Having a complete set of investment solutions and offering is critical for independent financial advisors looking to compete for high-net-worth and ultra-high-net-worth clients. Being able to bring investment banking deals to these more sophisticated investors is an often overlooked way advisors can differentiate themselves in the marketplace.
Most independent advisors, and their clients, miss out on the opportunities presented by investment banking either because they're not affiliated with a firm that has these capabilities or they've given up their Finra registration and are unable to offer clients commissioned solutions.
Investment banking isn't the exclusive domain of large financial institutions, so advisors don't need to be in a wirehouse or bank model to participate in deals on behalf of their clients. While the biggest deals tend to be done by those institutions, there are plenty of small and midmarket companies, from $100 million to $1 billion, working with a diverse group of wealth management firms to raise the capital they need to expand their business, hire employees and bring new products to market.
By affiliating with a wealth management firm that has an established investment banking arm, independent advisors can expand the investment solutions they offer wealthy clients who want more than cookie-cutter portfolio options or complex and illiquid alternative investments.
For independent wealth management firms, having a capital markets division in-house gives their advisors a unique opportunity to access high-quality transactions that have the potential to create outsized value for their clients, resulting in compelling synergies between the two sides of the business.
Investment banking’s liquid offerings, sold by prospectus, allow appropriate clients to participate in the growth of some of the most dynamic startups and expanding businesses in the nation.
In addition to initial public offerings, a firm’s investment banking capabilities provide advisors with other investment tools to use with clients, including shelf offerings, public structured products and senior convertible notes with warrant coverage.
Shelf offerings can allow investors to participate in a secondary stock offering at a discount to the market. These offerings happen quickly, so they're for investors who can move fast. This gives clients with advisors affiliated with a wealth management firm with an investment banking arm an advantage over others.
The public structured products allow clients to create outsized risk-adjusted returns, and senior convertible notes deliver investors protection on their investment, interest on their note and upside returns if the stock increases in value, in a best-of-both-worlds scenario.
Each of these products provide high-net-worth investors with opportunities that aren't available without investment banking access.
Aligning a firm’s investment banking solutions with their advisors and clients gives these firms another compelling reason to ensure their banking deals are well structured and positioned to perform over time. This can benefit all parties involved.
High-net-worth and ultra-high-net-worth individuals and families are often looking for more than a typical asset allocation. These accredited investors, who understand risk-reward dynamics, want options. Deals brought by the investment banking teams may be more appropriate for these clients than some of the highly structured and often illiquid alternative investments being offered by various product providers.
Having easy access to investment banking deals can be another arrow in the quiver for independent advisors to attract and retain these sought-after clients. But only if they have the ability to use it.
As we've seen over the past few years, more and more advisors are dropping their licensing with the Financial Industry Regulatory Authority Inc., seeing no real value in offering commissioned-based solutions to clients, and going RIA only. While there may be several good reasons for an advisor to go fee-only, to be able to service an entire client relationship, they may want to offer both a fee-based service and commission-based solutions through a hybrid model.
The ability to allocate investment banking investments in a well-diversified client portfolio is one reason advisors may want to keep their licenses and go hybrid.
Providing small and midsize companies access to the capital they need to succeed contributes greatly to the U.S. financial system and the overall health of the economy. Investment banking services can also give financial advisors affiliated with these firms a way to expand their businesses by attracting clients with the means and profile to take advantage of these growth opportunities.
If your current firm doesn't offer in-house investment banking capabilities, you may want to look elsewhere.
Michael Nessim is CEO and managing partner at Kingswood Wealth Advisors.
After a two-year period of inversion, the muni yield curve is back in a more natural position – and poised to create opportunities for long-term investors.
Meanwhile, an experienced Connecticut advisor has cut ties with Edelman Financial Engines, and Raymond James' independent division welcomes a Washington-based duo.
Osaic has now paid $17.2 million to settle claims involving former clients of Jim Walesa.
Oregon-based Eagle Wealth Management and Idaho-based West Oak Capital give Mercer 11 acquisitions in 2025, matching last year's total. “We think there's a great opportunity in the Pacific Northwest,” Mercer's Martine Lellis told InvestmentNews.
Osaic-owned CW Advisors has added more than $500 million to reach $14.5 billion in AUM, while Apella's latest deal brings more than $1 billion in new client assets.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
