Building a Stronger Financial Strategy with Liability Planning

In today’s increasingly complex financial landscape, effective wealth management requires more than simply focusing on assets. Liability planning plays a critical role in ensuring your financial strategy is both comprehensive and resilient, helping you align your borrowing decisions with your broader long-term goals.

At its core, liability planning considers your entire financial picture, both assets and liabilities, to create a more holistic and cohesive wealth management plan. By integrating debt strategies alongside investment planning, you gain a clearer understanding of how each component of your financial life works together, ultimately maximizing the value of the time and effort you invest in planning.

Liability planning delivers a range of strategic advantages, including:

• Ready Liquidity – Provides access to cash for planned and unexpected opportunities
• Stay Invested – Keeps long-term goals on track and avoids unexpected asset sales
• Tax Efficiency – Helps avoid triggering taxes from selling appreciated holdings¹
• Family Support – Can support education, housing and healthcare needs without transferring assets
• Estate Readiness – Supplies short-term liquidity for estate and transition expenses

A key component of effective liability planning is the thoughtful use of financing strategies such as securities-based lending. By leveraging eligible investment portfolios as collateral, securities-based lending allows you to access liquidity without liquidating assets. This can be particularly valuable if you want to remain fully invested while still meeting cash flow needs or pursuing new opportunities. In doing so, securities-based lending supports many of the core benefits of liability planning - helping you stay invested, maintain tax efficiency, and avoid disruptions to your long-term strategy.

Securities-based lending also enhances flexibility. Because access to capital is tied to existing holdings, you can respond more quickly to time-sensitive opportunities such as real estate purchases, business investments, or strategic expenditures. Rather than waiting to sell assets or restructure your portfolio, you can act with confidence, knowing liquidity is readily available when needed.

Ultimately, liability planning is about preparedness. It ensures you have reliable access to cash when timelines are unpredictable and decisions need to be made quickly. By integrating liabilities into your financial strategy, you create a more adaptable, forward-looking plan - one that supports both your immediate needs and your long-term financial ambitions.

Talk to a Wells Fargo Advisors financial advisor for personalized guidance about how strategic borrowing could complement your long-term financial goals.

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¹ Wells Fargo Advisors and its affiliates are not tax or legal advisors. Wells Fargo Advisors does not provide legal or tax advice.

² Non-purpose credit line proceeds may not be used to purchase or carry margin stock or pay down a margin account debit.

Securities-based lending has special risks and is not appropriate for everyone. If the market value of a client’s pledged securities declines below required levels, the client may be required to pay down the line of credit or pledge additional eligible securities in order to maintain it, or the lender will require the sale of some or all of the client’s securities. Wells Fargo Advisors, on behalf of Wells Fargo Bank, N.A., will attempt to notify clients of maintenance calls but is not required to do so. Clients are not entitled to choose which securities in their accounts are sold. The sale of their securities may cause clients to suffer adverse tax consequences. Clients should discuss the tax implications of pledging securities as collateral with their tax advisors. An increase in interest rates will affect the overall cost of borrowing. All securities and accounts are subject to eligibility requirements. Clients should read all Wells Fargo Bank Priority Credit Line documents carefully. The proceeds from the Wells Fargo Bank Priority Credit Line may not be used to purchase or carry margin stock or pay down a margin account debit (talk to your financial advisor about additional restrictions on the use of proceeds). Margin stock is defined in Regulation U and includes, principally: (1) stocks that are registered on a national securities exchange or any over-the-counter security designated for trading in the National Market System; (2) debt securities (bonds) that are convertible into a margin stock; and (3) shares of most mutual funds. Securities held in a retirement account cannot be used as collateral to obtain a securities-based loan. Securities in a Wells Fargo Bank Priority Credit Line collateral account must meet collateral eligibility requirements.

Wells Fargo Bank Priority Credit Lines are offered by Wells Fargo Bank, N.A. as the lender, in partnership with Wells Fargo Clearing Services LLC as agent, servicer and intermediary holding the collateral accounts.

There are conflicts of interest when Wells Fargo Advisors recommends that you use a loan secured by your Wells Fargo Advisors account assets as collateral. Wells Fargo Advisors and its Financial Advisors have a financial incentive to recommend the use of securities-based lending products rather than the sale of securities to meet client liquidity needs. Financial Advisors will receive compensation on the outstanding loan balance in your Wells Fargo Bank Priority Credit Line account. In addition, your Financial Advisor’s compensation will be reduced if your interest rate is discounted below a certain level. There is an incentive for Financial Advisors to recommend the Wells Fargo Bank Priority Credit Line and other securities-based lending products, such as Margin, as well as an incentive to encourage you to maintain a larger loan balance and to discourage interest rate discounts below a certain level. The interest you pay for the loan is separate from, and in addition to, other fees you may pay related to the investments used to secure the loan; such as ongoing investment advisory fees (wrap fees) and fees for investments such as mutual funds and exchange traded funds, for which Wells Fargo Advisors and/or our affiliates receive administrative or management fees or other compensation. Specifically, Wells Fargo Advisors benefits if you draw down on your loan to meet liquidity needs rather than sell securities or other investments, which would reduce our compensation. When assets are liquidated pursuant to a maintenance call or demands for repayment, Wells Fargo Advisors and your Financial Advisor also will benefit if assets that do not have ongoing fees (such as securities in brokerage accounts) are liquidated prior to, or instead of, assets that provide additional fees or revenues to us (such as assets in an investment advisory account). Further, different types of securities have higher release rates than others, which can create a financial incentive for your Financial Advisor to recommend products, or manage the account, in order to maximize the amount of the loan.

Wells Fargo Bank, N.A. has a lien on the account assets that are used as collateral for the Wells Fargo Bank Priority Credit Line. We will act to protect ourselves as the lender in connection with the loan and this may be contrary to your interests and/or investment objectives. This lien also creates a conflict of interest with respect to the recommendations your financial advisor makes to you. For example, your financial advisor may recommend that you allocate your investments to your collateral account pledged for the loan rather than to another account that is not pledged. Also, your financial advisor may recommend an investment solely to minimize the risk of loss with respect to the collateral.

Margin borrowing may not be appropriate for all investors. When you use margin, you are subject to a high degree of risk. Market conditions can magnify any potential for loss. The value of the securities you hold in your account, which will fluctuate, must be maintained above a minimum value in order for the loan to remain in good standing. If it is not, you will be required to deposit additional securities and/or cash in the account or securities in the account may be sold. Clients are not entitled to choose which securities in their accounts are sold. The sale of their pledged securities may cause clients to suffer adverse tax consequences. Clients should discuss the tax implications of pledging securities as collateral with their tax advisors. An increase in interest rates will affect the overall cost of borrowing. Margin strategies are not appropriate for retirement accounts. Please carefully review the Margin Agreement, which explains the terms and conditions of the margin account, including how the interest on the loan is calculated.

Margin is offered by Wells Fargo Advisors and margin accounts are carried by Wells Fargo Clearing Services, LLC.