Live Oak Bank, a 10-year-old bank that specializes in making loans to niche industries, including registered investment advisers, has launched its own RIA.
Live Oak Private Wealth, housed on the bank's main campus in Wilmington, N.C., will operate as a wholly owned subsidiary of the bank.
The new RIA is starting with $400 million under management by bringing on local industry veterans who specialize in asset management,
trust services, and sales, according to Jason Carroll, who is moving from managing director of investment adviser lending at the bank to chief executive of the RIA.
"My hat, from a lending perspective, has been removed," Mr. Carroll said. "I'm responsible for building a best-of-breed RIA by leveraging the great technology and marketing stack at Live Oak."
Live Oak Bank has an $8 billion loan portfolio and has lent $600 million to independent financial advisers since 2012.
The bank also specializes in such niche markets as veterinarians, pharmacists, craft breweries and senior care facilities.
What the RIA subsidiary does for the bank is provide a resource for managing
trust assets, which the bank has been outsourcing until now.
Asked whether the bank's ownership of the RIA creates any kind of conflict or competition with the lending business, Mr. Carroll responded definitively.
"Since Live Oak Bank entered and disrupted this industry, the bank has always considered itself Switzerland," he said. "It plays no favorites, and that's been a key to its success. If we used Live Oak Private Wealth to compete against the RIAs the bank serves, that would do no one any good."
However, he added, "Should an RIA want to join us, we will have a conversation."
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Mr. Carroll, who described the bank as a "a marketing and technology company that happens to be a bank," said that there will be no data sharing between the bank and the RIA, and that there are no current plans to send referrals to the RIA.
David DeVoe, managing director at the investment bank DeVoe & Co., said that not only will the bank not create a conflict, by owning an RIA it will be able to better serve the RIA market.
"I think it's a net positive for potential firms that might use the lending platform because the bank already knows RIAs pretty darn well, and they'll know them even better now that they own one,"
Mr. DeVoe said.
In addition to Mr. Carroll, who has been with Live Oak for five years, the new RIA includes managing directors Andy Basinger, Bill Coleman and Connor Keller.
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