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Unlocking the Door to Acquisitive Growth

By Ray Sclafani | October 4, 2016

client acquisition for elite financial advisors It’s a well understood reality that there is a veritable army of advisors in today’s marketplace who covet the idea of super-charging the growth of their business with an acquisition to augment their slower-paced organic growth. The obvious question then is why do so few of these potential acquirers ultimately pull the trigger? While there are a host of factors – from clashing cultures to operational incompatibility to unrealistic seller demands – by and large the single greatest impediment has been access to capital to finance these deals. 

Traditional bank financing has been hard to come by, in large part because commercial lending groups simply haven’t developed a clear understanding of the advisory business model. They see an intangible business whose value is derived purely from cash flows and client goodwill, without the brick and mortar facilities and equipment they typically look for as collateral. Some advisors have successfully turned to their broker-dealers and custodians to help fund acquisitions, but those resource pools tend to be limited and reserved for only the top revenue-generating firms.

The same obstacles also hold true for practices seeking to finance the lift-out of a wirehouse advisory team where there may be forgivable loans that need to be repaid. So where’s an acquisitive advisor who’s bent on growth supposed to turn other than self-financing?

Enter Live Oak Bank

On a recent business trip, I was fortunate enough to arrange a detour so that I could sit down for the better part of a day with the folks at Live Oak Bank in Wilmington, NC. I’d heard of their keen interest in investment advisor funding, but wanted to check the organization and the people out for myself.

Suffice it to say that I came away from that meeting duly impressed. The lending team there had a genuine understanding of the inner workings of advisory practices and seems deeply committed to facilitating acquisition, working capital and succession loans for growing practices. In fact, over the short span of about fifteen months Live Oak has amassed a financial advisory loan portfolio of close to $400MM and by the end of the year expects to surpass Wells Fargo in the total amount of SBA loans underwritten.

For acquisition-minded advisors, this aggressive new player is worth checking out. They just might be the key to opening up a whole new world of growth opportunities.


Coaching Questions from this article:

  1. Think about your long-term business strategy. What sort of growth do you envision for your practice? Do you expect to achieve that organically or do you envision one or more acquisitions to achieve that vision?

  2. What’s your timetable and strategy for identifying prospective acquisition targets? Which makes more sense for your business: an advisory team lift-out or the purchase of a retiring advisor’s book of business?

  3. Have you strategically retained cash in the business to fund future growth, or will you need to turn to external financing sources?


Topics: Client Acquisition

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