If you’re a Nedbank Private Wealth client who is looking for wealth creation through leveraging your existing assets and wealth, you’ll know that you need a financial partner who understands the importance of a structured wealth plan for your long-term planning. But in a volatile economic and investment environment, how do you best go about that?

What is structured lending, and how does it work?  

Structured lending, also known as structured financing, refers to a type of lending that is carefully tailored to meet your specific financial and regulatory needs. If you are a high-net-worth (HNW) banking client looking for long-term wealth creation, you should work closely with financial advisers and professionals to create a lending strategy that aligns with your unique financial goals, risk tolerance, and overall wealth management plan.

You will likely need a strategy designed for significant assets that are not adequately served by conventional lending products. Unlike standard loans, financial products and services such as structured loans are tailored to accommodate your distinctive needs, with larger amounts, more complex underwriting processes, and usually more favourable terms.

Structured loans consider not just income, but also assets – investments, real estate, and other holdings. They are typically designed for complex transactions and, for your individual financial growth, involve several customised instruments. Structured lending is:

• flexible – allowing you to creatively structure your debt obligations, reduce your debt burden, and increase available cash flow;
• customised – each loan is crafted specifically to meet your unique financial profile and goals;
• collaborative – as your structured lender, we work closely with you to tailor solutions that meet your needs; and
• careful to manage risk – we prioritise careful risk assessment and management to mitigate any potential pitfalls you might encounter.

Your financial requirements are multifaceted, necessitating strategies tailored to your specific circumstances. Structured lending can be a valuable addition to your wealth plan, helping you optimise cash flow, maximise tax efficiency, and realise your most important estate-planning goals.

As a complement to traditional securities-backed lending options, structured lending can involve customised loan terms specific to your requirements. It is generally more suitable when your financing needs aren’t met by traditional lending options, and you have substantial wealth that you want to leverage to borrow strategically for advantageous outcomes.

How structured lending fits into a wealth strategy

The conventional financial advice in the market is that you should aggressively pay down debt and live without it where you can. This is undoubtedly good advice, but for wealthy individuals, strategic borrowing can offer opportunities – even in market environments with relatively high interest rates.

This is because certain structured lending options can allow you to keep assets invested – and growing – while also providing you with liquidity. It can therefore be a useful tool to leverage debt and complement your portfolio, but you need to understand how debt can help you remain liquid without disrupting your investments, retirement plans, or lifestyle.

Mandatory legal and regulatory requirements can add complexity to the lending process. As a result, loan documents and legal agreements must also be carefully completed to ensure they’re accurate and compliant – so it’s advisable to work with financial advisers and professionals to understand if specific structured lending opportunities are a good match for you.

Finance that grows with you

As always, the larger the structured lending debt amount, the more risk there is for your lenders. Based on the risk profile, your lenders often apply stricter standards for you as a HNW individual than they would with a more traditional loan. Securing funding on real estate may be a challenge due to the unconventional nature of most of your income – it’s probably not a monthly salary! But this can also affect credit scores and other regulatory hurdles.

Structured lending solutions are therefore geared towards enabling you to leverage your assets for additional liquidity without liquidating those assets. You can also access financing at better rates while keeping your investment positions and benefit from potential market growth. You can usually secure these loans by leveraging your investment portfolios or other assets. Structured lending can also offer tax benefits.

While structured lending products demand a nuanced and deep understanding of financial products and strategies tailored to your requirements, you can, with the right professional help and advice, implement strategic structured lending approaches, leveraging your assets to grow your wealth and reducing risk.

Nedbank Private Wealth’s structured lending offering is part of our Connected Wealth portfolio. We offer gearing against investment portfolios, meaning you can leverage local and offshore assets without liquidating your investments. Our custom financing solutions offer tailored lending structures that align with your needs, especially in multi-asset funding vehicles that use property, investments, or business assets to secure financing. Our wealth bankers craft fully customised financing solutions that align with your investment, estate planning, and liquidity needs – ensuring a holistic, forward-thinking wealth strategy. Whatever your specialised lending needs are, we have a solution.