Protecting Your Assets: Beyond Insurance

While insurance is one way to protect what you have, asset protection is a much broader concept that requires thoughtful planning. 

Older couple smiling at each other

Podcast Transcript 

Host: Rob Miles, Senior Vice President, Wells Fargo Private Bank

Guest: Fawn Angel, Senior Wealth Planner, Wells Fargo Private Bank

[Rob]:

When people think about protecting their assets, the first thought that typically comes to mind is having an insurance policy. While insurance is an important planning tool, there are other ways to think about asset protection.

I'm Rob Miles, Senior Vice President for Wells Fargo Private Bank, and this is "Your Financial Journey," a podcast series that explores common financial matters. I am joined today by Fawn Angel, a Senior Wealth Planner at Wells Fargo Private Bank, to discuss the topic of protecting your assets. Welcome, Fawn, and thanks for joining us. 

[Fawn]: 

Thanks, Rob. It's good to be here.

[Rob]:

So, Fawn, when we say "protecting your assets," what do we mean?

[Fawn]: 

Well, Rob, as you mentioned most people tend to think about the insurance they have in place when it comes to asset protection. And while insurance is one way to protect what you have, asset protection is a much broader concept. For example, you may want to explore strategies to protect your investment portfolio from market risk or strategies to preserve your assets for your heirs. 

[Rob]:

Fawn, can you talk a little more about protecting your investment portfolio from market risk?

[Fawn]:

Sure, in my conversations with clients, I find that some have their portfolio mainly invested in low-yielding certificates of deposit spread across various banks. From their perspective, that is their way of diversifying or hedging against market risk and protecting their principle. They may also be working with multiple financial advisors and don't realize the market risk involved in the overlap of their portfolios.

[Rob]:

So Fawn, many people tend think of diversification that way by spreading their deposits or investments across various banks. So how do you and the team approach and help a client in that situation?

[Fawn]:

So in cases like this we would bring in our investment specialist to help clients understand how they are exposing themselves to inflation, interest rate, and market risk. We can then educate them on strategies to help hedge against those risks.

[Rob]:

Fawn, very logical approach. If your portfolio is not keeping up with inflation, you may be losing money at the same time or spending power. So Fawn, as a senior wealth planner, I know you spend your days identifying ways to help our clients preserve their assets. Can you give an example maybe from recent experience where this has come to light?

[Fawn]:

Sure, one common pitfall we see is people who focus only on certain types of asset protection. I can cite a recent example of a prospective client who was in the medical field. Protecting assets to him primarily meant medical malpractice. In addition to his creditor concerns, he was very concerned about market risk and protecting his principle. As we dug deeper, we realized that there were some other asset-related risks that he needed to address. 

[Rob]:

So, Fawn, can you give us a little more detail? How did you approach that situation?

[Fawn]:

Well, Rob, as we learned more, we found that his assets were titled in his wife's name transferrable to their kids at her death. We asked a simple but important question 'What if your wife predeceases you?' In this situation, if his wife had predeceased him, the assets would go to his children based on the titling. This could result in major retirement or cash flow problem as the assets would no longer belong to him. This discussion helped him see some of the unintended risks he had exposed himself to while trying to resolve other concerns. To help solve for this, we worked with him to place the assets into his wife's trust. That way the assets can pass as he intended and remain out of his name and away from his creditors. In these situations, you should work with your legal advisor in order to implement protection strategies that are appropriate based on your individual circumstances.

[Rob]:

So Fawn, protecting your assets from a creditor in order to pass to the next generation is clearly a good example of asset protection. Another common example of poor titling is when you divorce, remarry, or simply haven't updated your beneficiaries. In this case, your ex-spouse could potentially inherit your assets.

[Fawn]:

Right, depending on where you live and your agreement you may have an unintended beneficiary. The takeaway here is thinking broadly about asset protection. You'll want to explore strategies to protect your assets in the context of your overall financial plan. And work with a trusted advisor who can help guide you and can help uncovered any gaps. Everyone should regularly review their titling and estate planning for accuracy and coordination with the current laws.

[Rob]: 

So Fawn, Those are all really good points. For our listeners, let me summarize what I've been hearing. Protecting your assets is much broader than just an insurance policy. You'll really want to think about protecting your assets in the context of your overall financial plan including your investment portfolio, assets you want to preserve, as well as your estate. 

[Fawn]:

That's exactly right, Rob. It's really critical that everyone looks at this from a personal perspective to put the right plan in place for their family.

[Rob]:

So, Fawn, I want to thank you for your time and your perspective today and I want to thank our listeners for joining this podcast. Please join me next time, when we'll discuss defining your estate and legacy goals.

This is "Your Financial Journey."

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