How Advisers Can Help HNW Clients Navigate Volatile Market

How Advisers Can Help HNW Clients Navigate Volatile Market

Islay Robinson

Your clients won’t simply stop needing to access debt and finance just because there is uncertainty in global markets. They will still need to borrow capital to move projects forward, capture opportunities and unlock deals. If you work with or advise ultra or high-net-worth individuals, what can you do to help your clients navigate today's volatile market, maximising what they can borrow and minimising costs?

Remain ready to capture potential opportunities

In our experience, headwinds and unpredictable markets rarely, if ever, mean there is a complete absence of opportunities. Certainly, some individuals will need to ride out volatility. In contrast, for others, there will be an unexpected upside. Volatility can be a great precursor to market consolidation, leading to M&A opportunities, for example. Some businesses will find they can make a play for market share or expand a business, even in a downturn. In other cases, high-value assets become available at "bargain" prices. The possibilities are endless, but the common denominator in any of these cases is that these opportunities will only be available to your clients if they have the capital to support pursuing them.

At the point of opportunity – whenever that is – liquidity is obtained in one of two ways: either your client has access to their own capital, or they can raise debt. Depending on your client’s ambitions, the project and their existing assets, corporate finance, bridging finance, securities-backed lending (including pre-IPO loans and loans secured against a single line of stock), crypto finance and mortgages may all be possibilities. 

When it comes to debt and financing, we always suggest that advisers think medium to long-term on behalf of their clients, especially if the markets are uncertain. Yes, your client can buy a property today mortgage-free for £5 million. But if doing so means they have little liquidity to capture opportunities and execute plans in the next couple of years, might a mortgage be more beneficial from a long-term perspective? 

Whatever you can do to be proactive about securing finance for your clients ahead of time will help – even if this is just understanding the lender landscape and what lenders want to see in exchange for the best rates. This is especially helpful if there is something you can do now to put your client on a firmer footing and, by extension, lay the groundwork for better rates later. We can help you identify how to do this, as well as talking you through the options that will be on offer for your client.

Access the largest lender network possible

If your client needs finance, "waiting things out" for more favourable market conditions isn't usually an option – projects need to move forward. If the opportunity to expand a business comes up due to high demand or a potential buy-out of a competitor is on the table, this isn’t something your client can simply sit on – they will need to raise capital quickly to capture the opportunity and move the project forward. The same will be true if they need capital for other reasons: to consolidate debt, release equity from a property to create liquidity, purchase real estate in the UK or abroad or make another high-ticket investment. That said, volatile market can sometimes coincide with periods of time when your client – even if they are an UHNWI – are more likely to be turned down by lenders. This usually reflects lender appetite for certain types of deal, or a more cautious approach to risk during a particular period rather than due to the quality of your client or their plans. 

Over the past fourteen years, we've seen our fair share of ups and downs in the market, and we have brokered competitive finance deals in all of them. In our experience, in volatile market, the borrowers who get the best deals are invariably the ones who have the most extensive access to lenders. For the right clients, negotiation is always a possibility. However, finance applications have to be presented in a way that invites a conversation around rates and terms, rather than just simply passing on the basic information requested by the lender. 

If you are approaching lenders on behalf of a client and they have been turned down for finance elsewhere, it's also important not to jump at the first lender who approves a loan, thinking it's the only option you'll secure. Getting the best package for your client will depend first on approaching the lenders best placed to offer finance and, secondly, presenting them with a watertight case. This usually includes offering a complete oversight of your client's finances and pre-emptively addressing questions that the lender will raise. Understanding what these questions will be before even approaching the lender is its own speciality and one where Enness excels.

Work backwards from assets

Flexibility and an ability to look at the bigger picture make a tangible difference to what deals will be on offer to your client in volatile markets. Our approach is to consider all your client's global assets and net worth within the context of their wider plans to positively influence what they can borrow and costs. Practically, this means we don't say, 'The client wants to borrow £4 million to buy a £5 million house. What's the best mortgage on the market?' Instead, we consider all the types of finance that your client could use to raise the £4 million most effectively based on their assets, including lending against multiple asset classes. This isn't to say that the most obvious finance product isn't the right option – sometimes it will be. But especially in volatile market, the various finance options on offer might be worth exploring, especially when doing so opens the door to more lenders and products. Crypto finance, securities-backed lending, bridging loans and luxury asset finance are all on offer.

No matter your client’s scenario and whatever they want to finance, our Private Client Adviser Guide explains how Enness will work in a way that compliments your approach, your work, and your goals.