A Deloitte study reveals that stock-based lending to wealthy clients has grown into a $5 trillion market. The strategy allows borrowers to tap cash without selling their shares.
Known as “buy, borrow and die,” the approach lets investors use stock portfolios as collateral for loans. Borrowers avoid triggering capital gains taxes by holding assets until death.
The market now extends well beyond billionaires. Affluent professionals and business owners are increasingly using these loans to fund lifestyles and investments.
Lenders view stock-based loans as low-risk because portfolios typically exceed loan values. Falling share prices can trigger margin calls, however, forcing borrowers to post more collateral.
Tax rules drive much of the strategy’s appeal. Holding assets until death allows heirs to receive a stepped-up cost basis, erasing built-in gains.
Critics argue the approach widens inequality and deprives governments of tax revenue. Supporters say it provides liquidity and encourages long-term investment.
Deloitte’s findings highlight how private wealth services have expanded. Banks and brokerage firms now compete aggressively for high-net-worth lending clients.
