The asset location strategy (not to be confused with asset allocation) allows you to re-allocate a client's equities between the taxable, tax-deferred, and tax-free account buckets. In other words, without actually changing a client's overall equity / fixed income split, you can choose which accounts will house the equities, and which accounts will house the fixed-income asset classes, to help clients obtain preferential tax treatment on their investments.
Generally speaking, many asset location strategies will see stocks shifted into the taxable / tax-free buckets, with bonds reserved for tax-deferred accounts. This can be particularly beneficial for clients in higher tax brackets. If you are unfamiliar with asset location, we recommend this helpful breakdown from Vanguard.
