Meet Sally. She's the chief operating officer of a large corporation and has been steadily accumulating her company's stock over the years.
That stock makes up a significant portion of her retirement plan.
Her company has been doing well, but what keeps Sally up at night is wondering if her retirement plan could recover from an unforeseen drop in the stock's value.
Sally knows that she's currently restricted from selling her stock, but she knows that she needs to diversify her portfolio to withstand potential volatility.
Uncertain about the best way to go about it, she decided to consult with her Wells Fargo Private Bank relationship team, including her Wells Fargo Advisors financial advisor, to help her understand her options.
Her team outlined how a credit strategy could help her diversify her portfolio while keeping her wealth plan on track.
They explained that she could obtain a line of credit using her concentrated company stock as collateral for the loan.
Then, by using the funds from her line of credit, she could then invest in a new, more diversified portfolio that aligns with her risk tolerance and goals.
Sally liked this strategy because it would allow her to stay fully invested in her company stock, and avoid large capital gains taxes by not liquidating her existing investments.
Plus, she could even potentially earn dividend income.
Sally now can sleep better knowing that her retirement plan is more secure and that her overall wealth plan is aligned with her family's financial goals.
Borrowing to help you manage investment allocations is just one of the five strategic ways credit can be put to work for you.
Let's start a conversation about credit. Contact Wells Fargo Private Bank to learn more.
This video has been prepared for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Since each person's situation is different you should review your specific investment objectives, risk tolerance and liquidity needs with your financial professional before selecting a suitable savings or investment strategy.
Securities-based lending has special risks and is not suitable for everyone. If the market value of your pledged securities declines below required levels, you may be required to pay down your line of credit or pledge additional eligible securities in order to maintain it, or the lender may require the sale of some or all of your pledged securities. The sale of your pledged securities may cause you to suffer adverse tax consequences. You should discuss the tax implications of pledging securities as collateral with your tax advisor. Wells Fargo Advisors and its affiliates are not a tax or legal advisor. All securities and brokerage accounts are subject to eligibility requirements. Please read all line of credit documentation carefully. The proceeds from an asset backed loan may not be used to purchase additional securities or pay down margin.
Brokerage products and services are offered through Wells Fargo Advisors, a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.
Investing involves risk including the possible loss of principal. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Diversification does not guarantee profit or protect against loss in declining markets. Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations. Dividends are not guaranteed and are subject to change or elimination.
Wells Fargo Private Bank provides products and services through Wells Fargo Bank, N.A. and its various affiliates and subsidiaries.
Wells Fargo & Company and its affiliates do not provide legal and tax advice. Please consult your legal and tax 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 you own situation at the time your taxes are prepared. Wells Fargo Bank, N.A. NMLSR ID 399801. Equal Housing Lender. CAR# 0916-03460
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