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Dynasty Rolls Out New Funding Plan for RIAs

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Dynasty Financial Partners is moving to give the 42 RIA firms it works with more financial options.

The group, which works with advisors who manage more than $20 billion in client assets, has launched Dynasty Capital Strategies — which, in addition to offering business loans, will now buy a revenue interest of 5-10% of a partner firms looking to raise capital.

The move aims to give RIAs more ways to access liquidity for their growth strategies, such as starting up a new business, succession planning, asset diversification or fund acquisitions. It also lets them buy back the revenue shares after three or more years.

“This is another [option] for our partners, so they have liquidity and can get it as an option in the [Dynasty] family,” said Dynasty President and CEO Shirl Penney, in an interview.

For an RIA that produces fees and commissions of $5 million a year, for instance, Dynasty would be entitled to $250,000 to $500,000. “Say the group grows, we get better returns as they grow; they do no pay interest can buy back the interest after three years,” Penney explained.

The revenue producing notes, or RPNs, that Dynasty is introducing are a response to complaints made by lots of RIAs, according to the executive.

“They say it all the time. ‘I wish I hadn’t sold the business. All my economic upside is going to the firm I sold to,’” explained Penney. “Once you sell, you sell. You get the liquidity but you can’t change your mind.”

Taking an RPN, he adds, is the “first bite for someone who is thinking to sell 10 years down road but wants liquidity … to fund an acquisition or succession plan today, but who doesn’t want to execute the full sale of the firm.”

Dynasty, Penney adds, is “not in the business of taking upside off the table for its advisors.”

Among the firms that have affiliated with the firm lately is Icon Wealth Partners of Houston.

Having previously managed more than $750 million in client assets at their prior firms, Icon’s three founding partners — Mark McAdams, Blake Pratz and Steve Schwarzbach — decided to go independent. Pratz had previously worked at UBS, while McAdams and Schwarzbach were with Morgan Stanley Private Wealth Management.

— Check out Acquired RIAs Have Become Acquirers: Dave DeVoe on ThinkAdvisor.


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