--- title: How Financial Advisors Are Helping Clients Unlock Real Estate Assets description: With the current volatility and uncertainty of equity markets, some of your clients may be considering or already hold alternative investments, like collectibles, commodities, or real estate. Learn more about how you can help your clients unlock real estate assets. image: https://www.realized1031.com/hubfs/formsadvisor-842865000.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # How Financial Advisors Are Helping Clients Unlock Real Estate Assets Posted Feb 28, 2023 ![formsadvisor-842865000](https://www.realized1031.com/hs-fs/hubfs/formsadvisor-842865000.jpg?width=750&height=498&name=formsadvisor-842865000.jpg)With the current volatility and uncertainty of equity markets, some of your clients may be considering or already hold alternative investments, like collectibles, commodities, or real estate.  In a [recent Investment News article](https://www.investmentnews.com/3-questions-to-ask-retirement-clients-about-their-real-estate-investments-226951), Rob Johnson, who heads up wealth management for Realized, suggested that financial advisors ask clients about all investments (traditional and alternative). He also indicated that many financial advisors may not ask their clients about their real estate holdings. This is because investment real estate can be outside of the typical advisor’s purview.   This shouldn’t be the case. It’s important to know where all of your clients’ assets are held. That knowledge provides you with a more accurate view of their overall asset allocation. So, the first thing to do is ask your clients about their real estate assets. And second, discuss potential benefits of moving from direct ownership into passive real estate investments.  One way for clients to accomplish this is by selling their investment properties and investing the proceeds (via [the 1031 exchange process](https://www.realized1031.com/glossary/1031-exchange)) into [Delaware Statutory Trusts](https://www.realized1031.com/blog/what-is-a-dst-and-how-are-they-used-for-1031-exchanges) (DSTs).  ### Benefits to Clients  Moving investment properties into Delaware Statutory Trusts may offer the following advantages to your clients:  Potential tax advantages. The 1031 exchange process can help investors defer [capital gains taxes](https://www.irs.gov/taxtopics/tc409) and [depreciation recapture expenses](https://www.irs.gov/faqs/sale-or-trade-of-business-depreciation-rentals/depreciation-recapture) triggered by the sale of real estate assets.  Increased portfolio diversification. Real estate-supported DSTs can aid in portfolio diversification. These assets generally don’t correlate with market movements. Furthermore, real estate assets can possibly be used as hedges against inflation, depending on product type and class.  Supports passive ownership. DST trustees handle the acquisition and management of properties. This removes investors from the landlord headaches of direct ownership, while potentially increasing the advantages of [passive ownership](https://www.lawinsider.com/dictionary/passive-real-estate-ownership#:~:text=Passive%20Real%20Estate%20Ownership%20means%20the%20ownership%20of%20real%20estate,speculation%2C%20trade%2C%20or%20rental.).  ### Benefits to Advisors  When your clients exchange their investment real estate into DSTs, you can benefit in the following ways:  More effective tracking. Unlike individual investment property holdings, DSTs become assets under management, therefore offering a more comprehensive view of your clients’ holdings, asset allocation, costs, returns, and value.  Efficient holistic focus. Understanding the entirety of your clients’ investments can help you better formulate effective strategies to meet specific goals and objectives.   ### Ask the Questions, then Act  Asking your clients about their real estate holdings, then presenting the option of a 1031 exchange into DSTs can provide a host of benefits for you both. Clients continue to benefit from possible portfolio diversification and potential tax advantages. And you can better help develop plans and strategies to help your clients achieve their investment goals.  *This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. * *All real estate investments have the potential to lose value during the life of the investment. All financed real estate investments have the potential for foreclosure. * *The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. * *Costs associated with a 1031 transaction may impact investor’s returns and may outweigh the tax benefits. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. * *No public market currently exists, and one may never exist. DST programs are speculative and suitable only for Accredited Investors who do not anticipate a need for liquidity or can afford to lose their entire investment. * *All investments have an inherent level of risk. The value of your investment will fluctuate with the value of the underlying investments. You could receive back less than you initially invested and there is no guarantee that you will receive any income. * *Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. * Ready to Learn More? 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("Realized Holdings"). Check the background of this firm on [FINRA's BrokerCheck](https://brokercheck.finra.org/firm/summary/22333). Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment. Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain and should not be deemed a complete investment program. The value of the investment may fall as well as rise and investors may get back less than they invested. 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In a recent Investment News article, Rob Johnson, who heads up wealth management for Realized, suggested that financial advisors ask clients about all investments (traditional and alternative). He also indicated that many financial advisors may not ask their clients about their real estate holdings. This is because investment real estate can be outside of the typical advisor’s purview. This shouldn’t be the case. It’s important to know where all of your clients’ assets are held. That knowledge provides you with a more accurate view of their overall asset allocation. So, the first thing to do is ask your clients about their real estate assets. And second, discuss potential benefits of moving from direct ownership into passive real estate investments. One way for clients to accomplish this is by selling their investment properties and investing the proceeds (via the 1031 exchange process) into Delaware Statutory Trusts (DSTs). Benefits to Clients Moving investment properties into Delaware Statutory Trusts may offer the following advantages to your clients: Potential tax advantages. The 1031 exchange process can help investors defer capital gains taxes and depreciation recapture expenses triggered by the sale of real estate assets. Increased portfolio diversification. Real estate-supported DSTs can aid in portfolio diversification. These assets generally don’t correlate with market movements. Furthermore, real estate assets can possibly be used as hedges against inflation, depending on product type and class. Supports passive ownership. DST trustees handle the acquisition and management of properties. This removes investors from the landlord headaches of direct ownership, while potentially increasing the advantages of passive ownership. Benefits to Advisors When your clients exchange their investment real estate into DSTs, you can benefit in the following ways: More effective tracking. Unlike individual investment property holdings, DSTs become assets under management, therefore offering a more comprehensive view of your clients’ holdings, asset allocation, costs, returns, and value. Efficient holistic focus. Understanding the entirety of your clients’ investments can help you better formulate effective strategies to meet specific goals and objectives. Ask the Questions, then Act Asking your clients about their real estate holdings, then presenting the option of a 1031 exchange into DSTs can provide a host of benefits for you both. Clients continue to benefit from possible portfolio diversification and potential tax advantages. And you can better help develop plans and strategies to help your clients achieve their investment goals. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. All real estate investments have the potential to lose value during the life of the investment. All financed real estate investments have the potential for foreclosure. The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. Costs associated with a 1031 transaction may impact investor’s returns and may outweigh the tax benefits. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. No public market currently exists, and one may never exist. DST programs are speculative and suitable only for Accredited Investors who do not anticipate a need for liquidity or can afford to lose their entire investment. All investments have an inherent level of risk. The value of your investment will fluctuate with the value of the underlying investments. You could receive back less than you initially invested and there is no guarantee that you will receive any income. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.", "articleSection" : [ "Real Estate Investing" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-02-28T23:08:58+0000", "datePublished" : "2023-02-28T23:08:58+0000", "description" : "With the current volatility and uncertainty of equity markets, some of your clients may be considering or already hold alternative investments, like collectibles, commodities, or real estate. 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