Financing Your Route to Independence

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 1 st quarter;

$30,000 Leasehold improvements;

$30,000 Furniture;

$30,000 Technology;

$100,000 Recruiting another advisor (tuck-in) to join the new RIA;

$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.