Protection isn’t an add-on, it’s the financial resilience portfolio foundation

In this article, Gregor Sked argues that protection should no longer be viewed as a “missing asset class”. Instead, it deserves its place as the foundation of a client’s financial resilience portfolio, one that underpins every successful client plan when life takes an unexpected turn.

In the ever-evolving landscape of wealth management, advisers are constantly seeking new ways to add value to clients’ portfolios. In 2024 I wrote an article for IFA Magazine readers, looking at the idea that to help position protection within the wealth space, we should be thinking of protection as the missing asset class within a client’s portfolio. It was an argument that I hoped would help advisers visualise protection alongside equities, bonds and property. Looking back, it feels like I was approaching it from the wrong direction. 

Protection isn’t competing for returns, correlation or performance tables. Its role is simpler, and far more fundamental, it’s there to ensure a financial plan still works when life doesn’t go to plan. 

So, rather than thinking of protection as a missing asset class, should we reframe protection as a financial resilience portfolio?  

From asset class to resilience framework

After all, investment portfolios are designed to manage uncertainty. Clients diversify against risk because markets fluctuate and outcomes are generally unpredictable. While many advisers already incorporate protection into their cash flow modelling and financial plans, it remains vital to regularly review their assumptions of income sustainability and health, now and into the future, and the timing of death, ensuring that these factors are given due consideration alongside market risks. 

When those assumptions fail, it’s rarely investment volatility that causes the damage. It’s the sudden loss of income, an unexpected inheritance tax bill, or the absence of liquidity when it’s needed most. 

Protection doesn’t generate growth; it provides stability. And stability is what allows every other part of the plan to function. It’s the age-old concept of protection being the bedrock of financial planning. 

Building the resilience portfolio

So, how do we build a financial resilience portfolio? Instead of starting with policies, it starts with some simple questions for clients. 

•    What happens to this plan if income stops?
•    What happens if illness changes your working life?
•    What happens if death comes earlier than expected?
•    Where does liquidity come from at exactly the point it’s needed? 

Each of these risks creates a different financial shock and each requires a different response. Together, they form a framework that allows you to position protection in a way that’s not product led, but outcomes led.   

 

Life event	Financial response	Potential solution (personal and business protection)
Premature death	Covering lost income, debt exposure and tax liabilities	Family Income Benefit, Term Assurance, Whole of Life
Serious illness	Addressing short‑term costs and longer‑term lifestyle change	Critical Illness, Children’s Critical Illness
Injury or incapacity	Protecting ongoing income and preserving assets	Income Protection
Death with tax exposure	Ensuring liquidity without asset disruption	Whole of life, Gift inter vivos, Joint Life Second Death

When we look at it this way, life cover, income protection and critical illness cover aren’t separate recommendations. They’re components of a single resilience strategy. 
 
Why resilience matters more than ever

Frozen nil rate bands, rising asset values and reforms to agricultural and business property relief all point in the direction of more estates becoming likely to face an inheritance tax liability. 

Liquidity risk matters

For many families, the main challenge is not the inheritance tax bill itself, but having enough accessible cash to pay it when it becomes due.

•    Assets may be valuable but difficult to access quickly.
•    Relying on future funds being available can leave clients exposed.
•    A resilience portfolio helps address this liquidity risk before it creates disruption.

Research consistently shows that a significant proportion of working age adults would struggle to cover even a short period without earnings, and that vulnerability isn’t limited to lower earners or younger clients.  

The FCA’s work on the pure protection market has also put a greater emphasis on engagement, suitability, and evidencing value in protection advice. Under Consumer Duty, advisers are expected to consider whether foreseeable risks to a client’s financial well-being have been appropriately addressed. When income loss, health shocks or liquidity at death can derail a plan, resilience planning becomes less about optional add-ons and more about core advice quality.

If we accept protection as part of a resilience portfolio, client reviews become even more important, as the components of the resilience portfolio must be monitored and reviewed in case a client’s exposure to financial risk has changed. That might be driven by income growth or volatility, family circumstances, changing health or work patterns or an increased tax exposure.  
Reviewing resilience alongside investments and pensions creates a more joined-up planning conversation and one that puts protection front and centre, not at the bottom.

Investments grow wealth. Pensions manage tax and retirement plans. Estate planning shapes legacy. But without resilience, all of these rely on an assumption that nothing significant goes wrong along the way. 
A financial resilience portfolio doesn’t remove risk from life; instead, it prevents life’s shocks from derailing the plan. So, in that sense, protection isn’t the missing asset class at all. It’s the foundation that allows every asset class to do its job. 
 
This article was first published in IFA Magazine, 16 April 2026.