Taking the Mystery out of Lending for the Financial Advisor FINAL - Credit...Financial. Planning ....

Austin, TXMay 1-2, 2019

© 2019 Envestnet, Inc. All rights reserved. For advisor or investment professional use only.

Taking the Mystery out of Lending for the Financial Advisor


Today’s Panel

John Yackel

Executive Managing Director,Institutional Business

Development, Envestnet

Peter Stanton

President and CEO, Advisor Credit

Exchange

Gary Basso

Head of Institutional Sales,

Goldman Sachs Private Bank Select

Marcus Brooks

Founder & Principal, Kapstone

Consultants, LLC

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The Evolution of Advice to Financial Wellness

Packagingand Selectionof Products2.0 = Financial Planning 3.0 = Financial

Wellness4.0 =

• Democratization of capital market products (MFs, ETFs, Alts)

• Advice = asset allocation and product selection

• UHNW/HNW/Mass Affluent HHs

• Accessibility of planning software

• Advice = balance of daily and aspirational goals

• UHNW/HNW/Mass Affluent HHs

• Holistic services beyond market returns — planning, budgeting, lending, insurance, tax, impact investing, etc.

• Advice = comprehensive planning and seamless integration of solutions, driven by data

• Applicable and accessible to everyone

Product Access 1.0 =

• Access to stocks, bonds, banking and insurance

• Advice = buy/sell

• UHNW/HNW HHs

THE GATEWAY

Silos Fusionto to Network

3Source: Envestnet, Inc.


Delivering Financial WellnessWhere Does Managing Credit Fit in?

4

Planning

InvestingManagingCredit

BudgetingProtecting Capital

• Insurance• Identity protection

Protecting

• Credit balances, loans, mortgages , education, real estate and business

Managing Credit

• Have sufficient long-term investment assets• Hard assets (real estate, etc.)

Investing

• Spend patterns relative to income (where and when)• Short-term savings

Budgeting

• Developing plans for short and long-term goals

Planning

Financial Wellness Factors

Source: Envestnet, Inc.


Clients Want More Meaningful Engagement

Source: Spectrem August 2018 Defining Wealth Management

There are Significant Gaps between the services investors actually receive and the Wealth Management Services they would like to receive

96% 96% 95% 94% 93% 92% 87% 83% 83% 82%70%

24%

88%

10% 22% 25%5% 14% 3% 12%

Financialplanning

Wealthtransfer

advice (whilestill alive)

Investmentmanagement

Trust services Estateplanning

advice (forafter your

death)

Tax planningadvice

Non-liquidasset

management

Long-termcare

insuranceadvice

Loan andcredit

management

Life insuranceadvice

Services expected Services received

5


The Future Financial Advisory Practice Will Be Increasingly Multidiscipline In Order To Serve Clients’ Various Life Stage Needs

6Source: Envestnet, Inc.


The Industry’s Path to Integrated Banking, Lending & Wealth Management

Merrill Lynch leads securities industry

into adding banking & lending programs

Gramm Leach Bliley substantially

eliminates the separation of banking and

brokerage previously governed by Glass-

Steagall

During financial crisis, Goldman Sachs and

Morgan Stanley become bank holding

companies

Merrill Lynch purchased by Bank of

America

Morgan Stanley acquires Smith Barney

Ability to acquire bank (or bank charter) or

expand lending capabilities is

significantly restricted

Expansion of lending within integrated

wealth management firms, supported by

banking teams across SBL and other

lending programs

“Lending gap” created in the

securities industry

Goldman, Supernova, and others initiate

SBL programs; some banks focus on SBL lending; gap begins

to close between Wirehouses and the rest of the industry

Fully integrated wealth

management no longer limited to the top few firms

Liability Management is

now both a requirement and an opportunity

Wirehouse BDs expand into

multiple lending businesses

Some non-Wirehouse firms consider ways to also add banking

and lending

2015-2017

Industry leaders working to replace

product-driven strategies with

Liability Management advice-driven

programs

80’s & 90’s 2000 - 2007 2008 - 2009 2010 - 2014 2015 - 2017 2018 - 2019

7

Source: Advisor Credit Exchange & Envestnet, Inc.


Advisor Lending To Date

8

Advisors

Clients

• Margin/Purpose – Often promoted for Non-Purpose use,

increasingly problematic with industry regulators

• Non-Purpose – Primary Service Offered - Product Pitch

• Residential Real Estate – Reactive/Arms Length

Arrangements Since 2008

• Limited other capabilities with select firms

LIABILITY MANAGEMENT IS THE GOAL BUT ONE THAT HAS NOT YET BEEN DELIVERED

PRODUCTS



Advisors Tend to Avoid Credit Due to These Risks

9

• Limited products to offer vs. traditional lenders

• Client applying for a loan and being declined

• Concerns about the terms being competitive

• Uncertainty about potentially lengthy processes to execute loans



We believe a major opportunity exists to provide Financial Advisors, Wealth Managers, and Private Bankers with

automated access to pre-qualified, multiple loan optionsto levels not yet achieved in the financial industry.

The Difference: Enabling Advisors to be PROACTIVE VS. REACTIVE in providing loans to their clients

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Advisor Lending Opportunity in 2019



Panel Discussion

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Parting Thoughts & Takeaways

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Disclosure

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The services and materials described herein are provided on an ‘as is’ and ‘as available’ basis, with all faults. The graphicalillustrations herein do not represent client information or actual investments. Nothing contained in this presentation isintended to constitute legal, tax, accounting, securities, or investment advice, nor an opinion regarding the appropriatenessof any investment, nor a solicitation of any type. Envestnet disclaims all warranties, express or implied, including, withoutlimitation, warranties of merchantability or fitness for a particular purpose, title, non-infringement or compatibility.Envestnet makes no representation or warranties that access to and use of the internet while utilizing the services asdescribed herein will be uninterrupted or error-free, or free of viruses, unauthorized code or other harmful components.Envestnet reserves the right to add to, change, or eliminate any of the services and/or service levels listed herein withoutprior notice to the advisor or the advisor’s home office.

© 2019 Envestnet, Inc. All rights reserved.

FOR ADVISOR OR INVESTMENT PROFESSIONAL USE ONLY. NOT FOR DISTRIBUTION TO THE PUBLIC.

Taking the Mystery out of Lending for the Financial Advisor FINAL - Credit...Financial. Planning ....

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