Dynasty Financial lures breakaways with new financing deal

New lending program marks Dynasty's first foray into ownership stake

May 3, 2017 @ 2:35 pm

By Jeff Benjamin

Dynasty Financial Partners is launching a new division aimed at providing liquidity options for registered investment advisers.

The new unit, Dynasty Capital Strategies, will expand the firm's capabilities to include the purchasing of revenue interest in partner firms, the company announced Wednesday.

This means that RIA partner firms will be able to tap into capital from Dynasty Financial, which did not immediately respond to a request for comment. The new program is an addition to Dynasty's current lending program to RIAs by providing more ways for partner firms to access liquidity for start-up, succession planning, asset diversification or acquisitions, the company reported.

According to the company's statement, Dynasty is targeting revenue purchases in the range of 5% to 10%, "thus leaving the majority of upside growth economics on the table for adviser-owned firms that are on the Dynasty platform."

The program also allows RIAs to repurchase their revenue shares after a fixed period.

"As the number of Dynasty Network advisory firms increases, they have asked us to expand our services to continue to meet their growing needs," Dynasty Financial Partners chairman Todd Thomson said in the press release.

While underwriting can vary, Dynasty's lending program typically provides for up to 50% of a firm's revenue to be made available as a loan for the business and its owners.

Marc Cohen, managing director and chief operating officer at MarketCounsel, interpreted the move as a way for Dynasty to better cater to less-established breakaway brokers, who might want to go independent but don't yet have the capital in place to make the move.

"Dynasty has had success providing different solutions, but this is the first time they will be taking an ownership stake in the breakaway firms," Mr. Cohen said.

Since its founding in 2010, about half of Dynasty's partner firms have leveraged its capital programs to help them at various points, starting with the businesses transition and extending to growth initiatives.

"We have advisers who are in start-up phase, other RIAs who are in rapid growth and professionalization phase, and some that are beginning to think about and plan for succession," said Dynasty chief operating officer Ed Swenson in a prepared statement. "We will continue to expand our integrated technology-enabled service platform to address the changing needs of our clients as they move through these various business cycles. We seek to enable advisory firms to build better businesses and ultimately take better care of their end clients."

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