Aligning assets and liabilities to manage financial risks.
Description
Asset-liability management (ALM) ensures a family office’s investments match its obligations, like trust distributions or pension payments, to mitigate liquidity or interest rate risks. Wealth managers use ALM to balance cash flows and durations, especially in fixed-income portfolios. Misalignment can lead to funding shortfalls, requiring dynamic adjustments. It’s critical for long-term financial stability.
