As wealthy households plan to sustain their assets, they must also consider potential financial hazards. Some of these risks are not always obvious.
Illiquidity of assets. When the bulk of a household’s net worth is held in real estate or a business, a retirement transition may hinge on finding buyers or investors—and as illiquid assets are converted into cash, the significant monetary value may be lost.1
Investment risk. A 2017 U.S. Trust survey found that, on average, 60% of the wealth of high-net-worth retirees was concentrated inequities. Imagine the possible impact to the net worth of those households in a market downturn.
Family issues. Fragmented relationships with a spouse and children can also breed family financial conflicts. If one spouse dies, income can disappear, and joint filing status is lost.
An insurance shortfall. Customized underwriting may be needed to obtain policies with necessarily high levels of coverage.
Litigation. While medical professionals and business owners always live with this possibility, asset protection from creditors and “predators” becomes especially vital in and near retirement.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial. Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL Financial affiliate, please note LPL Financial makes no representation with respect to such entity.
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USTrust.com, “2017 Insights on Wealth and Worth,” Spring 2017