Case Study: Combining Borrowing and Investing to Enhance Total Net Worth


Jake owns several auto dealerships and coaches soccer on weekends. Over the course of his 25 years in business, he had accumulated multiple financial accounts across several providers with a combined total of $17.5 million.

Jake had a $10 million line of credit secured by $15 million in short-term Treasury bills in a brokerage account. He had $9.3 million outstanding at just over 2% interest that he used to support the business. At another bank, he had a $5 million mortgage on his personal residence and $600,000 outstanding home equity line of credit (HELOC) that he was using for both lifestyle needs and additional business expenses. Finally, his personal and business banking accounts were at a third bank.

Needless to say, Jake spent a great deal of time keeping track of his financial affairs. During a conversation after a recent soccer game, a parent of one of the players referred Jake to Susan, his private banker at BNY Mellon Wealth Management.

BNY Mellon’s Solution

The private banker arranged a virtual, introductory meeting with Jake. Over the course of several subsequent conversations, Susan made a number of observations for which she thought BNY Mellon could improve the business owner’s current financial situation.

With Jake’s agreement, Susan and her Wealth Management team conducted a balance sheet review to confirm her observations and develop a deeper understanding of his full financial picture. At their next meeting, Susan and the team offered Jake several recommendations set forth in a strategic roadmap that would be confirmed and prioritized according to Jake’s overall time horizon.


The Value of Advice

Given our comprehensive investment and lending capabilities as well as the team’s timely recommendations, Jake was on board with developing an Active Wealth strategy to improve his current situation. Lacking an understanding of the markets and fearful in the current environment, Jake had given up investment returns and purchasing power for the safety of Treasuries. With his personal and business finances scattered across multiple providers, and left unattended to for years, he lacked a single source—a team of experts–to actively monitor and coordinate his entire financial picture with his long-term goals in mind.

The benefits to Jake were clear and easily quantified. Not only did he gain an entire team of advisors, he immediately realized substantial savings in interest expense on the line of credit and mortgage, plus the improved returns on his diversified, tax-managed investment assets.

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