Expert: David Newman, CEO, Firenze Group Facilitator: Sharmil Patwa, Opus Una
Headlines
- Targeting non-bank wealth markets and lowering traditional thresholds is redefining lending
- From property purchases to tax planning, lending serves multiple client needs
- The low uptake in some markets highlights the need for education and awareness
- Trends like lending into Monaco for wealth tax optimisation showcase growing demand for international solutions
Discussion points:
Introduction to wealth-driven lending
The session focused on enhancing lending products for high-net-worth clients, with particular emphasis on wealth-driven lending strategies. The discussion explored approaches to making lending more accessible and addressing inefficiencies in traditional models.
Innovative approaches in lending
Innovative solutions aim to overcome traditional challenges such as high minimum thresholds, custody transfer complexities, compliance requirements, and slow decision-making processes.
Current state across institutions
Delegates shared their varied experiences with lending practices:
- Loan-to-Value Ratios (LTVs): Monitoring LTVs is essential to manage risks effectively
- Regional Variability: Certain markets show limited adoption due to lack of provider availability and low awareness
- Niche Applications: Use of lending products often focuses on specific client needs like short-term bridging or liquidity
Key challenges and considerations:
- Loans for residential property purchases often require adherence to strict regulatory compliance, such as MCOBs
- Mitigating risks through ongoing portfolio monitoring and maintaining appropriate LTV ratios remains a priority
- The impact of fluctuations in asset values necessitates rigorous risk assessment practices
Use cases and client segments
Wealth-driven lending addresses a wide range of client needs:
- Property Purchases: Providing liquidity for acquisitions.
- Debt Refinancing: Supporting restructuring of commercial debt.
- Tax Planning: Offering solutions for clients with significant shareholdings
- Emerging client segments include smaller family offices, entrepreneurs, landed estates, and individuals with inherited wealth
Education and awareness
The discussion highlighted the importance of educating both advisers and clients about lending as a liquidity solution. Historically, portfolio drawdowns have been the default recommendation, but lending is now gaining recognition as an efficient alternative.
Key takeaways:
- Demand for lending in jurisdictions like Monaco is driven by tax optimisation strategies
- Cashback lending was identified as a potential area for development
- Continued development of business-to-business solutions and alignment with regulatory requirements can drive growth
- All lending products must strictly adhere to established compliance frameworks, especially for residential loans
- Entrepreneurs, smaller family offices, and other niche markets offer significant growth potential
