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© 2025 M&T Bank and its affiliates and subsidiaries. All rights reserved.
Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), Wilmington Trust Asset Management, LLC (WTAM), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through M&T Bank Corporation’s international subsidiaries. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank. Member, FDIC. 
M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.
WTIA, WFMC, WTAM, and WTIM are investment advisors registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, WTAM, and WTIM is also available on the SEC's website at adviserinfo.sec.gov. 
Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services. Custom credit advisors are M&T Bank employees. Loans, retail and business deposits, and other personal and business banking services and products are offered by M&T Bank  Equal Housing Lender. Bank NMLS #381076. Member FDIC.
M&T Bank  Equal Housing Lender. Bank NMLS #381076. Member FDIC. 
Investment and Insurance Products   • Are NOT Deposits  • Are NOT FDIC Insured  • Are NOT Insured By Any Federal Government Agency  • Have NO Bank Guarantee  • May Go Down In Value  
Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any security or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance that any investment, financial or estate planning strategy will be successful.
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Finance today’s needs without sacrificing tomorrow’s goals

A sudden need for significant funds arises—where should you turn? One strategy can be leveraging your portfolio’s assets to access liquidity. What do you need to know about using your holdings as collateral? We sat down with Jon Coppola, head of Private Banking at Wilmington Trust, for the skinny on  potential rewards and risks of this complex yet engaging space.

Jon, some wealthy clients may be thinking, why shouldn’t I just keep a large portion of my portfolio stashed in cash, so it will be right there if I need it?

Well, it depends. There’s no right or wrong answer. This is just one of many decisions that needs be part of a discussion between clients and their advisors, based on their goals and objectives. One potential downside of keeping a great deal of uninvested cash on the sidelines—or “dry powder” as some refer to it—may be a missed opportunity to let invested monies work for you. Whether you’re talking about capital appreciation, dividends, or yields, there’s something to be said for letting assets continue to try and grow in order to help achieve your long-term goals. Staying invested may potentially be more productive, especially when you consider the bare-bones interest rates on holding cash. A key factor in the decision of how individuals decide to prepare to access liquidity is the degree of risk they feel comfortable taking and how to manage it efficiently.

Let’s say someone is more inclined to be fully invested. Couldn’t they just redeem some holdings if a significant cash need arises?

Certainly, but there may be ramifications to doing so. Redeeming investments can trigger taxable events if the sale results in a gain. Also, by cashing in some investments, they stop working for you, reducing the value of your overall portfolio. So, like everything, there’s a cost-benefit analysis.

What is securities-based lending? What advantages can it offer?

A securities-based loan is an interest-only loan where the borrowed amount is collateralized or backed by a portion of the stocks, bonds, or eligible securities in one’s portfolio. You can create ready cash for any spending need—such as tax payments, lifestyle purchases, charitable giving, home renovations, or even business opportunities. The application process is streamlined, and the loan can be set up fairly quickly, often within just a few days. Also, it’s pretty cost-effective with no set-up, non-use, or cancellation fees. There is competitive pricing, compared to some other financing strategies that reward a client for the overall relationship.

How much can someone borrow against their securities? How does it work?

How much leverage a portfolio can support is based on the advance rates we assign to each security held in the pledged account. The borrowing power will depend on a variety of factors, such as: asset class, type, and liquidity of the investment; whether there’s a concentration, say, of equities; how vulnerable a particular asset class is to market volatility; the size and value of a portfolio, etc. However, regardless of the size of the portfolio we always work with our clients to be sure that the amount being leveraged is suitable and being done in a strategic and thoughtful way. We develop a plan with clients based on their goals, time horizon, risk tolerance, and what we believe is use of leverage.

Are there any risks associated with securities-based lending?

There are risks associated with any type of borrowing and clients need to be aware of them. Leverage is a component of return and can magnify both losses and gains. When it comes to securities-based lending, the securities you borrow against have a value. In the event of major market fluctuations, the value of your pledged assets could decline considerably, leading to a possible margin call, which may require additional collateral or principal repayment. That in and of itself could involve an additional need for cash to supply new collateral to “cover” the borrowed amount, presenting a problem or even a need to redeem assets at inopportune times and unfavorable values. Of course, a sudden redemption could entail unanticipated tax consequences. And another risk is that a loan’s low interest rate could increase, making the loan more expensive than originally anticipated.

How do you manage those risks for your clients?

We start by understanding a client’s overall balance sheet, goals, and objectives, and advise the client to use leverage strategically and in a suitable way. Furthermore, there are a number of ways to protect against some of the risks I just discussed. One way is to diversify and selectively borrow against less volatile investments. Those holdings are generally less vulnerable to sharp market shocks that could lower the value of your portfolio. Regular monitoring of investments, especially during volatile times, can be very important to help sidestep drawdown exposure (a peak-to-trough drop in asset values).

What is the most important takeaway for those considering a securities-based loan?

Credit solutions are broader than just securities-based lending. Our advisory, consultative process manages balance sheets to see that a short-term funding strategy complements—not competes with—one’s overall long-term wealth management goals. When a client comes to us with a liquidity challenge—or even better, before one takes place—we have a conversation to determine the right solution that’s tailored to an individual’s particular circumstances.

It’s important to align the level of debt, the reason for the debt, and the length of time until the debt is repaid. If, for example, a debt is going to be in place long term, we may consider alternate credit solutions. In the case of a client, once the liquidity has been deployed, the individual works with his or her team to determine if permanent financing makes sense, given the timeframe expected to have the balance outstanding. This could take the form of our advisory credit solutions, residential mortgages, etc. Ultimately, it comes down to maintaining a culture of advice that places emphasis on the strategic use of leverage to underscore a thoughtful approach to managing wealth.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. This article is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.

Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, member FDIC.

Please see important additional disclosures at the end of the article.

Credit is being offered by M&T Bank. Member FDIC. The credit offering requires an investment account at M&T Bank, Wilmington Trust Company, and Wilmington Trust N.A. and sufficient eligible collateral to support a credit facility of the applicable loan amount. M&T Bank, Wilmington Trust Company, and Wilmington Trust, N.A. are affiliated, but are separate entities. Neither M&T Bank, Wilmington Trust Company, nor Wilmington Trust, N.A. is responsible for the products and services of each other. Borrowing with securities as collateral involves certain risks and is not suitable for everyone. A complete assessment of your individual circumstances is needed when considering a securities-based loan. You should review both the Securities-Based Lending Program Credit, Security and Guaranty Agreement. and the Disclosure, Waiver of Conflict of Interest, Acknowledgment and Release carefully with your legal and tax advisors. Also consider the following: • Credit secured by marketable securities can increase your level of market risk • The downside is not limited to the collateral value in your pledged account • Assets held in your accounts may lose market value or may be afforded less collateral value by the lender at any time, resulting in a collateral call • The collateral maintenance requirements can be increased at any time, which may result in a collateral call, and the lender is not required to provide you with advance written notice • You are not entitled to an extension of time on a collateral call • An increase to the variable interest rate will result in a higher periodic payment required and, if you are unable to make the higher periodic payment, could result in a collateral call; the sale of any securities in your account may be initiated, without contacting you, to meet a collateral call • Your ability to withdraw assets will be subject to the consent of the lender • The sale of your pledged securities may cause you to suffer adverse tax consequences; you should discuss the tax implications of pledging securities as collateral with your tax advisor. Neither M&T Bank Corporation, nor any of its subsidiaries, affiliates, or advisors, provide legal, tax or accounting advice; you should consult a legal and/or tax advisor before making any financial decisions. All securities and accounts are subject to eligibility requirements. Certain restrictions and terms and conditions apply. Tax-deferred assets are not eligible. Financing real estate with a securities-based loan or line of credit carries risk and may not be appropriate for your needs. Securities held in a retirement account cannot be used as collateral to obtain a loan.

Disclosures:

    • © 2025 M&T Bank and its affiliates and subsidiaries. All rights reserved.
    • Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), Wilmington Trust Asset Management, LLC (WTAM), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through M&T Bank Corporation’s international subsidiaries. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank. Member, FDIC. 
    • M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.
    • WTIA, WFMC, WTAM, and WTIM are investment advisors registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, WTAM, and WTIM is also available on the SEC's website at adviserinfo.sec.gov. 
    • Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services. Custom credit advisors are M&T Bank employees. Loans, retail and business deposits, and other personal and business banking services and products are offered by M&T Bank  Equal Housing Lender. Bank NMLS #381076. Member FDIC.
    • M&T Bank  Equal Housing Lender. Bank NMLS #381076. Member FDIC. 
    • Investment and Insurance Products   • Are NOT Deposits  • Are NOT FDIC Insured  • Are NOT Insured By Any Federal Government Agency  • Have NO Bank Guarantee  • May Go Down In Value  
    • Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any security or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance that any investment, financial or estate planning strategy will be successful.
    • Credit is being offered by M&T Bank. Member FDIC. The credit offering requires an investment account at M&T Bank, Wilmington Trust Company, and Wilmington Trust N.A. and sufficient eligible collateral to support a credit facility of the applicable loan amount. M&T Bank, Wilmington Trust Company, and Wilmington Trust, N.A. are affiliated, but are separate entities. Neither M&T Bank, Wilmington Trust Company, nor Wilmington Trust, N.A. is responsible for the products and services of each other. Borrowing with securities as collateral involves certain risks and is not suitable for everyone. A complete assessment of your individual circumstances is needed when considering a securities-based loan. You should review both the Securities-Based Lending Program Credit, Security and Guaranty Agreement. and the Disclosure, Waiver of Conflict of Interest, Acknowledgment and Release carefully with your legal and tax advisors. Also consider the following: • Credit secured by marketable securities can increase your level of market risk • The downside is not limited to the collateral value in your pledged account • Assets held in your accounts may lose market value or may be afforded less collateral value by the lender at any time, resulting in a collateral call • The collateral maintenance requirements can be increased at any time, which may result in a collateral call, and the lender is not required to provide you with advance written notice • You are not entitled to an extension of time on a collateral call • An increase to the variable interest rate will result in a higher periodic payment required and, if you are unable to make the higher periodic payment, could result in a collateral call; the sale of any securities in your account may be initiated, without contacting you, to meet a collateral call • Your ability to withdraw assets will be subject to the consent of the lender • The sale of your pledged securities may cause you to suffer adverse tax consequences; you should discuss the tax implications of pledging securities as collateral with your tax advisor. Neither M&T Bank Corporation, nor any of its subsidiaries, affiliates, or advisors, provide legal, tax or accounting advice; you should consult a legal and/or tax advisor before making any financial decisions. All securities and accounts are subject to eligibility requirements. Certain restrictions and terms and conditions apply. Tax-deferred assets are not eligible. Financing real estate with a securities-based loan or line of credit carries risk and may not be appropriate for your needs. Securities held in a retirement account cannot be used as collateral to obtain a loan.

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