Many investors likely need to take some profits in stocks and put that money to work in municipal bonds, Garvey said.
"Municipal bonds are still very cheap," he said, due to an outflow of assets from tax-free mutual funds being forced to munis and pushing prices down. There is, as well, a fear of rising interest rates and bankruptcies, such as the Detroit situation.
"There is an opportunity that we haven't seen in previous years, to do what's called tax-loss harvesting, selling your appreciated stock and swapping that money into muni bonds," Garvey explained.
Currently, a municipal bond with a maturity of 10 to 12 years is yielding about 2.72 percent, nearly equal to Treasurys with a similar maturity. "If you compare munis to Treasurys, they are paying very close or even more than taxable bonds. That's unusual," according to Garvey.
UBS has favored A-rated muni bonds issued by states such as California and Pennsylvania, just as examples.
Using proceeds from selling your equities, you can swap that into muni bonds. Or, if you have Treasury bonds that are trading at a loss, sell those bonds, book the loss, and swap that money into tax-free muni bonds.
On the stock side, UBS has been recommending selling U.S. equities and deploying that money into European Union stocks, which trade at 14 times earnings, compared with 15 times U.S. forward earnings.
Finally, Garvey has advised quite a few clients to take their required minimum distribution (RMD) from their retirement portfolios and donate that to charity - creating a tax write-off in many cases. Some clients have also been "gifting" appreciated stock to charity.