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How to Make the Most of 2020 Annual Reviews

Pedro Regalado, Gregory Fat | Institutional Banking | 11/14/2020 11:48 AM
Pedro Regalado, AVP, Regional Business Development Officer, Southeast
Gregory Fat, VP, Regional Business Development Officer, Mid-Atlantic

There is no doubt that this year’s client annual reviews will be different. With the COVID-19 pandemic still causing both social and economic uncertainty, it will change the way we interact with our clients. Not only how we meet with them (e.g., virtually or using safety measures for in-person discussions) but also in the content and agenda for the review. While market performance, asset returns and financial goals are always key topics to discuss, the current environment has brought the importance of planning for uncertainty to the forefront. As a result, managing debt and planning for the future have never been more relevant and timely considerations.

While debt is a sensitive topic to discuss and no one can predict all of their future cash needs, there is value for both you and your clients when making them a part of your year-end review. This is not only from the perspective of the pandemic economy, but also because the industry is moving toward financial professionals being able to provide more holistic wealth management advice to their clients — advice that needs to consider both the asset and the liabilities side of a client’s balance sheet.

Starting the Conversation

It is entirely possible that while you manage your client’s assets, you may not have a clear picture of their liabilities or their future cash needs. If you’ve never spoken to clients about these topics, below are some lead-in questions that can help you ease clients into the conversation:

  • Do you have any outstanding debt or loans?
  • Do any of your whole life insurance policies have loans against them?
  • Did you need to sell off portfolio assets this year? If so, will you pay capital gains taxes as a result?
  • Do you have any planned real estate deals, college tuition payments, other substantial purchases on the horizon?
  • Do you have a trust or business account that would benefit from access to liquidity?

Learning more about your client’s current debt and liquidity needs can go a long way toward strengthening your professional relationship. More importantly, it conveys to the clients both your interest and your ability to help them better manage all aspects of their finances and help them plan accordingly.

Bringing Some Certainty to the Process

If your clients have outstanding debt or liquidity needs, The Bancorp can help. Our Securities Backed Line of Credit (SBLOC) and Insurance Backed Line of Credit (IBLOC) offer low-interest access to funding to help individuals, trusts or businesses consolidate debt, proactively plan for future expenses, and add flexibility to their wealth management strategy. With no application fees or closing costs clients can also apply for an SBLOC or IBLOC proactively to be ready for cash needs in the future.

While uncertainty may be the new normal for now, proactive wealth planning that includes both sides of a client’s balance sheet, can create added value that can be measured in dollars and sense.

IBLOC and SBLOC Benefits

  • No application fees1 or closing costs
  • No charge for the portion of line not in use
  • Interest payments can be capitalized and may be tax deductible2,3
  • Tiered annual percentage rates (APRs) tied to The Wall Street Journal Prime Rate (WSJP); fixed-rate option available
  • Can be used to meet a variety of cash needs: college tuition, real estate purchase, home improvement, debt consolidation and more4
  • Access to funds via line of credit checks, online fund transfers and wire transfers
 
1. The Bancorp Bank (“Bank”) does not charge an application fee. State, local and/or third-party fees may apply in some states. The SBLOC and IBLOC each have two fees: the Return Payment Fee and the Interest Rate Conversion Fee. See the Agreement for details.
2. Clients are advised to consult a financial/tax professional regarding the potential tax implications involving their investment portfolio.
3. There may be adverse tax consequences when pledging an insurance policy. It is advisable to consult with a tax advisor before pledging a policy.
4. Neither the SBLOC nor the IBLOC can be used to purchase additional securities or to pay off a margin loan that was used to purchase securities.
5. Line of credit is contingent on life insurance policy remaining in good standing. To be eligible as IBLOC collateral the insurance policy must be issued by an insurance provider approved by the Bank.
6. Subject to credit approval and underwriting.
Securities-based lending has special risks and may not be suitable for everyone.

 

The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.