Equally important to saving for retirement, financial advisors need to help clients protect what has taken a lifetime to accumulate, and that is especially important given the volatile markets.

Here are some not-so-common accumulation strategies to help safeguard and protect client assets:

1. Prevent another 2008 by using a stop-loss strategy. Adding a stop-loss to a retirement portfolio can increase the longevity of assets and mitigate the impact of tail risk during retirement.

The idea is to have enough equities and cash or “safe” investments in the portfolio so if the market drops suddenly or substantially like it did recently, losses aren’t beyond what is tolerable.

“While tail risk isn’t supposed to happen often, we still have to plan for it,” says Chris Cook, founder and president of Beacon Capital Management in Dayton, Ohio.

“We use a stop-loss strategy on our equity portfolios to prevent catastrophic losses,” he says. “We also use a stop-loss on our clients’ bond portfolios to minimize losses from rising [interest] rates.”

2. Consider cash value build-up insurance for clients. Most people equate insurance with taxes, an unwelcome expense.

But a little-used accumulation strategy is a cash value build-up insurance policy. There are three basic options: whole life, universal life and variable life.

Like most permanent life insurance, each not only has a death benefit but a cash value accumulation feature. The life insurance cash value is the amount of money that must be built up through premiums and investment interest for the length of time the policy is owned.

Securities America Inc. offers its clients, chiefly advisors, indexed universal life, a version of universal life, based on the S&P 500.

“We’re using the indexed [version] because it’s not 100% correlated with the market,” says Zachary S. Parker, a certified financial planner and first vice president of wealth management. “We feel the indexed story is a unique opportunity.”

3. Reduce risk with strategic dollar-cost averaging. Here is a twist on dollar-cost averaging that will protect clients’ accumulated assets and reduce risk, particularly useful during periods of market volatility.

“A great strategy I use regularly is to tilt risk toward an account that you are dollar-cost averaging into, for example, a 401(k). At the same time, we advise to take less in an account that you are not adding into on a regular basis,” says Tony D’Amico, chief executive of The Fidato Group, a registered investment advisor in Strongsville, Ohio.

For example, if clients with a moderate risk profile want to have a 60/40 allocation, they could invest a 401(k) in a 70/30 allocation and the other investment account they aren’t adding to a 50/50 allocation, he says.

If both accounts are the same value, they will blend out to a 60/40 account overall.

“This will allow them to take advantage of dips in the market in the account they are dollar-cost averaging into and at the same time, have less equity risks in their other account while there is market volatility,” D’Amico says.

Bruce W. Fraser, a New York financial writer, contributes to Financial Planning and On Wall Street

This is part of a 30-30 series on retirement planning.

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