You’ll see how to access them conflict-free, with institutional-grade due diligence, and without adding back-office work for your team.

Find the gain. Understand the exchange. Make the move. You’ll leave knowing which clients to call before year-end and how to explain the opportunity in plain English.

You’ll learn

How to spot the households whose low-basis positions are keeping them stuck
The requirements for a 351 exchange and which client portfolios qualify
The potential benefits, including tax efficiency, diversification, and investment flexibility
The risks and practical considerations to weigh before recommending one
How a 351 exchange differs from an exchange fund
Where 351 exchanges fit in portfolio management and wealth planning
How to go from spotting the opportunity to putting it in place

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