What Are Assets Held Away and Why Do They Matter?

Understanding Assets Held Away

“Assets held away” is a common term in personal finance and wealth management. It describes financial assets owned by an individual or entity that are not managed by their primary financial advisor, broker, or financial institution. These assets exist outside the direct oversight or consolidated reporting of a main financial relationship, making them “held away” from that primary view.

This concept differs significantly from “assets under management” (AUM), which refers to the total market value of investments a financial institution or advisor directly manages for clients. While AUM represents capital actively controlled by a firm, assets held away are those that an individual owns but are managed by other institutions or are self-managed. Understanding this distinction is important for individuals seeking a complete picture of their financial standing.

Common Categories of Assets Held Away

Many types of assets can fall under the “assets held away” designation. Employer-sponsored retirement plans, such as 401(k)s or 403(b)s, are frequent examples, especially if administered by a provider separate from one’s main financial advisor or from a previous employer.

Directly held investments also constitute a significant category. This includes individual stocks or bonds purchased directly, rather than through a brokerage account managed by a primary advisor. Real estate holdings, whether a primary residence, investment properties, or vacation homes, are almost always considered assets held away because they are illiquid and require specialized valuation.

Less conventional investments, such as private equity or venture capital investments, also fit this definition. These assets are typically illiquid and held for long periods, often managed by specialized funds outside the purview of a general financial advisor. Collectibles like art, antiques, or stamps represent another form of held-away assets, valued for their historical or aesthetic significance rather than traditional financial returns.

Annuities or life insurance policies issued by different providers than one’s primary financial institution are also considered assets held away. Even bank accounts or certificates of deposit (CDs) held at institutions separate from one’s main banking relationship can be classified this way. Inherited assets, particularly those held in separate trusts or accounts established by the grantor, often remain outside the direct management of an individual’s primary financial advisor.

Why Tracking These Assets Matters

Tracking assets held away is fundamental for a comprehensive understanding of one’s financial position. It provides a complete picture of an individual’s total net worth, crucial for accurate financial planning, including setting goals for retirement or education funding. Without this holistic view, financial projections can be inaccurate, potentially leading to misinformed decisions.

Accounting for all assets is also essential for effective estate planning. Ensuring that every asset, regardless of where it is held, is documented and considered within wills, trusts, and succession plans helps facilitate a smooth transfer of wealth. This minimizes potential disputes and ensures that an individual’s wishes are honored upon their passing.

Tracking these assets supports risk management and tax planning. Knowing the total asset allocation across all holdings helps individuals understand their overall diversification and exposure to various market risks, allowing for adjustments to maintain a balanced portfolio. For tax purposes, accurately reporting all income, gains, and losses from diverse sources is a legal obligation and prevents unforeseen tax liabilities.

Providing a complete overview of all assets to financial advisors enables more comprehensive guidance. With full visibility into an individual’s entire financial landscape, advisors can develop strategies that align with overall financial goals, rather than just focusing on the portion of assets they directly manage. This collaboration enhances the quality of financial advice received.

Managing and Tracking Assets Held Away

Managing and tracking assets held away begins with centralizing information. Individuals can create a detailed record, such as a spreadsheet or secure digital document, listing all account numbers, the institutions holding the assets, the specific types of assets, and their approximate values. This consolidated record serves as a single point of reference for all financial holdings.

Regular review of this centralized information is important, ideally on an annual basis or whenever significant life events occur. This periodic check allows for updating asset values, confirming beneficiary designations, and ensuring all contact information for institutions is current. Staying organized with these details helps prevent oversights and simplifies financial administration.

Leveraging technology can streamline the tracking process. Some personal finance software or financial aggregation tools offer features to link to various accounts, providing a consolidated view of an individual’s financial picture. While convenient, it is important to exercise caution regarding security considerations and choose reputable platforms that prioritize data protection.

Open communication with financial advisors, estate planners, and tax professionals is also a practical step. Sharing comprehensive information about assets held away allows these professionals to provide coordinated planning and advice, ensuring that all aspects of an individual’s financial life are considered. This collaborative approach leads to more cohesive and effective financial strategies.

Maintaining organized and secure records of all related documents is a practical measure. This includes statements, deeds for real estate, and policy documents for insurance or annuities. Keeping these documents in a secure location, whether physical or digital, ensures they are readily accessible when needed for review, planning, or in the event of an emergency.