What the heck is QEB?

Quantifiable Economic Benefit (QEB)

Strategic Credit Solutions

High Net Worth and Ultra high Net Worth Individuals maintain wealth through their family's generations through capital preservation and continuing to accumulate additional wealth through time.  The Economic Benefit gained through any financial solutions employed should be measured against potential alternative solutions.  I've made the point in past posts that many or most HNW/UHNW individuals don't consider the use of a Strategic Credit Solution when making financial decisions.

In my last post I discussed "Observable Client Behaviors (OCBs);" those client behaviors that Family and RIA wealth advisors learn about through their position of trusted advisor with the family.  Often times the financial solution related to many of the actions discovered from these "Observable Client Behaviors (OCBs)" can be aided by the use of a Strategic Credit facility.  The word strategic in the term Strategic Credit relates to the reason or purpose the HNW or UHNW client would use leverage and the credit facility usually differs in term, rate, collateral and repayment from that with which the client might be familiar.  It is not the typical loan or line of credit that most all banks make readily available to these clients.
As part of a financial solution Strategic Credit might be used:

1. instead of the typical loan or line of credit with which the client might be familiar or,
2. the use of portfolio cash or a portfolio liquidation to raise cash or.

"Strategic Credit” will always provide the client with the opportunity to realize “Quantifiable Economic Benefit (QEB)." This economic benefit can be measured and generally be classified in one of three ways; those solutions where Strategic Credit can offer cost savings over the more traditional mass market credit available, those where a tax liability that would otherwise be incurred can be deferred or avoided or those solutions where, by the use of Strategic Credit, the client's cash that would be otherwise utilized in the planned action can be or remain invested over the term of the Strategic Credit’s outstanding.  Many times the Strategic Credit Solution can combine more than one of these benefits.
Becoming familiar with the QEB that Strategic Credit can provide in these circumstances adds a new level to the wealth advisor's capabilities. In partnership with a bank Private Wealth Management Credit Advisory Professional delivery of these credit structures can be a seamless process.

In my last post  I included a chart that delineated some common HNW/UHNW client OCBs.  Follow this link to an expanded chart that shows the Strategic Credit Solution I suggest for each OCB and the source of the QEB potentially derived by employing it.

I think these client behaviors will ring true with each of you. You have likely been asked for help and given advice around each of these situations.   Now you have an additional alternative to help you client consider. 

Please review my past LinkedIn posts at: https://www.linkedin.com/profile/preview?locale=en_US&trk=prof-0-sb-preview-primary-button for more detail on the Strategic Credit Solutions I mention here and don't hesitate to contact me if you'd like to discuss the topic more fully.

Your past "likes" and "comments" have been most welcome and appreciated.  I look forward to more. 

Don't hesitate to contact me directly for deeper discussion on how my approach Strategic Credit production can drive your Private Wealth Division's profitable growth.  

Mark S. Johnson
404.909.5167