Dismantling the Myths and Misconceptions of SBLOC

What if your clients could get liquidity without selling a single investment? Many advisors still think SBLOCs are risky or complex. It’s time to change that thinking.Whether it’s a large tax bill, tuition, or a real estate closing, your clients’ short-term liquidity needs can arise at any time. That’s why securities-backed lines of credit (SBLOCs) are a smart, strategic tool that helps advisors like you meet clients’ needs without disrupting long-term plans.

Still, many advisors hesitate to provide SBLOCs due to outdated assumptions or uncertainty about how they work. Let’s clear the air.

What is a Securities-Backed Line of Credit (SBLOC)?

An SBLOC is a revolving line of credit that allows clients to borrow against the value of their taxable investment portfolio—without selling any of the securities. It’s secured by the assets in the account and provides flexible repayment with interest-only minimum payments.

This means clients stay invested, potentially continue to grow their portfolio, and still access cash when they need it.

What Is the Difference Between SBLOC vs. Margin Loans?

While both options involve borrowing against investment assets, a margin loan is used specifically to purchase additional securities, adding leverage and risk. An SBLOC, on the other hand, is a non-purpose loan, which means it’s not used to buy investments. Instead, it’s used for personal, business, or real estate needs, providing access to liquidity without increased market exposure.

What is the Difference Between SBLOC vs. HELOC?

A home equity line of credit (HELOC) is secured by the equity in a home. It may offer favorable rates but comes with property-related risks and longer set-up times. An SBLOC typically provides faster approvals (3–5 business days), doesn’t require appraisal and income verification, and doesn’t tie up a client’s home—making it a clean, flexible option that keeps financial decisions centered in your advisory practice.

Common SBLOC Myths and Misconceptions

Let’s tackle some of the most common concerns advisors have about SBLOCs—and why they’re often based on outdated or misunderstood information.

“SBLOCs are just for clients in a cash crunch.”

SBLOCs aren’t about financial emergencies—they’re about strategic liquidity. Many clients use them for opportunity-based spending: a home purchase, tax payments, or a one-time business expense. Having an SBLOC in place doesn’t mean your client is struggling—it means they’re planning ahead.

“I worry about how an SBLOC could impact my client’s credit.”

CashAdvantage Lending provides a non-reported line of credit—meaning drawing a balance doesn’t show up on credit reports or affect credit scores unless there’s a default. This makes them a discreet tool for accessing liquidity without adding to visible debt loads.

“An SBLOC will hurt my AUM.”

Quite the opposite. SBLOCs help protect your assets under management by allowing clients to access liquidity without selling off investments. Instead of liquidating securities to fund a short-term need, they can borrow against the portfolio, keeping your investment strategy—and their financial plan—intact.

“SBLOCs are the same as margin loans.”

This is a misconception we hear a lot. Margin loans are designed to buy more securities and typically carry higher risk because of that. SBLOCs are non-purpose loans, meaning they’re prohibited from being used to purchase securities. They’re about cash flow, not leverage.

“I don’t have time to figure out the set-up process.”

The SBLOC application process is surprisingly straightforward. AssetMark’s SBLOC solution, CashAdvantage Lending^SM, provides most approvals within 3–5 business days and only requires your client to fill out a quick application (similar to a credit card). Once set up, it becomes a reusable credit line your client can tap into as needed—without reapplying each time.

“SBLOCs are only for HNW clients.”

While high-net-worth clients can certainly benefit from SBLOCs, they’re not the only audience. Anyone with a taxable portfolio of around $50,000 or more could be a good candidate, especially if they face irregular cash flows or need gap coverage flexibility for larger purchases.

“Clients can use SBLOCs to fund whatever they want.”

Almost true—but with one big caveat. SBLOCs can be used for anything except the purchase of securities. That means they’re perfect for paying taxes, consolidating debt, funding tuition, making charitable donations, or even financing a major life event.

“My client doesn’t need to borrow that much.”

That’s okay. The beauty of an SBLOC is its flexibility. There’s no minimum draw requirement, and your client only pays interest on the amount they borrow. Think of it as a safety net—there when they need it, cost-free when not used.

“An SBLOC may affect my client’s portfolio or investments.”

Your client’s underlying portfolio stays intact and continues to perform according to your investment strategy. The only exception is if the portfolio's value drops below the required collateral threshold, at which point a maintenance call could require action. If that occurs, the client must then restore the loan-to-value ratio—either by depositing additional assets or repaying part of the loan—to avoid forced liquidation of securities.

That’s why it’s smart to borrow conservatively and monitor SBLOC loans regularly, just like you would with any lending product.

Ready to Offer More Value Without Adding Complexity?

At AssetMark, we understand the demands on modern advisors. Our CashAdvantage Lending^SM solution helps you meet clients’ needs with an SBLOC that’s easy to implement, flexible for clients, and designed to not affect your core investment strategy.

Ready to add SBLOCs to your planning strategy? Contact AssetMark to learn how CashAdvantage Lending^SM can help you go above and beyond for your clients.

*Source: 2 times faster according to AssetMark advisor data 2023-2024.

8020184.1 | 06/2025 | 06/30/2027