Financial advisors can help their clients save money by using certain tax strategies in connection with their equity investments, says Michael Allison, equity portfolio manager at Eaton Vance, an investment management firm based in Boston.

“No one aims to leave money on the table. But thanks to capital gains taxes, that is exactly what investors do each year,” says Allison.

In 2014, mutual funds paid nearly $398 billion in capital gains, according to the Investment Company Institute. With the S&P 500 Index setting new records last year, capital gains for 2015 were likely even higher.

Investors tend to underestimate, or even entirely overlook, the impact of taxes on their long-term investments, Allison says.

“Despite the significant bite taxes can take out of an investor’s real rate of return, many people simply don’t consider taxes when considering investment returns," he adds. "A tax-managed equity strategy may employ a number of techniques to help ease investors’ tax burden, including taking steps to minimize capital gains and avoiding fully taxable dividend income.”

Allison recommends several steps that investors can take to shield their clients from some taxes. For example, investors should use a long-term perspective when investing to delay capital gains recognition because long-term gains are taxed at a lower rate than short-term gains. And the use of tax-loss harvesting can help offset gains realized elsewhere in the portfolio.

If a client is divesting himself of shares, their advisor should make sure the client is selling the shares with the highest basis first to minimize capital gains.

Advisors should also assist clients with using tax-advantaged hedging techniques as alternatives to taxable sales in order to manage gains and losses, potentially maximizing after-tax returns.

“It is critical that investors understand the potential impact of capital gains and taxes on their portfolios. Appropriate strategies to help mitigate the tax drag should be explored. Investors should consult their financial and tax advisors for more information,” Allison says.