The focus of this course is on the different lending solutions available to customers. Lending solutions are an essential service line and product offered by private wealth management (“PWM”) institutions and private wealth managers. In order to understand lending solutions fully, we must first understand the basic concept of lending in general, its place within the wider banking industry, and the commercial reality of lending in the current regulatory environment. We will then consider the universal principles and knowledge required for all financial institutions and private wealth managers engaged in the lending profession.
On completing this course, you should be able to:
- Understand the benefits and risks of borrowing/lending activities and leverage transactions for investors and PWM institutions;
- Understand the credit process and the private wealth manager's role and responsibility within it;
- Describe the types of credit facility offered by PWM businesses, the rationale for such facilities and risk control mechanisms and how to apply share margin financing;
- Assess customers' suitability for using borrowing and leveraging as an investment strategy, and understand the concepts of customer and product suitability, using the accumulator as an example;
- Explain how a Lombard facility is structured and the rationale behind advance ratio (“AR”), haircut and concentration rules;
- Understand how a portfolio's market value and collateral value (“CV”) are used to calculate initial margins (“IMs”) and mark-to-market (“MTM”) for derivative transactions;
- Understand the selling process for loans and leverage products; and
- Apply leverage under different market environments in meeting the needs, objectives and risk profile of the customer.
Section 1: Essentials of Lending
Section 2: Lombard Lending
Section 3: Other Forms of Credit
Who should attend
It is relevant to those PWM practitioners who would like to enhance their knowledge and skills in wealth management products.