MassMutual launches securities-backed credit line with Supernova as lender

MassMutual Wealth Management began offering a securities-backed line of credit on Oct. 15, letting clients of its brokerage advisors borrow against eligible taxable holdings rather than sell them to raise cash.

Every loan is made, approved and serviced by Supernova Lending LLC, a non-bank lender licensed at the state level, under a partnership announced the same day. MML Investors Services LLC, the MassMutual subsidiary that operates as MassMutual Wealth Management, is the referral partner: Supernova pays it for taking applications and originating loans, and MMLIS makes no underwriting or credit decisions.

Clients can pledge stocks, ETFs, mutual funds, Treasuries, other bonds and cash equivalents held in MMLIS brokerage accounts. Retirement accounts are excluded, and the size of the line varies with the value, type and concentration of the pledged securities. MassMutual says it charges no application, maintenance or closing fees, and that interest accrues only on the amount drawn.

The line is not available in Mississippi, Nevada, North Dakota or Puerto Rico. MassMutual did not disclose rates, saying only that they compare favorably with many traditional borrowing options.

The credit line is the second banking-style product MassMutual has introduced to its advisors in two weeks. Seven days earlier, Flourish, the cash management platform MassMutual has owned since 2021, said it would offer its high-yield cash account to the insurer's network of more than 6,000 financial professionals.

For lending against client assets, the credit risk sits with Supernova. MMLIS books origination fees rather than net interest margin, and Supernova handles the underwriting MMLIS does not.

"We built Secured Credit Line in partnership with Supernova so when a client need or an opportunity arises, the financial professional can remain at the center of the conversation," said Linda Bestepe, MassMutual's head of lending and banking services. Vaughn Bowman, the insurer's head of wealth management, said access to credit, tapped thoughtfully, "is becoming an important component when building wealth."

Separately, MassMutual Ascend, the insurer's annuity arm, had topped $2 billion in cumulative RIA annuity sales as of our August reporting.