Which term describes clients lacking sufficient assets to meet future liabilities?

The term that best describes clients lacking sufficient assets to meet future liabilities is "Underfunded Clients." This designation highlights the financial situation where a client's assets fall short of the amount needed to cover anticipated future obligations or liabilities, such as retirement expenses, educational costs, or debt repayment.

Understanding this concept is crucial in portfolio management, as recognizing underfunding is essential for developing strategies that can help these clients improve their financial positions. For instance, investment strategies may need to be tailored to enhance growth potential or to reassess risk tolerance to ensure that the clients can build sufficient assets over time. This distinction serves as a clear indicator for financial advisors to focus their efforts on creating actionable plans that address the funding gap.

In contrast, adequately funded clients have sufficient resources to meet their liabilities, overfunded clients have excess assets beyond what is needed for future liabilities, and high net-worth clients simply denote individuals with a significant accumulation of wealth, not necessarily reflecting their adequacy in meeting future obligations. Recognizing these differences allows for more precise financial guidance tailored to the specific needs of different client segments.