This hesitation is understandable. Tied assets are frequently and prematurely equated with periodic life insurance products – instruments often sold to younger individuals with limited assets as savings vehicles. That is not what this article refers to. Such products generally offer little strategic value in professional financial planning.

What is meant here is the deliberate use of tied assets as an independent portfolio component within more complex wealth structures.

In Switzerland, tied assets are subject to strict regulatory requirements. Under the Insurance Supervision Act, life insurers must fully secure policyholder claims through a segregated pool of assets, including mandatory safety buffers. These assets are reserved exclusively for policyholders and remain ring-fenced even in the unlikely event of insolvency. Compliance is monitored on an ongoing basis by FINMA.

From a financial planning perspective, the legal structure itself is less important than its economic implications. Tied assets are invested with a long-term, conservative and broadly diversified approach. The allocation typically focuses on bonds, real estate and mortgages, complemented by a deliberately limited equity exposure. The objective is not maximum return, but stability, predictability and continuity of income.

This is precisely where their relevance for affluent investors lies. In modern portfolio theory, the decisive factor is not the isolated return of an asset, but its contribution to the overall efficiency of the portfolio. Low volatility, limited correlation with risk-heavy assets and smoothed returns can materially improve the risk-return profile, even if individual components do not deliver headline-grabbing performance.

In this context, the inclusion of tied assets can improve the Sharpe ratio of an existing portfolio – not by increasing returns, but by reducing volatility and stabilising cash flows. For investors with substantial equity exposure or entrepreneurial risk, this creates a counterbalance that allows risk to be taken deliberately where it is most likely to be rewarded over the long term.

Such an approach presupposes a certain level of structural complexity. It is not designed for simple wealth situations, but for portfolios where assets are viewed functionally. Not every investment serves the same purpose; rather, wealth is allocated across different roles, such as growth-oriented assets, stabilising components and planning-relevant reserves.

In this framework, tied assets are not return-driven instruments. They function as stabilisers, reducing overall portfolio risk, increasing predictability and decoupling specific asset segments from short-term market fluctuations. Institutional investors and family offices have long applied this logic. In private wealth management, however, it remains widely underutilised.

From a holistic financial planning perspective, tied assets are therefore neither a substitute for equities nor a solution for every life stage. They are a specialised building block which, when applied in the right structure and at the right time, can make a meaningful contribution to portfolio robustness.

Not loud. Not spectacular. But effective.