HighTower is looking to bring more liquidity to the market for entrepreneurial advisors by supplying startup capital.
The RIA platform provider will offer financing to new, qualifying advisor teams launching their own practices and affiliating with the firm.
Traditionally, little outside capital has been available to advisors looking to go independent; they had to fund the venture themselves, rely on their broker/dealer for financing, or take out loans from family and friends. A few investment banks—Live Oak Bank is a popular one—offer financing to RIAs.
New HighTower teams can use the capital to cover any costs associated with the launch of their businesses, and the amount of the loans will depend on each individual team’s needs, according to a HighTower spokesperson.
The loans are structured for a term of five to seven years, with no prepayment penalty, the spokesperson said.
"This financing program allows us to fuel the growth of more teams looking to launch their own businesses,” said HighTower CEO Elliot Weissbluth, in a statement. HighTower provided little information regarding the new offer beyond the statement, including whether the advisors would pay back the loan in cash or via equity in their new business. HighTower's business model has evolved, from providing back-office support to independent advisors for a fee to taking ownership of advisory firms.
HighTower is having a record year, with a total of 21 deals in the first half of 2017. The firm recently announced its acquisition of WealthTrust, an RIA with $6.4 billion in client assets, HighTower's largest transaction to date. The firm’s assets are now approaching $50 billion, up 27 percent since the first of this year.