Lenders working with financial advisors say it has been a busy year, with registered investment advisors and independent broker/dealers seeking loans for a combination of acquisitions and equity financing as part of succession plans.
Although it is hard to benchmark the exact amount of private loans made to the financial advice sector, some of the largest direct lenders to the space, including Live Oak Bank, Oak Tree Funding, PPC Loans and M&A bank financing advisor SkyView Partners, indicate a robust market in 2025.
“This year will be the biggest lending year we’ve ever had,” said James Hughes, managing director, small business banking, at Live Oak Bank. “Just like the industry has grown a lot, we have grown a lot.”
Live Oak’s financial advisor loan origination this year has been primarily allocated toward acquisition financing, with a smaller but substantial portion going toward internal succession transactions. Additional uses for loans include recruiting, breakaway financing and commercial real estate.
Dustin Mangone, director, investment advisor program for PPC Loans, reiterated advisors’ primary use of loans for acquisitions and internal equity.
“On the succession side, RIAs are looking to transition internally,” Mangone said. “A lot of times, the founder may be looking to exit in the next three years, five years or even 10 years, so we’ll continue to work with those firms throughout the course of that equity transition.”
Overall, Mangone said PPC Loans has seen loans increase by about 30% to 35% this year. He said the boost has come partly from firms coming off the sidelines, following the uncertainty surrounding the 2024 presidential election.
Even as the loan market has been busy, private equity funding has also been moving further down market in the RIA space as a competitor for financing. And while that has cut into the lending market—particularly for larger loans—it has also raised overall firm valuations, which in turn drives the need for financing across both acquisitions and internal equity buys, according to lenders.
Early Innings
Adam Farag, vice president of strategic markets with Oak Street Funding, which is owned by First Financial Bank Corp., said while some RIAs may be doing so with minority or even majority external investors, there is still plenty of runway for employee-owned firms to grow in the specialty banking sector.
“The wealth management space is still in early innings with a lot of peer-to-peer and internal succession transactions,” Farag said. “There are owners in the $200 million to $2 billion AUM range that want to grow and acquire other RIAs/IARs or fund internal equity sales, seeking bank debt up to $30 million to $40 million.”
As a direct lender, Farag said Oak Street sits in a sweet spot between Small Business Administration loans and private equity-driven investing, which typically ranges from $20 million and above.
“While we serve clients small and large, there’s a gap between $5 million and $20 million that I think we and other specialty lenders bridge really well for the wealth management space,” he said.
Dick Pfister, CEO and founder of AlphaCore Wealth Advisory, said his nearly $8 billion RIA has used lending from Live Oak to fuel acquisitions, including a deal this year for a Rockville, Md.-based RIA with $1.5 billion in assets under management.
“I don’t want to be highly levered to 6x or 10x leverage,” he said. “I’m generally more conservative, and so is the bank. The bank to me was a natural fit to avoid further dilution but also provide capital to do more of our strategic growth initiatives, which includes inorganic growth.”
Pfister founded La Jolla, Calif.-based AlphaCore with his own funding and that of his wife’s, with any profits reinvested in the firm. Over time, they brought on partners with equity stakes, and in 2023 sold a minority stake to Constellation Wealth. As the firm continued to expand, however, more funding was required, and he and senior leadership did not want to sacrifice more equity, which the firm shares among its employees, even beyond the advisor base.
Zero Loan Loss
Scott Wetzel, CEO of SkyView Partners, which advises financial advisors seeking M&A bank financing, said there has been zero loan loss in SkyView’s loan portfolio since its inception in 2017.
“That means our borrowers are doing an exceptional job substantiating the veracity of the financial advisor financing marketplace,” he said. “Since inception, they’ve done that, and that’s why you see that spread in their risk premium come down.”
Higher interest rates, however, also play a role in how advisors consider the cost of loans. Since rates have gone up, Wetzel said, refinancing loans have been almost nonexistent. The more rates come down in 2026, the greater chance of that business returning, he said.
George Chang, who recently founded RIA Pillar Point Wealth Management in San Francisco, had previously worked with RIAs to consider lending options as a managing director at Charles Schwab. He noted that lending is a good option, but borrowers should carefully examine the loan terms and how they align with their longer-term plans.
“You need to really understand what debt you are taking on and what the terms are,” he said. “Oftentimes, you may be able to refinance, but you may not be able to refinance in the first couple of years because they don’t want to go through the trouble of underwriting and issuing the loan and the costs and risks associated with that.”
In addition, RIAs considering the use of loans to acquire should closely examine the books of business of the advisors joining. Although steady, regular cash flows characterize the RIA space, there are no tangible assets beyond the clients, he noted.
“It’s a service business,” Chang said. “There’s no warehouse or machinery or inventory that you could even get pennies on the dollar on. These clients can all walk out the door tomorrow …. What is the profile of those clients? What has the attrition rate been? What is the average client size?”
Hughes of Live Oak said 2025 highlighted the progression of a business that, just a few years ago, was done generally through Small Business Administration loans. By 2020, Live Oak was assessing the performance of its advisor loans and decided to move further upmarket to offer larger loans outside the SBA market.
“The quality of the firms has really improved over the last 10 years,” he said. “And the amount of capital in the industry in the last five years, since COVID, just ballooned.”
