Before the Budget - 5 High-Net-Worth Client Scenarios Where Liquidity Could Become a Problem

With the Autumn Budget approaching, clients will inevitably be reviewing planned transactions, disposals, investment positions and wider wealth structures. The priority, however, should not be trying to second-guess policy changes, but understanding how quickly clients could respond once the position becomes clear.

For many wealthy clients, that raises a liquidity question. Significant net worth does not necessarily mean readily available capital: wealth may be concentrated in investment portfolios, businesses, property or assets held across multiple jurisdictions. Accessing cash at short notice can therefore mean selling assets, disrupting an investment strategy or delaying a transaction.

For advisers, the pre-Budget period is an opportunity to identify these constraints early and understand the financing alternatives available. The objective is not necessarily to act before the Budget, but to ensure clients have the flexibility to act afterwards.

1. Your client needs cash but doesn't want to sell investments

A client may have significant wealth invested in listed securities or a managed portfolio but require liquidity for a property purchase, tax liability, business opportunity or other substantial expenditure. The obvious solution is often to sell. It isn't necessarily the most efficient one. A disposal can crystallise gains or losses, create tax consequences, interrupt an established investment strategy and remove the client's exposure to future market performance. Timing can be particularly important where a liquidity requirement is temporary, or the client intends to remain invested over the long term. For advisers, the question is therefore not simply “Which assets can we sell?”, but “Where is the most appropriate place on the client's balance sheet to raise the capital?”

Financing options to consider

Depending on the client's circumstances, alternatives can includes:

• Securities-backed or Lombard lending: borrowing against an eligible investment portfolio while retaining ownership of the underlying assets.
• Property-backed borrowing: raising capital against an existing residential or investment property.
• Bespoke private bank facilities: where multiple assets, jurisdictions or income sources need to be considered as part of the overall lending proposition.

These structures are not without cost or risk. Portfolio-backed facilities, for example, can be subject to changes in collateral value and additional collateral requirements if markets fall. The appropriate comparison is therefore between the full cost and risk of borrowing and the financial consequences of liquidating assets.

For clients with substantial but relatively illiquid balance sheets, reviewing both options before a sale can preserve valuable flexibility, particularly where the requirement for cash may only be temporary.

2. Your client wants to complete a property transaction quickly

For buyers, the challenge is not always affordability. It is often timing.

A client may have agreed the purchase of a £3m, £5m or £10m property but need to complete within weeks. Their net worth comfortably supports the acquisition, yet the capital required may be tied up in another property, an investment portfolio, a business or assets held overseas. Waiting for an existing property to sell or a conventional mortgage to complete can introduce execution risk. Equally, liquidating investments purely to meet a completion deadline may conflict with the client's wider investment or tax strategy. For advisers, the key question is how the client can create certainty of funds without unnecessarily restructuring the rest of their balance sheet.

Financing options to consider

Depending on the transaction and exit strategy, these can include:

• Bridging finance: short-term funding to complete an acquisition while another property is sold, longer-term finance is arranged or another liquidity event takes place.
• High-value mortgages: bespoke lending for larger transactions where income, assets or ownership structures require more individual underwriting.
• Refinancing after completion: short-term finance can potentially provide the speed required for acquisition before being replaced by a longer-term facility once the transaction has completed.
• Asset-backed lending: in some cases, existing property or investment assets can provide an alternative source of liquidity without requiring their immediate sale.

The exit strategy is critical. Short-term finance should be structured around a clearly identifiable repayment or refinancing event, with the cost of borrowing considered alongside the commercial consequences of missing the acquisition. For clients able to service the transaction but unable to mobilise capital quickly enough, access to liquidity can become as important as access to wealth itself.

3. Your client is asset-rich but income-light

A £10m net worth, a £4m investment portfolio and several properties can still sit alongside relatively modest conventional income. For entrepreneurs, company directors, partners, retirees and those with inherited or family wealth, this is far from unusual. The difficulty arises when a client's financial position is assessed primarily through the lens of regular PAYE income. Wealth may instead be generated through dividends, carried interest, investment returns, partnership distributions, retained business profits or irregular bonuses. As a result, a client with substantial assets and demonstrable wealth can still fall outside standard affordability criteria.

For advisers, a mainstream lending decision should not necessarily be treated as a verdict on the client's borrowing capacity.

What financing can look like

Private banks and specialist lenders may be able to take a broader view of the client's circumstances, considering factors such as:

• Overall net worth and asset composition
•  Investment portfolios and other liquid assets
•  Historic and projected income
• Dividends, bonuses and partnership distributions
• Business ownership and retained wealth
• Property holdings and existing debt
• International assets and income
• The purpose, term and proposed repayment strategy

The appropriate structure will depend on the lender and the client's circumstances, and affordability requirements still apply. However, for complex HNW borrowers, the assessment can extend considerably beyond a conventional salary multiple.

This is where early collaboration can be valuable. Before assuming a client's income profile makes a transaction not achievable, advisers can establish whether their wider balance sheet supports a more bespoke lending approach.

4. Your client's wealth is spread across jurisdictions

A client lives in London, earns income in Switzerland, holds investments in Luxembourg and wants to purchase a property in France. For internationally mobile HNW clients, this type of balance sheet is increasingly familiar. For many lenders, it can be considerably harder to accommodate. The issue is not necessarily the amount of wealth available, but where that wealth sits, how it is denominated and how it can be used within the proposed transaction. Foreign income, multiple currencies, overseas assets, residency and international ownership structures can all affect lender appetite and underwriting. A client may therefore have substantial capital globally while still facing constraints when trying to access liquidity in a particular jurisdiction or currency.

What advisers should consider

Cross-border financing can require several elements of the client's position to be assessed together:

• Residency and domicile: where the client lives and their connection to the jurisdiction in which they are borrowing.
• Foreign and multi-currency income: including how lenders assess income received in a different currency to the proposed loan.
• Location of assets: whether overseas portfolios, property or other assets can be recognised within the lending proposition.
• Currency exposure: the implications of borrowing, earning income and holding assets in different currencies.
• Property jurisdiction: local lending criteria, security requirements and transaction processes.
• Existing banking relationships: whether an international or private bank can consider assets held across several markets.

For advisers, the important point is when the financing conversation takes place. If lending is considered only after the tax, legal and ownership structure has been finalised, the client may discover that an otherwise appropriate structure restricts their financing options. Bringing financing into the conversation earlier allows the client's tax, legal, wealth and lending advisers to consider the transaction together, helping ensure the eventual structure works not only from a planning perspective, but from a funding perspective too.

5. Your client needs liquidity - but doesn't yet know exactly when

Not every liquidity requirement begins with an immediate transaction. A client may know that a significant capital need is likely to arise over the next six to twelve months without knowing precisely when, or how much will be required.

They may be considering an acquisition, anticipating a tax liability, planning a substantial gift to family, investing into a business, purchasing property or restructuring existing assets. The capital requirement is foreseeable; the timing is not.

The potential mistake is waiting until the requirement becomes urgent before establishing how that liquidity could be raised. Financing options that are viable with several months' preparation can become more limited when a client needs funds within days or weeks. Lender selection, valuations, due diligence, credit approval and the complexity of the client's underlying wealth can all affect execution times.

What advisers can establish in advance

A liquidity review does not necessarily mean arranging borrowing immediately. Instead, advisers can help clients understand where borrowing capacity may exist across the balance sheet, including:

• Property-backed borrowing: identifying unencumbered or lowly leveraged assets against which capital could potentially be raised.
• Securities-backed facilities: assessing whether eligible investment portfolios could support borrowing if liquidity is required.
• Private-bank relationships: determining whether the client's wider assets and banking requirements could support a bespoke facility.
• Bridging finance: understanding the short-term options available if a transaction needs to complete before permanent funding or another liquidity event.
• Refinancing capacity: reviewing existing debt to establish whether additional capital could be released or facilities restructured.

This can also give advisers a clearer picture of how much liquidity may be available, the likely cost of accessing it and how quickly it could be deployed.

For clients with complex wealth, establishing those parameters before capital is required can turn financing from a reactive solution into part of the wider planning process. The objective is not to borrow unnecessarily, but to know where liquidity can come from when the client needs it.

What should advisers be discussing with clients before the Budget?

For clients with complex balance sheets, the priority is not predicting what the Budget will contain but understanding how prepared they are to respond. A pre-Budget review should consider:

• Where is the client's wealth currently held? Property, investment portfolios, businesses, cash or assets across multiple jurisdictions.
• What significant capital requirements are approaching? Property purchases, tax liabilities, investments, gifts, business funding or debt repayments.
• How quickly could they access liquidity? Establish which assets are genuinely liquid and which could take weeks or months to realise.
• What would need to be sold to generate capital? Consider whether meeting a cash requirement would require disposing of investments, property or other strategic assets.
• Would a sale affect another part of the client's strategy? Factor in potential tax consequences, investment objectives, market exposure and longer-term wealth planning.
• What borrowing capacity already exists? Review whether property, investment portfolios or the client's wider balance sheet could provide an alternative source of liquidity.

The objective is simple: understand the client's options before they need to use them.

Preparation doesn't mean prediction

Good pre-Budget planning is not about trying to second-guess the Chancellor or restructuring a client's affairs in response to speculation. It is about ensuring clients understand their options and have sufficient flexibility to respond once the policy landscape becomes clear. The value of considering financing early is therefore not necessarily in borrowing today. It is in understanding what capital could be available, from where, on what terms and how quickly it could be accessed if circumstances change. If you have a client with a potential liquidity requirement, our team can assess the financing options available, even when the requirement is complex, cross-border or still at an early stage.