Lombard lending is a centuries-old form of secured borrowing that allows investors to unlock liquidity without selling their assets. Previously only accessible to the ultra-wealthy via private banks, investors pledge portfolios of equities, bonds, funds, GIAs or ISAs as collateral, giving access to flexible credit while remaining fully invested.
Democratising this credit option to a wider group of high net worth individuals, working with their current wealth managers, provides an elegant solution that blends tradition with modern technology. It offers a line of credit, on demand, without having to move or liquidate assets.
For many affluent investors, the greatest challenge lies in balancing the need for liquidity with the desire to preserve investment portfolios. Selling assets to raise cash can disrupt carefully built strategies, crystallise Capital Gains Tax, and open up the risk of missing out on future market growth.
Traditional borrowing options are often slow, inflexible, or costly, leaving clients underserved at critical life moments such as funding a property purchases, tax planning, or family wealth transfers. Lombard Credit solves this dilemma by enabling investors to access funds quickly and efficiently without dismantling their portfolios, turning illiquid wealth into immediate opportunity while safeguarding long-term financial objectives
For wealth managers, adding Lombard lending to the client proposition has become more than an optional enhancement. It is now an essential component of modern wealth management, providing both a competitive advantage and a means to strengthen client loyalty.
Historically, if clients wanted access to Lombard Credit, they often had to move assets to a private bank. This created a challenge for advisors: not only did they lose Assets under Management, but the relationship with the client risked weakening as private banks assumed control.
Today, fintech platforms such as ours have transformed this equation. By offering regulated, technology-enabled access to Lombard facilities, wealth managers can integrate liquidity solutions seamlessly without transferring custody.
The Benefits of Lombard lending for Investors
The attraction of Lombard lending lies in its ability to provide liquidity while preserving long-term wealth strategies.
The most immediate advantage of Lombard Credit is liquidity without disruption. Clients do not need to sell assets or dismantle carefully designed investment portfolios to access funds. Whether the purpose is to buy a property, fund a business opportunity, pay school fees, or gift to loved ones, having access to cash without the need to disrupt long-term investment strategies means Lombard lending is an appealing option.
Capital can be released quickly, often within days. Unlike unsecured loans or traditional mortgages, Lombard facilities operate with flexibility similar to an overdraft. Borrowers can draw down funds when required, repay them at their own pace, only paying interest on the drawn amount, and reuse the facility as long as the underlying asset values remain intact.
Tax efficiency is another major benefit. Because borrowing does not involve disposing of assets, there is no immediate Capital Gains Tax liability. For clients concerned with inheritance tax (IHT) planning, Lombard lending can also support strategies that consider both assets and liabilities, helping families prepare for the future without eroding wealth. At the same time, the collateralised nature of the loan means that interest rates are often more competitive than other forms of short-term borrowing such as bridging finance.
The Benefits of Lombard lending for Wealth Managers
For wealth managers, the strategic benefit to enterprise value is clear.
By embedding portfolio lending into their service model, firms can retain valuable clients who might otherwise move assets elsewhere. They can maintain fee revenue, deepen advisory relationships, and offer a proposition that feels modern and holistic.
The availability of liquidity enhances the perception of value, positioning the advisor as a problem-solver who can address both long-term investment goals and immediate financial needs.
The economic impact for wealth managers is equally significant. By protecting AuM and embedding liquidity solutions, firms create greater “stickiness” in client relationships. They not only safeguard revenue but also position themselves as progressive leaders in a changing marketplace.
Risks to be Aware of with Lombard lending
For wealth managers, Consumer Duty considerations must be front of mind. Advisors must demonstrate clear value, fairness, and transparency by conducting suitability assessments, explain terms clearly, and ensuring their clients have the knowledge and resilience to manage risks.
To achieve this, wealth managers must consider their service model carefully. Some firms may wish to act simply as introducers, pointing clients toward trusted partners. Others may prefer to embed the facility fully, offering detailed advice and incorporating Lombard lending into wider financial planning discussions.
The decision often depends on regulatory permissions. Firms without credit broking permissions can still provide access, while those who wish to engage in deeper advisory roles must obtain FCA approval.
Training is therefore essential, with some firms adopting specialist teams while others rely on firm-wide accreditation programmes. We have developed a robust training plan for all firms and platforms who partner with Firenze, providing real-time support, customised to suit each partners requirements.
Investors should also take responsibility for understanding the risks around Lombard lending.
- Market Risk – If investment values fall, this may trigger a margin call which could require extra capital or investments to be sold at a time that is sub-optimal.
- Interest-rate Risk – If interest rates go up, this will increase the amount due on any of the loan that is being utilised, having a clear repayment plan in place is crucial
- Liquidity Risk – To maintain the loan-to-value amount offered, there may be instances where further liquidity is needed, requiring extra capital from a source other than the loan
- Tax Risk – If using ISAs or GIAs as a form of collateral, investors should be aware of the terms around that tax-wrapper benefit to ensure none of the tax benefits associated are invalidated.
Is Lombard lending the right option?
For those with the right profile, the advantages can outweigh the drawbacks. Access to liquidity without disrupting investments is a rare opportunity in wealth management. But the benefits only materialise when risks are managed responsibly, which is why the collaboration between client and advisor is so important. In this way, Lombard lending becomes not just a borrowing tool but an integral part of a carefully considered wealth strategy.
Ultimately, embedding Lombard lending is about future-proofing. Clients expect it, competitors are adopting it, and fintech has removed the operational barriers that once made it exclusive to private banks. Firms that integrate it now will be better placed to meet client expectations and grow enterprise value in the years ahead.
If you are a Wealth Manager and interested in talking to us about improving your client value proposition, get in touch with us here.
If you are an Investor, interested in discussing whether a Lombard loan is right for you, reach out to your Wealth Manager or financial advisor to discuss your options.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Wealth managers must seek appropriate regulatory permissions before introducing or advising on Lombard lending solutions.
