Three Ways Advisers Can Help HNWIs Create Liquidity

Three ways advisers can help HNWI create liquidity

Islay Robinson

Liquidity will often represent a competitive advantage for your clients – especially if the economic landscape creates challenges or unexpected opportunities. Whether you need to help your client create liquidity for a specific goal or you are considering how to help your clients access capital at short notice, tailored solutions are imperative. Here are three avenues to explore if your client needs liquidity and how we can support maximising what your client can borrow while structuring the deal to their requirements and assets. 

Refinancing debt

With interest rates almost certainly set to rise again this year, you are probably already thinking about the costs of any existing finance packages your clients have. Debt facilities might be anything from a mortgage to corporate finance. 

If you have recently negotiated a loan, you will probably have secured competitive rates when you arranged finance. However, if you or your client negotiated the facility some time ago, refinancing may be an option to help you secure better rates than a current finance package. Refinancing can offer a myriad of advantages, two of which are likely to be particularly important:

  • You can help buffer your clients against future rate raises 
  • You and your client will have some certainty around the cost of the loan, which will facilitate future cash flow and financial planning

Both will be particularly useful in the context of the rising cost of living, particularly in the UK, where inflation is approaching double figures. 

If you are considering refinancing, it's essential to know that increasing interest rates is not synonymous with a lack of liquidity in the broader market. Lenders – some of whom are seeing reduced borrowing volumes – are keen to take on new business. There is plenty of liquidity available, setting an excellent base for negotiations. 

Enness can help you source refinancing offers for your client, whatever their debt facility. If it's something you are thinking about or would like to explore, get in touch as soon as possible. The more time you have ahead of your client’s current facility coming to an end or the less urgent your timeframe, the better, and the more options we will be able to explore and negotiate for you.  

Asset classes and possibilities

Property tends to be the 'go-to' security for high-net-worth individuals who want to release equity, probably because real estate is the most commonly owned asset class, and the financing mechanisms are the best understood. However, when it comes to equity release, many of your clients will have more than one path to choose from. Real estate aside, corporate finance, bridging finance, securities-backed finance, crypto finance and luxury asset finance may be options, depending on your client's assets and the wealth they have tied up in each. Your client can use all of these assets to release equity, and we can explore the benefits, costs, and what your client can borrow with you.

We often see that if an individual needs liquidity quickly, they will revert back to tried and tested means of achieving this, which aren't necessarily that advantageous to them. For example, many successful business owners or entrepreneurs simply inject their personal wealth into their business rather than raising finance through their company. However, corporate finance is usually very possible and quick to arrange with excellent rates– while supporting a spilt between your client’s personal and business finances. 

Exploring what assets your client has that they could raise debt against (either personally, within a business or both) and the process, possibilities and options against an actual scenario will provide lots of clarity on the best path forward for your client. 

It can also be beneficial to take a slightly longer-term view of your client's financial situation when considering which assets to release equity against. For example, your client might have shares in a business that will list in the next 12-18 months. Here, securities-backed lending could be a fantastic option. Alternatively, a bridging loan might be ideal if they plan to dispose of a high-value property in the UK or abroad but are currently waiting for the property to sell. They can draw down loan capital quickly, using the property as security and then repay the loan using the sale proceeds.

When considering equity release for high-net-worth individuals, we always work backwards from what your client wants to use the liquidity for and assess their assets and wealth in relation to that objective. When we have a firm grasp of the facts, we will present ideas and options for you and a fixed plan of action you can take for your client. 

Release equity from a property

Releasing equity from a UK or international property can be an ideal way to create liquidity. Your clients will be able to release equity against unencumbered property or property in which they have built up significant equity, although they may still have a mortgage. 

Your client can use equity release for a variety of purposes – in the mass market, it is usually used for downsizing or to generate liquidity later in life. Your HNW clients may choose to do the same, or they can use equity release to create liquidity for other reasons. They can use this capital to accomplish various plans, including purchasing a buy-to-let property, make home improvements, expand a home and so on. One advantage of equity release is that loans can be negotiated and approved quickly, especially if you have clients with strong financial backgrounds and significant wealth. 

If your client wants to release equity from a property (particularly if they want to borrow a significant amount), they will need to demonstrate the strength of their financial background effectively. We can help you arrange this and present a solid case to lenders to unlock significant capital. We have a track record of releasing tens of millions of pounds against UK real estate, international property, and for foreign nationals looking to release equity in property they own around the world. We can also help your clients release equity from multiple properties in a portfolio if they want to release significant equity.  

Whatever the scenario, Enness will be able to advise you on how to secure the best rates and terms for your clients and maximise what they can borrow.