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How Advisors Can Help HNW Clients Use Finance in 2022

17th January 2022
Simon Everett HEAD OF GLOBAL BUSINESS DEVELOPMENT

Simon Everett

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How Advisors Can Help HNW Clients Use Finance in 2022
HEAD OF GLOBAL BUSINESS DEVELOPMENT

Simon Everett

What’s the best way for high-net-worth individuals to maximise the effectiveness of finance and benefit most from its use? Here are four of the best ways your clients can use finance in 2022. 

Help clients access the best opportunities

Financing increasingly makes sense for sophisticated investors and high-net-worth investors, especially considering the wider economic situation. Economic growth looks to be slowing, and many people who leveraged investments in the past couple of years now need to repay debt. The vast majority of people who need to do this are not high-net-worth investors with other assets to fall back on or utilise. For these people, selling investments will be their only option to access net returns and pay off the principal loan amount. Selloffs inevitably lead to price drops leaving opportunities for those with liquidity to snap up highly competitive deals. 

Financing works in one of two ways here. One option is that your clients raise debt to make investments they don’t want to finance. In these cases, they may look to buy property, luxury assets, or grow a business using finance, leaving them liquid to make other purchases or investments. 

The second option is to finance the opportunity itself as it arises using your clients’ existing assets as collateral. Cryptocurrency finance, securities-backed lending and bridging finance are quick ways to do this. 

Facilitate clients’ global projects

We’ve also seen a new trend of high-net-worth individuals considering the geographic spread of their wealth very carefully. Your clients are likely contemplating:

  • The countries where there are new opportunities for high ROI investments (be this property, business growth, investments etc.)
  • The locations of their tangible assets (particularly investment property) and if there is a possibility to raise capital to broaden the geographic spread of their portfolio in search of future returns.

International debt has a reputation for being complex and challenging to achieve, but we can easily arrange finance for international investments, foreign nationals, and cross-border deals. We believe raising debt is one of the easiest ways to pursue global opportunities and deploy funds internationally, even if your clients need significant capital. 

Reduce tax liability

Many high-net-worth individuals and advisors are increasingly using debt to minimise tax exposure. Every individual will need independent tax advice here, but financing is becoming one of the most accessible and most beneficial routes to reducing fiscal liability. Often, debt offers the possibility to offset a tax burden (or not to trigger a taxable event in the first place). 

Financing will be available to most of your clients. Offsetting and benefitting from debt is often fast and easy to arrange, even in the context of increasingly complex fiscal landscapes. Depending on how your client structures their wealth and what they need to finance, the cost of borrowing capital can be less than the tax bill otherwise incurred.

Put clients’ existing assets to work 

The pandemic has shaped how wealthy individuals and families plan and structure their wealth. We’ve also seen more consideration of the assets our clients what to own and enjoy for their personal use, and we expect you will have seen the same. The sweet spot usually sits at the meeting point of assets that bring real pleasure to own, but that will also appreciate in value - art, luxury assets, second and third homes and so on.

Increasingly, your clients will be considering using existing assets as security for these new purchases rather than buying in cash. Using an existing property portfolio, securities or cryptocurrency investments as collateral to facilitate these purchases is increasingly the norm. Learn more about crypto real estate here. We’re receiving more calls from advisors asking us to deliver a comprehensive financing solution for high-net-worth individuals in a way that uses existing assets most effectively.

As an advisor, you don’t need to know which of your client’s assets are best used for raising finance. We can look at your client’s situation holistically and suggest the vehicle which will be most fiscally attractive, maximise LTV and is easy to organise.

Enness’ offering

Enness brokers high-value, cross-border finance. We specialise in brokering significant mortgages, securities lending, private debt, luxury finance, bridging finance, corporate finance and real estate finance. No matter how much your client wants to borrow or where in the world they want to deploy their capital, we will source and negotiate a personalised finance package from our network of more than 500 lenders.