asset safeguarding

Economic downturns put client assets at risk as market declines, business stress, and job losses can reduce portfolio values. During these times, advisors need to come up with practical steps to help clients protect assets and find new opportunities.

Clients rely on advisors for guidance when uncertainty arises. With a strong plan, you can help them reduce risk and keep assets safe. This guide covers how advisors support asset safeguarding and offers expert advice on building effective protection strategies.

What is asset safeguarding?

Asset safeguarding involves the use of policies, procedures, and strategies to protect assets from loss, misuse, or unauthorized access. For organizations and businesses, this can mean physical security, data protection, and strong internal controls. For individuals, it can include legal and financial tools to shield wealth from creditors and lawsuits.

Asset safeguarding becomes even more important during economic downturns. Falling markets and business disruptions can increase the risk of loss and claims against assets. Advisors can help clients adapt their asset protection plans by addressing these risks and ensuring that all safeguarding measures remain effective as conditions change.

Who needs asset safeguarding

Asset protection is valuable for anyone with assets, but it’s especially important for:

• high-net-worth individuals
• business owners
• real estate investors
• individuals in high-liability professions such as doctors and lawyers
• all types of businesses and organizations

Those with large debts or uninsured assets also face higher risk. Planning ahead is key, since asset safeguarding strategies work best when set up before legal claims or lawsuits are filed. Proper planning helps shield wealth from unexpected threats and supports long-term financial security.

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What types of assets need protection

A wide range of assets can be at risk from lawsuits, creditors, and economic downturns. Below are some key asset types that require protection:

Tangible assets

These are physical possessions that have value such as:

• real estate like homes, land, and investment properties
• vehicles, including cars, trucks, motorcycles, and other forms of transportation
• equipment and inventory such as machinery, tools, and goods for sale
• personal property like jewelry, cash, and other valuables

Intangible assets

These are non-physical assets with inherent value, including:

• funds held in checking and savings accounts
• retirement accounts such as IRAs and 401(k) plans
• investments like stocks, bonds, and other securities
• business interests and accounts receivable
• intellectual property such as patents, copyrights, trademarks, and trade secrets
• data and information, including digital files, customer lists, and other sensitive information

Role of advisors in asset safeguarding

RIAs play an important role in helping clients create an effective asset protection plan.

“Independent registered investment advisors are registered with the SEC and have committed to a fiduciary standard,” explains Liz Miller, president and Founder of Summit Place Financial Advisors.

“This is a long way of saying an RIA is committed to putting a client’s best interest first. If such an advisor recommends an insurance policy to protect assets, you can be confident that it is a solution in your best interest.”

Tom Ruggie, founder and CEO of Destiny Family Office, says this fiduciary responsibility makes “safeguarding the assets for our clients a cornerstone for what we do.”

He adds that this duty emphasizes “the importance of knowing your clients – their needs, wants, fears, etc. – and developing a strategy to provide them with the peace of mind that they should have when working with a trusted advisor.”

Miller and Ruggie are recognized as among the top financial professionals in the US by InvestmentNews.

Common types of asset protection strategies

There are several types of asset safeguarding strategies, but the right approach depends on a client’s personal circumstances. A sound plan often uses a mix of these measures to keep client assets safe during legal challenges and economic downturns. 

Limited liability entities

Using limited liability entities separates personal and business assets to reduce risk.

• Limited liability companies (LLCs): These protect personal assets from business debts and lawsuits. Many states limit creditors to “charging orders,” so they cannot seize LLC assets directly
• Corporations (S-Corp or C-Corp): These entities keep shareholder assets separate from business liabilities

Retirement accounts and IRAs

Retirement accounts and IRAs can be strong tools for asset safeguarding. Federal law protects most qualified retirement plans, such as 401(k)s, from creditors in bankruptcy. Many states also shield IRAs from creditors, but the level of protection varies by state.

Advisors should check state laws to confirm the level of protection for each client. Encouraging clients to maximize contributions to these accounts can help keep more assets safe from legal claims.

Insurance coverage

Insurance coverage helps protect against large, unexpected claims. Some examples are:

• Umbrella liability insurance: This adds extra coverage after home, auto, or boat policy limits are reached
• Specialized insurance: This can include professional liability, directors and officers (D&O), and employment practices liability insurance (EPLI)

Trusts

Trusts move ownership of assets to a trustee, which can help shield them from claims.

• Asset protection trusts: These are set up to keep assets safe from future creditors. The trust holds legal ownership, making it harder for creditors to reach the assets if a claim arises
• Irrevocable trusts: Once assets are placed in an irrevocable trust, the grantor gives up control and ownership. This separation helps shield the assets from lawsuits and creditor claims

Homestead

Many states offer homestead exemptions that protect a portion of a primary residence’s value from creditors. This is a simple way to keep some home equity safe.

Family limited partnerships

Family limited partnerships (FLPs) let families place assets in a partnership to limit creditor access. Creditors can only get a charging order, not direct access to the assets.

Asset titling

This refers to how ownership of property and accounts is structured. Choosing the right form of ownership can help protect assets from creditors. For example, holding property as “tenants by the entirety” with a spouse in some states can prevent creditors of one spouse from claiming the property. Proper titling can also help with estate planning and simplify the transfer of assets.

Asset diversification

Asset safeguarding also includes spreading investments across different asset types to reduce risk. Diversification helps limit losses if one asset class drops in value. Here are some investment options:

• real estate
• equities
• bonds
• commodities
• cash
• private equity
• alternative investments

Strategic gifting

Gifting assets to family or trusts can move them out of the reach of future creditors. This must be done before any claims arise to be effective.

Offshore banking

Offshore accounts and trusts can add another layer of asset safeguarding. These structures can make it harder for creditors to access assets, but they must follow all legal requirements.

Here’s an overview of each of these asset safeguarding strategies.

Strategy	Complexity	Level of protection	Ease of implementation
Limited liability entities	Medium	High	Medium
Retirement accounts and IRAs	Low	High	High
Insurance coverage	Low	Medium	High
Trusts	High	High	Low
Homestead	Low	Medium	High
Family limited partnerships	High	High	Low
Asset titling	Low	Medium	High
Asset diversification	Medium	Medium	Medium
Strategic gifting	Medium	Medium	Medium
Offshore banking	High	High	Low

How to create a strong asset safeguarding framework for your clients

Each client comes with unique needs, that’s why there’s no one-size-fits-all solution for safeguarding assets. However, there are general steps that advisors follow to come up with a sound asset protection plan.
 

Step 1: Risk assessment and client education

 

• Identify potential threats: Start with a full risk assessment. Review the client’s job, finances, and lifestyle to find risks like lawsuits, malpractice claims, or creditor actions
• Educate on inherent protections: Explain which assets already have legal protection. Federal law and some state laws shield certain retirement accounts, like 401(k)s and some IRAs, from creditors. Many states also protect part of a primary home’s value with homestead exemptions
• Differentiate protection vs. concealment: Make sure clients know the difference between legal asset protection and hiding assets. Warn against moving assets after a lawsuit is imminent – courts can reverse these moves and add penalties

 

Step 2: Strategic use of legal structures
 

Advisors use legal structures to separate and safeguard client assets. These include:

• LLCs: An LLC can keep personal assets safe from business lawsuits or debts. This is useful for business owners and real estate investors
• Trusts: Trusts, such as asset protection trusts and irrevocable trusts, move ownership to a trustee and help shield assets from claims
• Strategic titling of assets: In some states, holding property as “tenants by the entirety” with a spouse can protect it from creditors of one spouse
• Family limited partnerships: FLPs let families place assets in a partnership. Creditors can only get a “charging order” against the partner’s share, not the assets themselves

 

Step 3: Risk management and insurance

 

• Maximize insurance coverage: Insurance is the first line of defense in asset safeguarding. Advisors ensure clients have adequate liability coverage, such as homeowners, auto, and professional malpractice insurance
• Add umbrella insurance: For clients with significant assets, an umbrella policy provides an extra layer of liability coverage beyond the limits of standard insurance policies

 

Step 4: Collaborative and ongoing management

 

• Coordinate a team of professionals: Advisors work with estate planning attorneys, CPAs, and insurance agents to make sure the plan is legal and complete
• Integrate with other financial goals: Asset safeguarding should fit with the client’s tax, investment, and estate plans
• Provide ongoing oversight: Advisors review the plan regularly to keep it effective as laws, finances, or life situations change

Ruggie stresses the importance of proper planning when developing an asset protection plan.

“Planning trumps performance,” he says. “I’d rather have a sound and agreed upon plan the client understands and will make them comfortable during all phases of market performance.

“Greed and fear can have clients (and advisors) making poor emotional decisions. A strong strategy… will likely generate better performance long-term, if poor short-term decisions are not being made in the interim.”

Developing an asset safeguarding strategy in economic downturns

An asset protection plan helps clients shield their wealth from lawsuits, creditor claims, and other risks that increase during downturns. It protects both personal and business assets to support financial stability when markets are uncertain.

“I start with clarifying discussions to understand what assets we are protecting and what the consequences of an economic downturn are for my client,” Miller says. “For clients with a long-term horizon, I can help them navigate the emotions of sticking with a long-term growth strategy during a market downturn.”

Miller adds that they look at opportunities and make sure that there is cash available to take advantage of those opportunities.

“They have the time to benefit from both the down and the recovery and need guidance to plan ahead and have a partner along that roller coaster journey.”

Her approach, however, is different for those nearing retirement.

“We can begin planning specifically for upcoming living expenses and outline the first several years of retirement. The assets needed in those first few years must be secure and available regardless of what the markets are doing. Then we can discuss the types of investments that can protect those funds, from money market funds to a strategy of laddered CDs or bonds, depending on their risk circumstances.”

Why is it important to have an asset safeguarding plan?

A sound asset protection plan helps clients keep their wealth safe from lawsuits, creditor claims, and other risks that increase during downturns. Advisors who build strong plans can help clients avoid large losses and maintain financial stability. Effective asset safeguarding gives clients confidence and supports their long-term financial goals.

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