Customization that serves the multifaceted needs of private wealth.
Your financial requirements are multifaceted, necessitatingstrategies tailored to your specific needs. Structured lendingcan be a valuable addition to a high-net-worth individual’sfinancial plan, helping you optimize cash flow, maximize taxefficiency and realize important estate planning goals.
As a complement to traditional securities-backed lendingoptions, structured lending involves customized loan termsto meet specific borrower needs. Customized loan termsmay include loan size, rate, structure, repayment schedulesand financial covenants.
Structured lending is typically leveraged in situations wherea borrower’s financing needs aren’t met by traditionallending options, or if you have substantial wealth and wantto borrow strategically for advantageous outcomes.
Structured lending collateral
Similar to securities based lines of credit (SBL), structuredlending is a customized credit solution that providesdiversification and liquidity without disrupting your long-termfinancial strategy. Qualifying collateral may includetraditional marketable securities, concentrated equitypositions, exchange funds, hedge funds, cash surrender valueof life insurance, and more.
Assets leveraged as collateral may also include other less liquidor illiquid securities, meaning they’re more difficult to valueor sell. This added degree of complexity requires specializedknowledge to structure the loan.
Why leverage borrowing as a wealthy individual
Financial thought leaders often advocate for the benefits ofa*ggressively paying down debts and living without it whereyou can.But for wealthy individuals, strategic borrowing can offeropportunities – even in market environments with relativelyhigh interest rates.
This is because certain lending options can allow you to keepassets invested – and growing – while also providing you withliquidity access.
Overall, structured lending can be a useful tool to leveragedebt and complement your portfolio, but you need to trulyunderstand whether debt can help you take a balancedapproach to liquidity without disrupting your investments,retirement plans or lifestyle.
Where there’s opportunity, there’s risk
Structured lending can be customizable, but with that flexibilitycomes a need for more specialized knowledge. That’s whereyour advisor and their network of professionals can help.
Remember, mandatory legal and regulatory requirementscan add complexity to a lending process. As a result, loandocumentation and legal agreements must also be carefullycompleted to ensure they’re accurate and compliant.
While structured lending under the right conditions can be apowerful tool in wealth creation, it’s important to reach out toyour advisor to understand if specific lending opportunities area good match for your needs.
A line of credit backed by securities may not be suitable for all clients. The proceeds from a line of credit backed by securities cannot be (a) used to purchase or carrysecurities; (b) deposited into a Raymond James investment or trust account; (c) used to purchase any product issued or brokered through an affiliate of Raymond James,including insurance; or (d) otherwise used for the benefit of, or transferred to, an affiliate of Raymond James. Raymond James Bank does not accept RJF stock or any securitiesissued by affiliates of Raymond James Financial as pledged securities towards a line of credit. Borrowing on securities based lending products and using securitiesas collateral may involve a high degree of risk including unintended tax consequences and the possible need to sell your holdings, which may lead to a significant impacton long-term investment goals. Market conditions can magnify any potential for loss. If the market turns against the client, he or she may be required to quickly depositadditional securities and/or cash in the account(s) or pay down the loan to avoid liquidation. The securities in the Pledged Account(s) may be sold to meet the CollateralCall, and the firm may sell the client’s securities without contacting them. A client may not be entitled to choose which securities or other assets in his or her account areliquidated or sold to meet a Collateral Call. In many cases, the firm may increase its maintenance requirements at any time and is not required to provide a client advancewritten notice. A client may not be entitled to an extension of time on a Collateral Call. Increased interest rates could also affect SOFR rates (or any successor rate thereto)that apply to your line of credit causing the cost of the credit line to increase significantly. The interest rates charged are determined by (i) the market value of pledged assetsand the net value of the client’s non-pledged Capital Access account or (ii) the line of credit amount. Lines of credit are provided by Raymond James Bank. RaymondJames & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Bank, member FDIC.Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
Sources: raymondjamesbank.com; investopedia.com; forbes.com; capco.com
