Learn about creative strategies that may help you meet your wealth planning goals.
Head of The Private Bank and Wells Fargo Partnerships
You’ve heard people offer this piece of advice before: When it comes to your finances, make a plan and stick to it.
I have offered that same advice myself. Creating a strategy to help meet your financial goals and staying the course may help you withstand even difficult economic conditions.
A common misunderstanding is that once you have developed your strategy, you can set it and forget it. Since the financial options available to help you and your advisor execute your plan often evolve, such a mentality means you could miss out on new opportunities that could benefit you and your family. Wealth planning is a year-round process. It’s important that you and your advisor stay in touch to review your plan and help ensure you are on the same page about goals and any changes in your personal or business life.
You can stick to your overarching wealth plan while also exploring new solutions throughout the year. Market dynamics are constantly fluctuating, and your advisor is there to help you weigh long-term investments, interest rates, liquidity, and the needs of your family.
Here are a few things to consider:
How we approach investments is evolving
For decades, the 60/40 portfolio has been the standard of the investment community. A portfolio with 60% allocated to equities and 40% to fixed income has long been viewed as an effective strategy that helps mitigate risk. But the experience of recent years has resulted in an investment philosophy evolution that leans toward alternative investments, which allow investors to think about portfolio diversification in a new way. Our most sophisticated clients, who may be able to invest over longer time frames, can often access beneficial private credit and private equity opportunities.
Thinking outside the box doesn’t have to be risky
Being creative does not mean you have to overhaul your entire strategy or investment philosophy. Even investors who have a minimal tolerance for risk have a variety of options at their disposal. Consider talking with your advisor about cash alternatives such as high-yield certificates of deposit (CDs) or deposit accounts that typically offer higher yields on cash balances and daily liquidity.
Creativity extends to philanthropy
Effective philanthropy requires planning. You want to help create meaningful change and support causes near and dear to your heart, but simply writing a check may limit your involvement and your ability to see the impact of your donation. You may want to consider a donor-advised fund, which allows you to contribute cash, stock, real estate, or other assets while offering the opportunity for greater tax deductibility options, ways to get loved ones involved, and generally less administrative requirements than a foundation.
Your financial options are constantly evolving. With complex wealth, it’s important to understand how new and creative strategies may potentially enhance your ability to meet your strategic plan. I encourage you to connect with your advisor to review your strategy. Your portfolio only benefits from your continued involvement.
Generally, CDs may not be withdrawn prior to maturity. CDs are FDIC insured up to $250,000 per depositor per insured depository institution for each account ownership category and offer a fixed rate of return, while the return and principal value of other investments will fluctuate with changing market conditions. CDs may be issued by out of state institutions.
The Private Bank is an experience level for qualifying clients of Wells Fargo Wealth & Investment Management (WIM). WIM offers financial products and services through affiliates of Wells Fargo & Company. Bank products and services are available through Wells Fargo Bank, N.A., Member FDIC.
Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Alternative investments, such as hedge funds, funds of hedge funds, managed futures, private capital, real assets and real estate funds, are not appropriate for all investors. They are speculative, highly illiquid, and are designed for long-term investment, and not as trading vehicle. These funds carry specific investor qualifications which can include high income and net-worth requirements as well as relatively high investment minimums. The high expenses associated with alternative investments must be offset by trading profits and other income which may not be realized. Unlike mutual funds, alternative investments are not subject to some of the regulations designed to protect investors and are not required to provide the same level of disclosure as would be received from a mutual fund. They trade in diverse complex strategies that are affected in different ways and at different times by changing market conditions. Strategies may, at times, be out of market favor for considerable periods with adverse consequences for the fund and the investor. An investment in these funds involve the risks inherent in an investment in securities and can include losses associated with speculative investment practices, including hedging and leveraging through derivatives, such as futures, options, swaps, short selling, investments in non-U.S. securities, “junk” bonds and illiquid investments. The use of leverage in a portfolio varies by strategy. Leverage can significantly increase return potential but create greater risk of loss. that are affected in different ways and at different times by changing market conditions. Strategies may, at times, be out of market favor for considerable periods with adverse consequences for the fund and the investor. An investment in these funds involve the risks inherent in an investment in securities and can include losses associated with speculative investment practices, including hedging and leveraging through derivatives, such as futures, options, swaps, short selling, investments in non-U.S. securities, “junk” bonds and illiquid investments. The use of leverage in a portfolio varies by strategy. Leverage can significantly increase return potential but create greater risk of loss. At times, a fund may be unable to sell certain of its illiquid investments without a substantial drop in price, if at all. Other risks can include those associated with potential lack of diversification, restrictions on transferring interests, no available secondary market, complex tax structures, delays in tax reporting, valuation of securities and pricing. An investment in a fund of funds carries additional risks including asset-based fees and expenses at the fund level and indirect fees, expenses and asset-based compensation of investment funds in which these funds invest. An investor should review the private placement memorandum, subscription agreement and other related offering materials for complete information regarding terms, including all applicable fees, as well as the specific risks associated with a fund before investing.
Donor-advised fund donations are irrevocable charitable gifts. The sponsoring organizations maintaining the fund have ultimate control over how the assets in the fund accounts are invested and distributed. Donor-advised funds donors do not receive investment returns. The amount ultimately available to the donor to make grant recommendations may be more or less than the donor contributions to the donor-advised fund. While annual giving is encouraged, the donor-advised fund should be viewed as a long-term philanthropic program. Tax benefits depend upon your individual circumstances. You should consult your tax advisor. While the operations of the donor-advised fund and pooled-income funds are regulated by the Internal Revenue Service, they are not guaranteed or insured by the United States or any of its agencies or instrumentalities. Contributions are not insured by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Donor-advised funds are not registered under federal securities laws, pursuant to exemptions for charitable organizations.
