Five Ways Securities-Based Lending Unlocks Opportunities for Advisors and Clients

JERSEY CITY, N.J. – According to a new whitepaper, “Win. Grow. Retain. How to enrich your business with smart liability management,” released today by BNY Mellon’s Pershing (Pershing), advisors have a unique opportunity to address the rapidly changing needs of affluent clients through securities-based lending.

“Securities-based lending allows clients to quickly seize opportunities and meet today’s business and personal needs without sacrificing tomorrow’s goals,” says Katie Swain, director, Global Strategy & Product Management at BNY Mellon’s Pershing. “By expanding wealth management services to include lending, advisors can make their business more comprehensive and competitive—all while deepening relationships with current clients and the next generation.”

By definition, high-net-worth and ultra-high-net-worth clients have enough assets to fund their lifestyles and meet their financial goals. However, if they need to make large purchases, pay a capital gains tax or invest in their businesses, selling their investments can interfere with their wealth management plan, carrying unintended consequences like taxes and opportunity costs.

“Borrowing can enhance an investors’ wealth management plan and investment strategy, but this source of liquidity should come from an advisor who understands their entire financial picture,” adds Swain.

Securities-based lending offers an effective approach, allowing advisors and clients to:

• Enhance Value Proposition and Turn Prospects into Clients: Providing resources for credit needs can differentiate advisors from the competitors that are focused on the asset side of the balance sheet. Centers of influence (COIs), such as CPAs, and divorce and estate attorneys, may be more willing to refer clients if they know liability management is offered—many of their clients require ready access to financing for items like tax bills, divorce settlements or real estate bridge loans.

• Grow and Strengthen Client Relationships: Discussing securities-based lending with existing clients can provide two opportunities. First, existing clients who need liquidity may be encouraged by the conversation to consolidate assets in order to qualify for a larger line of credit. Second, it allows advisors to deepen client relationships by opening the door for new conversations.

• Retain Assets and Clients: Providing alternative sources of liquidity can prevent clients from selling part of their investment balances and make assets difficult to unwind. Beyond this, offering securities-based lending can help protect clients from forming relationships with other advisors. According to research from Aite Group, lending relationships, regardless of the amount loaned, are the primary cross-sell channel for non-credit products.

• Meet Unexpected Client Needs: Many wealthy individuals are business owners, corporate executives, or hedge fund or private equity partners. As a result, they may need a source of liquidity for working capital, investment opportunities or unforeseen expenses, positioning them to move as quickly as they need.

• Keep Long-Term Investment Strategy Intact: Selling investments to generate liquidity can be costly in terms of expenses and missed opportunities. Securities-based lending allows clients to remain invested and continue to participate in markets.

For more information on BNY Mellon’s Pershing Lending Solutions, please click here. To access the full paper, please visit www.pershing.com/perspectives/win-grow-retain.