More and more wirehouse advisors are going independent and seeking financing to assist in their transition to independence, whether they intend to join an RIA or Independent Broker Dealer. Here’s how it works:
Mark Jones, a wirehouse advisor with $245 million in AUM, is starting his own RIA. His junior partner and a client-service associate are transitioning with him.
Jones’ first step is to seek financing to capitalize his new business while end-client assets transition to the RIA’s new custodian. He hopes to borrow $500,000 and contacts Live Oak Bank. Live Oak reviews Jones’ transition plan and provides a loan for $500k. It’s a 10-year, fully amortizing loan with no repayment penalty.
The loan proceeds are broken down like this:
$125,000 Staff salaries for 1st quarter;
$30,000 Leasehold improvements;
$185,000 Working Capital.
Although Jones’ goal is to transition at least 80% of his clients’ accounts to the RIA within 6 months, he is well aware that the firm will not bring in its expected revenue during this period, owing to the fact that his custodian bills on a quarterly cycle. To give the revenues time to catch up, Live Oak modified the loan structure to allow for interest-only payments during those initial 6 months.
With the $500,000 loan from Live Oak Bank, Mark Jones can fund his initial business costs, transition his team and move client assets to a platform that empowers Jones to put his clients’ best interests front and center. What’s more, he’ll enjoy a better payout, as is typical among independent advisors.
How Advisors Can Help Clients and Media Understand Volatility
Can You Build a Business on Chance Encounters?
Here’s Why You Should Drive a Piece of Crap Car
Small Talk Can Mean Big Bucks
5 Ways to Eliminate Customer Service Friction
8 Productivity Tips to Get Your Company Moving
Challenging the Notion of What it Truly Means to be a Business Owner in the RIA Space
The Two Evergreen Rules of Social Media
Read This Before Buying a Boat
Exploring the Independent Broker Dealer Space
Insights20 hours ago
Facebook Libra: Weighing The Pros And Cons
Research20 hours ago
Trump’s Trade War Is Paralyzing Business
Development20 hours ago
7 Things Many Advisors Don’t Do and Fail as a Result
Global3 days ago
Should You Follow This Billionaire Investor Towards Gold?
Digital Strategy3 days ago
What Does the Fourth Industrial Revolution Mean for Healthcare?
Financial Podcasts3 days ago
Cracking the Code to Customer Devotion with Shawn Moon
Solutions3 days ago
6 Requests for Men in Financial Services
Advisor3 days ago
The Secret Power of Smarketing