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Help Them to Help You: Lending Enhancement Could Bring More Managed Account Clients and Assets Your Way

Issue 2 - June 2007

LoanAdvance® is a lending solution that allows you to expand your role as an investment professional and make you an instrumental force in multiple aspects of your clients’ financial lives. It gives you the tools necessary to support both sides of clients’ balance sheets, increasing the likelihood that they will entrust additional assets to you, and expanding the scope of your relationship.

Managed Accounts and LoanAdvance: What You Need to Know
This securities-based consumer lending tool offers your clients access to credit lines. When clients require liquidity—whether to fund college, renovate their homes, or even expand their businesses—LoanAdvance provides an easy, convenient way to free up funds for most business and personal reasons, with the exception of the purchase of securities. LoanAdvance was recently enhanced to leverage assets held in managed accounts as collateral for a loan. The Boston-based research firm TowerGroup estimates that separately managed account assets (SMAs) will hit the trillion-dollar mark this year. Chances are that a substantial number of your clients’ portfolios are structured as SMAs.

"LoanAdvance provides an easy, convenient way to free up funds for most business and personal reasons…"

In addition to broadening your product arsenal, LoanAdvance facilitates streamlined, yet comprehensive, money management—as long as the equity and collateral remain at an acceptable level. Portfolios may be rebalanced in clients’ existing managed accounts, even though they have been pledged as collateral for their loans. LoanAdvance for managed accounts provides the opportunity to help you meet your clients’ liquidity and lending needs without having to liquidate securities.

Selling points your clients will be happy to hear

  • Quick and easy - There is no need to fill out mountains of paperwork, as when applying for a personal loan, second mortgage, or home equity line-of-credit. LoanAdvance allows a client to have access to cash without hassling with closings, attorneys, credit checks, and appraisals. Purchasing power is created with a simple signature on a LoanAdvance Lending Agreement, Form T-4, and a Restricted/Control Stock Disclosure and Interest Rate Acknowledgment form. Once the line-of-credit is established, funds can be easily accessed by requesting a check or wire transfer.
  • Less costly - Unlike other traditional consumer lending vehicles, there are no points, application, or origination fees—only a competitively priced monthly interest charge once a loan is drawn. The rate is based on the prime rate or the federal funds target rate, which is often lower than standard bank loans or credit cards. Furthermore, as long as adequate collateral is maintained in the LoanAdvance account, there is no fixed payment schedule; your clients can pay down the loan amount at their discretion, without prepayment or other penalties.
  • Increased flexibility - Clients who use LoanAdvance for managed accounts can borrow up to 70% of the value of their qualified securities (equity, mutual fund, and investment-grade corporate or municipal bonds), and up to 90% of U.S. Treasury securities—as opposed to 50% in a standard, traditional margin account.

To extend the reach and value of your services, LoanAdvance is now also available to clients domiciled in certain areas outside the United States. However certain restrictions vary by state. For additional detailed information about LoanAdvance and the new managed accounts enhancement, contact your home office today.

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