You're likely too busy to read a white paper today so enjoy our weekly Blue Paper where it’s all about the highlights.

Week : 09/20/2017

You're likely too busy to read a white paper today so enjoy our weekly Blue Paper where it’s all about the highlights.

Week : 09/20/2017

This Weeks Blue Paper Topics
  • Industry demand for tuck-in advisors is off the charts
  • Broker Protocol: When You’re On A Team
  • 5 Financing Factors to Consider When Structuring Your Acquisition Deal
  • Are you a passive or poised advisor?
  • WSBA Loan Property Liens
Topics From Previous Issues

    Blue Paper By Advisorbox Week of 9/04/2017
  • LPL acquisition of NPH = Recruiting opportunity
  • Wells Fargo: Wheels Falling Off? (originally posted on 8/23)
  • UPDATE: Yes, the wheels are falling off.  Wells Fargo fraud much worse than anticipated, like 1.4 million worse
  • Is Wells Fargo’s new brand impacting wealth management growth? (Originally posted on 8/23)
  • UPDATE: The decline in brand is impacting the bank – it must be impacting advisors as well
Blue Paper By Advisorbox Week of 8/23/2017
  • Are Wells Fargo Wheels Falling Off?
  • Wells Fargo’s New Brand Impacting Wealth Management Growth?
  • 5 Things To Do When First Considering Selling Your Practice
  • The 2017 Solar Eclipse was Spectacular, if You had Eclipse Glasses that is
  • 15 Great Pinot Noirs for Less Than $50

Blue Paper By Advisorbox Week of 8/13/2017
  • Advisorbox Rolls Out Strategy ProFormas for Advisors
  • Strategy ProFormas for Succession and Selling
  • Strategy ProFormas for Hiring and Acquiring
  • Strategy ProFormas for Recruiting
  • Blended Strategy ProFormas
Blue Paper By Advisorbox Week of 8/01/2017
  • Where Are All The Sellers?
  • RIA M&A Tracking Toward Another Record Year
  • Sellers: Know Your Numbers
Blue Paper By Advisorbox Week of 7/17/2017
  • Retirement & Succession
  • Mergers & Acquisitions
  • Acquisition Lending
Blue Paper By Advisorbox Week of 7/10/2017
  • Breakout Broker
  • Breakaway Broker
  • Wirehouse Broker's Recruiting
  • Broker Protocol
  • Recruiting Guide for Firms
  • Retirement & Succession
  • Mergers & Acquisitions
  • Acquisition Lending
  • Blue Paper By Advisorbox Week of 6/26/2017
  • Top 5 Compelling Takeaways For Breaking Away
  • 7 “Breaks” Before You Breakaway
  • 10 Ways Advisorbox Helps Breakaway Brokers Break Away
  • 5 Reasons Breakaway Brokers Should Call Advisorbox
Blue Paper By Advisorbox Week of 6/19/2017
  • 8 Things Sellers Should Know About Valuations
  • Sellers: Advisorbox Screens Buyers Based On 10 Components
  • 8 Advisor Acquisition Lending Myths
  • The 8 Causes That Can Turn Passive Advisors Into Active Recruits
  • Broker Protocol: Discretion Direction
Blue Paper By Advisorbox Week of 6/12/2017
  • 5 Service Boxes from Advisorbox
  • 7 Broker Protocol Basics
  • 6 ways DOL impacts advisor marketing
  • Rouge brokers and the firms that hire them
  • Will wirehouses re-evaluate Broker Protocol Membership?
Blue Paper By Advisorbox Week of 6/05/2017
  • Express Lending made even easier for advisors
  • 3 Alternative Paths for Non-producing Branch Managers
  • Get Advisors “Recruiting Compass” Pointed To Your Firm
  • Nurturing Your Recruiting/Acquisition Pipeline
  • Partnerships: Put It In Writing
Blue Paper By Advisorbox Week of 5/29/2017
  • Our 10 Spoofs on the New Wirehouse Recruiting Strategy
  • “Stepping Over Mentors to Pick Up Millennials” = New Wirehouse Recruiting Mantra
  • 3 Reasons Why Other Firms Will Not Follow the New Wirehouse Recruiting Direction
  • Recruiting Bonuses are Just One of the Financial Considerations of Moving Firms
  • Suggested Books for Advisors this Summer
Blue Paper By Advisorbox Week of 5/22/2017
  • Wirehouse Advisors Putting $800 Per Day on Their Manager’s Desk
  • Growth Through Acquisitions. Brilliant!
  • 5 Waves of RIA M&A Activity
  • Producing Branch Managers Back in Demand
  • Are You on Our Buyers List?
Blue Paper By Advisorbox Week of 5/15/2017
  • Merrill Gets Booted From The Adult’s Recruiting Table
  • Our 10? Favorite spoofs and one-liners about the new Merrill Lynch Recruiting strategy
  • Where Are The Largest Recruiting Bonuses Now?
  • 5 Advisor Contingency Plans
  • What Written Signatures Reveal About You And Your Clients
Blue Paper By Advisorbox Week of 5/08/2017
  • Wirehouse Advisors: Financially Advising Yourself
  • Wirehouse Advisors: What Are You Really Getting paid?
  • No succession plan? No problem. Maybe...
  • Survey: Times Are Good For Small Business Owners
  • 2017 Starts with record quarter of RIA M&A activity
Blue Paper By Advisorbox Week of 5/01/2017
  • Acquisition Financing is Skyrocketing
  • Top 10 Seller's Markets for Exiting Advisors
  • Advisorbox Top 10 Seller States for Exiting Advisors
  • 2016 Best Ranked Cigars And Where to Get Them
  • 7 Ways to “Hack” Your Interactions with Candidates
Blue Paper By Advisorbox Week of 4/24/2017
  • 5 Things To Do When First Considering Selling Your Practice
  • Get Out Of My Personal Space
  • FICO Knows A Lot About You But What Do You Know About FICO?
  • FICO Score Minimums For Business Loans
  • FICO’s 5 Components Of Your Credit Score
Blue Paper By Advisorbox Week of 4/17/2017
  • Advisorbox is expanding our “Buyer Listing”
  • Qualify at about 6x to 7x your revenue for SBA acquisition loans
  • Qualify for 7x annual debt payment
  • Business Loan Rates are Increasing
  • Increased cost of capital consequences
Blue Paper By Advisorbox Week of 4/10/2017
  • 2017 IBD Report Card
  • J.D. Power 2017 Top 10
  • J.D. Power 2017 U.S. Full Service Investor Satisfaction Study
  • 2016 Insurance M&A
Blue Paper By Advisorbox Week of 4/03/2017
  • RIA M&A Getting Stronger In 2017
  • Don’t Be Held Hostage By Your Deferred comp
  • Deferred Comp Replacement Options
  • Busy DOL Week
  • 3 complications With DOL Timing And Outcome
Blue Paper By Advisorbox Week of 3/27/2017
  • Takeaways from 2016 M&A Data
  • Soft Landings for Breakaways
  • Breaking Down Soft Landings
  • April Fools Day: Two-Year Reprieve
  • AdvisorboxMedia Twitter Feed: Consolidate Industry Tweets
Blue Paper By Advisorbox Week of 3/20/2017
  • 10 Ideas To Attract Growth-Minded Tuck-Ins
  • SBA Loan Property Liens – 5 Things To Know
  • Birthday Paradox
  • Week In DOL
  • Advisorbox Directory Tops 200
Blue Paper By Advisorbox Week of 3/13/2017
  • 8 Reasons Why Advisors Are Still Moving Firms In 2017
  • What To Do If You Get Terminated
  • March Madness Begins This Week
  • Recruiting Advisors For Your Independent Advisory Firm? Prepare Your Brand
  • DOL Weekly
Blue Paper By Advisorbox Week of 3/6/2017
  • DOL Weekly Update
  • 5 Tips for Finding Sellers
  • 5 Buyer Preparation Tips if You Will Need an Acquisition Loan
  • Ready to Start Acquiring Practices? 10 questions to ask your broker dealer
  • Recruiting: Passive but Open Minded
Blue Paper By Advisorbox Week of 2/27/2017
  • DOL
  • Retiring in 10 Years? Maximize what you monetize
  • How Buyer Loans Impact Sellers
  • Raider Rules Radar
  • Recruiting: Passive but Open Minded

Industry Demand for Tuck-in Advisors is Off the Charts

The recruiting demand for both W-2 and 1099 structured tuck-in advisors is as strong as we have ever seen. The demographics of the aging advisor population and the growing inorganic growth strategy trend of practices of nearly all sizes hiring and acquiring, has created a competitive environment for recruiting tuck-in advisors.

There are literally thousands of advisors of all shapes and sizes looking to bring in another advisor into their practice. Not a day goes by without Advisorbox receiving a call from an advisor looking for a tuck-in advisor, typically targeting $200K to $500K in revenue.

While advisors at this level can certainly affiliate direct with a IBD or custodian, there are unique value propositions across the country for tuck-in advisors who would rather be tucked into another practice than flying solo.

Tuck-in Value Proposition Options

The tuck-in value proposition and personality match is different with each opportunity.  Advisorbox literally has hundreds of advisors in our database offering numerous and varying value props to advisors who join them. When it comes to tuck-in options there are no cookie cutter deals, each one is negotiated separately providing tuck-ins with the ability to maximize the industry’s demand for their services.

Depending on the geographical area and timing, there are compelling value props available for would be tuck-in advisors and for currently tucked-in advisors looking for a better scenario to plug into. Here are some of the options we are seeing for tuck-ins:

  • Successor – Senior advisors who want a future successor to groom, then either sell to outright, or sell gradually through partial client acquisitions or equity buyouts over time. About 70% of soon to be retiring advisors do not have a succession plan or successor in place. This opportunity is becoming more frequent as the aging advisor population is starting to plan their exit strategies.
  • Warm leads – There are advisors whose marketing programs generate more leads than they can handle themselves and others who have grown large enough to need help in servicing existing clients.
  • Acquisition clients – Tuck-in advisors can also benefit from the acquisition wave coming to the industry due to the aging advisor population. There are practice principals acquiring practices who take the top clients from an acquisition for themselves, but give their tuck-in advisors the rest of the clients to service.
  • Growth incentives – There are a lot of creative incentives local advisors have come up with to compete for tuck-ins and to incentivize growth. We have seen a growing trend of advisors who will reward tuck-ins business development by matching every new client you bring in, with another client the advisor transfers to you to service and grow. Other advisors will match the assets you bring to their practice by carving off the equivalent AUM from their book and provide to the tuck-in to service.
  • Coaching and development – There are a lot of top independent advisors who both excel and love to coach and develop advisors. This kind of coaching practice principal is ideal to tuck-in with if you are looking to grow, develop, and take your assets and revenues to the next level.
  • Growth and business development support – There are practices who will support you with individualized marketing programs and participate in your client meetings to help close more deals. Some advisors are more hands on than others in helping you grow. For would be tuck-ins, growth is typically their most important goal. There are advisors sincerely committed to helping their tuck-ins grow and willing to invest the time and resources.

Considering tucking into another practice? Advisorbox will be pleased to share the current options in your area and introduce you to local advisors offering compelling tuck-in value propositions.

Broker Protocol: When You’re on a Team

It’s common for wirehouse advisors to be on teams and if you are, there are different aspects to consider.

  • If you are on a team, and the team is moving together to a new firm, it is more difficult to keep the move under wraps. Team members should discuss with each other the importance of confidentiality throughout the process.
  • If you plan on leaving your team behind, it can get more complicated as typically several team members can be involved in different points in supporting the client base.
  • If you’re currently on a soon to be “left behind” team you’ll want to find your team agreement. The agreement should spell out client rules and usually are restrictive to a departing team member. The team agreement should also be given to your legal council advising you on Protocol.
  • If there is not a written team agreement and you have been on the team less than 4 years then Protocol only protects the clients you brought to the team. If you have been a producing advisor on a team for 4 years or more, all team clients are fair game.
  • It’s not unusual for a team agreement to prevent you from soliciting clients other team members brought to the firm, however, you may still be able to contact those clients to inform them of your departure and new firm.

Advisorbox strongly advises advisors engage a Protocol experienced attorney to ensure that all requirements are followed. Advisorbox is not a law firm and does not provide legal advice. This overview is provided for general information purposes only.

Find Protocol experienced attorneys on the Advisorbox Directory.

For more on Broker Protocol, click the button below to read the Advisorbox Broker Protocol Blue Paper.

5 Financing Factors to Consider When Structuring Your Acquisition Deal

  1. Timing Alignment
    Both conventional and SBA loans can take 30 to 45 days to fund but this time clock begins after we have a complete financial package and there are a few factors that can potentially delay (but typically don’t) the process. Before scheduling a hard closing date with the seller consider checking to make sure the loan can be done in time with your lender.
  2. Seller Financing
    While 100% financing is available to qualified deals and buyer borrowers, most deals we see are structured with the seller financing 25% and the buyer financing 75% with the loan. For SBA loans the seller note is required to be on standby for 2 years.
  3. Seller Subordination
    In all cases, our lenders require that the seller note be subordinated to the lender. This means the seller is in second position behind the lender. It doesn’t matter if the seller is financing 25% or 75% the subordination letter is required. Some sellers who are financing a majority of the deal may not like being in second position to a lender who is financing less than they are. While this is understandable, it’s just the way it is in commercial lending. This is a topic that should be covered with the seller during the negotiating process and not sprung on them at the last minute and potentially kill the deal. The lender always provides the subordination letter as a closing requirement.
  4. Business Valuations
    Third party business valuations are required on the seller’s practice over $500K for our non-SBA lenders and over $350K for SBA loans. AdvisorLoans lenders will not finance an amount that is higher than the valuation estimate. There are several third-party valuation companies focused on Financial Advisors. Not all lenders accept all valuations and some lenders require that they order the valuation.
  5. First lien position
    Most all lenders will require a first UCC lien position on all acquisition loans. This means that advisors who have other business loans that have placed a UCC lien, such as SBA loans, bank loans, seller notes, and broker dealer loans (other than recruiting notes), will need to be refinanced and rolled into the new loan.

Are You a Passive or Poised Advisor?

Most advisors are not at the point in their life where they are actively looking to transition to a different firm or model today. They’re not calling recruiters or hiring managers and proactively doing due diligence on all of their options.

While there are advisors who are currently actively looking at recruiting options, most advisor recruiting leads generated are more passive than active.

For some advisors, it is a long process to consider moving firms or changing models. Others will experience the scenario where the straw broke the camel’s back and once a decision to move has been made will try to do it as quickly as they can.

For passive advisors who are generally happy where they are at, isn’t overly excited about the prospect of transitioning their clients, and will likely remain passive until a triggering event happens in the future.

However, some advisors that aren’t currently active in exploring recruiting options aren’t always passive, but poised. These advisors can be the most ideal recruits because while they aren’t actively seeking out recruiting opportunities, they are open to the perfect recruiting value proposition that presents itself.

Advisorbox of course loves to help advisors who have already made up their mind that they are moving firms and want to evaluate and compare their options. However, we also love working with advisors who aren’t actively looking now but would be poised to move if the “right” scenario presented itself.

  • If you’re happy at your current firm but have an open mind to hear about your options, recruiting managers want to speak with you.
  • Many of the advisors we help transition weren’t irate at their manager or actively looking to move tomorrow.
  • Recruiting managers want to speak with poised advisors who are doing well, but who also have an open mind to hear what they are offering.
  • Sharing about your practice and goals and seeing if there may be synergy with a different firm, transition package, platform, support structure, and culture can be both rewarding and educational.
  • Knowing you have options is one thing, but being poised after a little due diligence can put you in the best scenario if something changes.

If you are generally happy but open minded and poised for something else, something better, we would be pleased to share options matching the value needed to move from poised to active.

SBA Loan Property Liens

  1. The SBA 7(a) has clearly defined loan property lien requirements. For loans over $350,000 the SBA requires that a lien be placed on available equity of the borrower’s personal real estate including residential and investment property.
  2. The SBA does not require lenders to collateralize a loan with personal property if the borrower has less than 25% equity of fair market value.
  3. For loans under $350,000 some banks still require a lien on personal property if there is more than 25% equity available.
  4. If you take a HELOC before you submit your financial package, and have less than 25% equity in your house or investment properties, then a lien will not be required. HELOCs typically offer interest only rates and the full balance from your mortgage and HELOC are deducted from cash flow.
  5. If your spouse owns 20% or more of the “Small Business Applicant” the SBA instructs lenders to consider taking jointly owned investment or residential property as collateral.

Checkout for more information about SBA and conventional lending options for


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