Conventional commercial financing for financial advisors

SkyView's quantitative and qualitative process evaluates several factors for registered investment advisor loans. Prospective borrowers may apply for wealth management lending via a Small Business Association (SBA) loan or a conventional commercial loan; each structure has pros and cons.

SkyView's underwriting process requires information from both the buying/borrowing and selling advisor for RIA financing.

Preparing for Bank Financing

Bank loans for financial advisor financing for M&A have not been available until fairly recently; as a result, many RIAs seeking lending have never entered the commercial loan application process. Unlike other financial services firms, RIA lenders seek comprehensive relationships with their clients. Understanding the value of your checking, savings, mortgage, or other banking business to your bank partner may result in the most symbiotic partnership for RIA loans.

Borrowers in other industries with greater access to financing understand the nuances of which RIA lender to approach and how to approach them. SkyView has relationships with a network of RIA lenders nationwide; we know how each lender wants to see RIA acquisition financing structured.

Advisors who are well versed in the RIA lending options available to today's buyers not only ingratiate themselves to wealth management lenders but may also find increased receptivity from prospective sellers. Understanding each component of how RIA lenders will view your application for financing will best prepare you to secure RIA acquisition financing.

Character Assessment

The borrower's character is a significant underwriting factor for RIA loans; as a result, the underwriting process will examine credit, civil and criminal court records, and U5 declarations. Prior RIA acquisition financing conducted by each applicant, and their payment history on previous RIA loans, is critical. 

Cash Flow Assessment

Commonly, financial advisory practices have very limited tangible assets to secure RIA loans; consequently, RIA lenders focus on the revenue from both the practice applying for financial advisor financing (buyer) and the RIA being acquired to collateralize the loan for external RIA acquisitions. More specifically, RIA lenders want to determine if the post-acquisition entity has sufficient cash flow – debt service coverage - to support the requested RIA acquisition financing.

Internal successions must rely on the cash flow of one practice to obtain an RIA loan. RIA acquisition financing requests for internal successions often have more muted cash flow available for servicing the loan. SkyView's credit team works with lenders to recognize the value of internal succession plans to secure RIA loans.

RIA Loan to Value (LTV) Assessment

Every RIA lender in SkyView's network requires a valuation on both the buyer's and seller's practices in an external acquisition. RIA lenders are interested in the enterprise value of "newco" – the practice that will be created as a result of the acquisition or succession. With external RIA acquisition financing, borrowers will benefit from combining the enterprise value of both buyer and seller for RIA lenders to derive RIA loan-to-value calculations. Internal succession RIA loan-to-value benefits only from the seller's practice; as a result, internal successions often yield lower – less attractive – RIA loan-to-value ratios. SkyView's Credit Team specializes in RIA lending; we are well-equipped to communicate the value of internal succession plans to RIA lenders to secure loans for financial advisors.

Practice Assessment

Underwriters want to determine the transition risk for the acquisition, succession, or merger for each applicant.

Factors that impact financial advisor financing include:

  • Transition timeline for selling advisor
  • Client-facing personnel retention from seller’s practice
  • Advisory versus commission-based fees
  • Tenure of the acquiring advisor
  • Requisite personnel for acquiring advisor to service new clients
  • Age of retiring advisor
  • Average age of the clients in the seller’s practice
  • Diversification of client base
  • Average tenure of the clients in the seller’s practice
  • Beneficiary planning initiatives for the seller’s practice
  • Portfolio diversification and investment philosophy of the buyer

Validating Documentation

SkyView underwrites each application for investment advisor loans. After completing SkyView RIA acquisition financing, each lender conducts their own underwriting. Obtaining an RIA loan requires documentation to validate the RIA loan application. Documentation required includes:

  • Three years' personal tax returns
  • Three years' business tax returns
  • Personal financial statement
  • Revenue validation
  • Third-party valuation
  • AUM validation

Wealth Management Lending and RIA Financing Experts

At SkyView, our expertise is in wealth management lending and RIA acquisition financing.

Contact us today or call us at (866)567-6282 to learn how we can assist you through the M&A financing process.


Does SkyView Partners offer conventional RIA loans or SBA wealth management loans for financial advisors?

SkyView provides conventional (non-SBA), commercial RIA loans for wealth management successions, mergers, acquisitions, and debt restructuring. In certain cases where an advisor may not qualify for a conventional advisor loan, SkyView can offer an SBA structure.

Who is SkyView’s network of RIA lenders?

SkyView has established a well-capitalized, progressive network of RIA lenders across the nation. SkyView ensures that each borrower is paired with the financing partner best suited to help them achieve their RIA M&A initiatives.

What is the collateral for a conventional, commercial wealth management loan?

The borrower’s wealth management practice (post-transaction) is collateral for the loan. With external acquisitions, the borrower has the benefit of utilizing both buyer and seller practices as collateral to secure wealth management M&A financing.

When SkyView assesses the cashflow and LTV of an RIA practice, will they consider the assets and revenue being acquired?

Existing and new assets and revenue being acquired are considered in the cash flow and LTV analysis. SkyView understands that production will change post-transaction, and the borrower should be able to support a higher advisor loan amount than the current practice could support alone.

Does SkyView work with potential buyers who do not currently own an RIA practice but desire to acquire one?

SkyView is well versed in lending to individuals that do not currently own a practice. Historical examples include internal successions for junior advisors already part of an existing practice, but who are not yet owners, or industry participants (i.e., wholesalers) who have desire to acquire a wealth management practice.

What is an acceptable credit score?

Minimum credit scores are above 650, with limited exceptions.

How does SkyView determine who is eligible for RIA financing?

SkyView’s credit team manages a comprehensive underwriting process with a deep understanding of a wealth management practice. This process includes a character assessment, cash flow assessment, LTV assessment, validation of document collection, and quantitative practice review. Through this underwriting process, SkyView is able to determine which RIA borrowers are eligible for conventional RIA bank financing.

How many documents are required to be collected and validated for wealth management M&A financing?

SkyView requires between 27 and 30 documents to close each RIA loan, dependent on the complexity of your transaction.

How does an advisor initiate the advisor loan process?

To start the loan process with SkyView Partners, advisors can click the “Get Pre-Approved” button on the SkyView homepage to enter preliminary information. If approved, SkyView will send advisors a Pre-Approval Letter within 48 hours, in addition to a list of next steps to secure advisor M&A financing.

Take your practice to the next level.