Is Your Classroom Time Worthwhile? *Increasing Private Wealth Management Credit Revenue *

Given my perspective, the answer is a resounding, YES!  That said, there are a simple caveat to that answer. 

After 16 to 20 years of school, university and certification courses and completing seemingly endless professional education requirements the last thing PWM professionals desire is a trip to another classroom.  Unless . . .

This time in the classroom directly impacts production results . . . I mean measurable increases in Credit Opportunity Identification (OID).  Let's define OID. 

Opportunity Identification = Recognition by any member of the Private Wealth team that the client's desired financial end result could be enhanced through the use of a Strategic Credit facility. 

 

Given the collective perspective and training backgrounds of the majority of the PWM client team members, credit opportunity education will have an dramatic and immediate impact on the opportunities the team encounters. 

In most bank PWM environments credit professionals occupy only a "part time" position with the PWM team.  They usually partner with multiple PWM client teams and often span large regional geographies.  Inherent in this structure is a tendency to be reactive to client inquires about the use of credit rather that proactive in offering Strategic Credit as part of an alternative solution to many client financial activities.  In this model many opportunities are left undiscovered.  Why? 

• Typically members of the Wealth Advisory team (planners, trust advisors, investment advisors, insurance advisors, brokers) simply aren't exposed to credit opportunity discovery concepts. 

During my long tenure leading a team of Credit Advisors (that partnered with Family Office Wealth Advisors) I discovered that, over time, only about thirty percent (30%) of our total credit facility production and outstandings came from "client identified" uses of credit.  A good seventy percent (70%) came as part of client financial solutions when the Wealth Advisor and Credit Advisor partnership took a use of credit "idea" to the client. 

The opportunities discovered that gave rise to the these alternative financial solutions (that include the use of Strategic Credit) were the direct result of the OID approach we initiated shortly after the team was formed. 

My Credit Advisory team gave the Family Office Wealth Advisors' time in the classroom.  The direct and measurable result of the time spent in the classroom was significantly increased Credit Revenue from every team in the company. 

(The "classroom" may take many forms; from conference room wealth team meetings to webinars or simple conference calls supported by PowerPoint presentations) 

We found that while the increased OID certainly varies among Wealth Advisors, the time in the "classroom" resulted in extraordinarily sharp increases for all during the first eighteen (18) months of exposure to these Strategic Credit concepts.  While OID can continue to increase beyond this initial time period (albeit at a slower pace), to do so, Wealth Advisors require continued classroom reinforcement of the original concepts introduced and exposure to new Strategic Credit uses that evolve over time (illustrated in the graph above) as tax, trust and entity laws change.

I've published several articles previously about particular Strategic Credit uses and why they appeal to the High Net Worth and Ultra High Net Worth Individuals.  But that appeal is only realized once its presented and presentation is completely incumbent on OID.

(You can find all the articles through my profile on LinkedIn.com or on my blog at strategiccreditsolutions.com)

You "likes" and "comments" and "shares" are greatly appreciated.

I can present these concepts to your PWM Advisors (and follow them up) in a variety of effective ways. Please don't hesitate calling to discuss the best method for your institution.

Mark S. Johnson

mark.johnson@strategiccreditsolutions.com

Strategic Credit Solutions
404.909.5167
On twitter @CreditStrategic

Secret Sources of Credit Revenue - Financial Planners Hold The Keys

Private Wealth leaders on the divisional, regional and team levels are all looking for new sources of revenue.  One typically untapped source sits in the office right down the hall.

Your Financial Planning colleagues know it all!  They are invited into your client and prospect families' current and future worlds.  For them to rationally introduce and eventually recommend future financial  stratagems they are given a level of information not typically reached by any other member of the advisory team. 

"Credit Opportunity Discovery"education is not often offered to the planning staff.  You can change that paradigm.   Those companies' that do formalize a opportunity discovery training approach for this constituency have enjoyed significant gains in Private Wealth Management credit production.  As strategies are designed to provide either wealth preservation, wealth accumulation or both, previously undiscovered possibilities will come to light.  Situations will arise where the use of a Strategic Credit Facility, as an alternative to the "standard" financial solution, can provide the client and their family with substantial  Economic Benefit.  Benefit that can and should be quantified by a member of the Credit Advisory group prior to presentation to the client. 

Credit Opportunity Discovery education in today's Client Team approach to the Private Wealth market is essential to the team reaching its full success potential.  In this team structure the Planners are not asked to become experts in providing Credit Advice but only to become aware of apropos credit concepts and then to recognize situations where a Strategic Credit Facility potentially could provide Economic Benefit. 

Do your Financial Planners encounter situations where an Strategic Credit alternative could aid their client?  Experience tells me that your Financial Planners encounter them everyday.  

For instance, do your clients:

-Use GRATS to pass low basis, easily valued, marketable securities to future generations?
Consider a Strategic Credit Facility to "insure" GRAT success

-Gift low basis stock to subsequent generations and there-by loose its potential  step-up in basis?
Consider a Strategic Credit Facility to fund the gift and maintain the basis step up

-Purchase high dollar life insurance within an ILIT?
Consider a Strategic Credit Facility for the ILIT itself to:
1. to defer or potenitally avoid creating tax liability for the insured when gifting premiums
2. keep cash otherwise used to pay premiums invested

-Incur Estate Taxes where prudent financial planning has isolated the client's liquid assets from the estate’s executor/administrator?
Consider a long term fixed rate Strategic Credit Facility to actually reduce estate tax liability and pay the total tax due in a timely manor

These concepts and many others can be covered in a scalable and repeatable seminar designed to significantly stimulate growth in the credit related revenue achieved by your company's  Private Wealth organization.  Your Financial Planning constituency is one of the keys to meaningful credit production success.  Once armed with this education immediate opportunities will result.  While not all opportunities will result in "at bats" or subsequent credit production, those that do will very rapidly increase the team's comfort in recommending the use of Strategic Credit Facilities leading to increase in overall team productivity.  

For a deeper level of detail on the Strategic Credit uses I've mentioned here please review the previously published articles my LinkedIn profile page or on my blog.


I am ready to discuss the delivery of an "Credit Opportunity Discovery"educational offering for your Financial Planners.  Please don't hesitate in contacting me at 404-909-5167.  Thank you.

Mark S. Johnson
Strategic Credit Solutions

mark.johnson@strategiccreditsolutions.com

The Hardest Bucket To Fill - Stimulating Wealthy Individual Credit Revenue

With the high level of private banking focus on increasing Assets Under Management (AUM/A) or Advisement the potential revenue increases that robust Credit Outstandings can provide sometimes take a back seat.  It's understandable in that the clients themselves don't often think of borrowing a their financial solution.  More often than not the High Net Worth Individual thinks borrowing is, at best, costly and at worst places undo risk on their financial plans.  By showing the client the Economic Benefit potentially gained through the use of a Strategic Credit Structure the Adviser's role is truly enhanced and the client gains a viable alternative financial solution.  A solution that not only provides the client with substantial Economic Benefit but also increases the bank's credit balances outstanding and maintains or potentially enhances the current level of AUM. 

Hopefully, this short discussion will stimulate your interest.  There are many Wealthy Individual Client situations the will give rise to substantial and measurable Economic Benefit through the use of a Strategic Credit Facility as an alternative to the client's original approach.

A few examples would include:

Your client plans to draw down cash or liquidate investment assets to fund “Private Equity Investments" -Consider the use of a Strategic credit Facility so as to keep cash and investment assets invested

Your client is planning the purchase of or already owns Life Insurance within an Irrevocable Like Insurance Trust - Consider the use of a Strategic Credit Facility to avoid Gift Tax and/or investment asset liquidation

Your client uses GRATS to accomplish inter-generational transfer residual assets - Consider the use of a Strategic Credit Facility to "insure" the GRATS are successful

Your client seeks to finance or refinance an asset purchase (or desires 100% financing) - Consider the use of a Strategic Credit Facility to avoid typical market "closing costs" and obtain a lower rate of interest


To review a short PowerPoint on the subject please click the Link embedded here.

For a much deeper level of detail on the Strategic Credit uses I've mentioned here please review the previously published articles my LinkedIn profile page or on my blog.

I am ready to discuss the delivery of an "Credit Opportunity Discovery"educational offering for your the many advisory constituencies that make up your team.  Please don't hesitate in contacting me at 404-909-5167. 

Thank you.

mark.johnson@stategiccreditsolutions.com

on Twitter @creditstrategic

Higher Wealth Team Credit Production Performance

Strategic Credit Solutions  

 

How many times have you seen a chart like the one below?

Probably, your answer is something like, "more than I can count."  It seems as though every consulting firm brings some variation of it to the table when suggesting the best approach to the Private Wealth market.  Oh, the terminology is always somewhat different (advisor vs. manager or wealth vs. banking) and the chart may contain bubbles for additional professional disciplines but the concept holds true in most every presentation.  I completely agree with the concept and approach . . . as far as it goes.  Over the past 20 years, as most banks have adopted some variation of this, both the client families and the banks have clearly benefited from the greatly enhanced and better coordinated financial advice the approach creates.

Image by Mark S. Johnson 

 Teams that perform at high levels must meet regularly to discuss  their clients' financial activities and the multitude of ways their collective professional advice could provide Economic Benefit.   And, while the consultants' charts always seems to indicate the professional interaction always runs through the Client/Wealth/Family Advisor, the highest performing teams go beyond that basic approach.  While communication and coordination is one the concept's key attribute, each of the team's professionals is an expert in his/her field and with their deep expertise comes the ability to recognize those Client Behaviors that indicate an alternative approach to the client's planned activity that should be explored.  The trick is how to help each professional recognize an opportunity in another professional's area of expertise.   As you might have already surmised from the red bubble in my chart the focus here is on Credit Opportunity recognition. 

It is the Credit Advisor's responsibility to make sure the other team members are aware of the client financial activities in each professional's sphere of influence where the use  of a Strategic Credit Facility might provide the client family with significant and measurable Economic Benefit.  (I've added my red back and forth arrows to the chart to reflect how information flow between the various professionals should augment the consultants' traditional flows between the Client/Family/Wealth Advisor and the team). Each professional, over time, will observe Client Behaviors that indicate an alternative solution involving a Strategic Credit Facility could provide the client and their family with Economic Benefit.  Recognition of those behaviors by the professional that is in the position to observe them is the key.  For example, the Credit Advisor should make sure that:

1.  the team's Investment Advisor knows that a client request for asset liquidation and/or cash distribution to fund a private equity investment indicates economic benefit potential enhanaced yields from the use of a Strategic Credit facility

2.  the team's Insurance Advisor knows that a client considering the purchase of a "wealth replacement" high dollar insurance policy, to be owned in a ILIT, indicates economic benefit potential in gift tax avoidance/deferral and enhanced investment yields from the use of a Strategic Credit facility

3. the team's Trust Advisor knows that clients who use or are considering the use of GRATs to accomplish the generational transfer of wealth (appreciated publicly traded stock with volatility) could "insure" GRAT success through the use of a Strategic Credit facility

4. the team's Estate/Tax/Financial Planner knows that clients can accomplish significant economic benefit from estate tax saving through the use of a Strategic Credit facility

These are but a few of the possibilities. I refer you to my previous post called "Observable Client Behaviors (OCBs) on July 13, 2015 or my blog at: strategiccreditsolutions@blogspot.com for more detail.

Obviously, this interactive approach must work in multiple directions among all the team's professionals to reach the highest level of success.  My experience indicates that consistent reinforcement is required to reach and maintain optimal levels. Team meetings dedicated to professional education led by the appropriate teammate seem to work best once all team members buy into the concept.   The result is simple; more opportunities in every team member's area of professional expertise are recognized.  Certainly, all opportunities don't result in an "at bat," but their recognition definitely leads to higher levels of production and increased client economic benefit fulfillment.

If you would like to discuss this concept further or how Strategic Credit solutions could help your Wealth Team achieve its highest potential Credit Sales please don't hesitate contacting me.

Your "likes, "shares" and "comments" are welcomed and appreciated.

Mark S. Johnson
Strategic Credit Solutions

404.909.5167

@creditstrategic

mark.johnson@strategiccredit.com

 

 

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Funding the "Family Bank"

Strategic Credit Solution

As I have demonstrated in previous posts, the key to stimulating borrowing by Wealthy Individuals is showing each client the Economic Value to be gained by the use of a Strategic Credit. The credit strategy described here will not only provide the family with measurable economic benefit through aiding in preservation of their current wealth and accumulation of additional wealth but may also assist their efforts toward fostering generational responsibility. 

I will leave the reader to muster their own research on the reasons High and Ultra High Net Worth families should consider creating a Family Bank.  The research is extensive and very easy to find in libraries and throughout the internet. 

My focus here is on the use of a Strategic Credit Facility with which to fund the Family Bank and its activities.  In the downloadable Linked Power Point I'll describe the economic benefits that families can derive from this strategic credit approach and, importantly, how the understanding and application of this concept can aid Private Wealth Group Managers drive credit balance outstanding growth and increase profitability within their banking divisions.  Additionally, this brief presentation illustrates the structure of the bank line of credit that provides the funding and its typical funding mechanics.  Please download the PowerPoint and take a look.  

Don't hesitate contacting me directly if you'd like to discuss the concept in more detail or discuss how Strategic Credit Solutions might help your Wealth Management Team attain its Credit Sales potential.

Your "likes," "comments" and "shares" are greatly appreciated.

Mark S. Johnson
Strategic Credit Solutions

marksthephnejohnson@comcast.net

@creditstrategic

404-909-5167