Integrated Advisors: How Partnering with Oak Street Drives Growth

Wealth advisory firm owners have several options when building their businesses: acquisition, private equity investment, and organic growth supported by responsible debt financing. Michael Young, president and managing partner at Integrated Advisors Network, a registered investment advisor platform based in Dallas, has expanded his company organically through a long-term lending partnership with Oak Street Funding.

In our recent OnPoint podcast, Young shared how that partnership and smart debt financing has driven powerful growth for Integrated Advisors. This blog will explore different ways to use debt to promote growth, advantages of debt financing, and what makes a good lending partner.

⚡At a Glance: Integrated Advisors Network's Partnership with Oak Street Funding

• • Integrated Advisors used Oak Street Funding to support organic growth without private equity.
  
• • Debt financing can fund talent, marketing, technology, coaching, and other growth initiatives.
  
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  A line of credit helps RIAs act quickly on opportunities without restarting the loan process.
  
• •Debt can support succession planning, including partner buyouts, while preserving liquidity.
  
  

The Integrated Advisors Story

After many years working as an investment advisor, Young – along with Linda Pix and Jeff Groves – founded Integrated Advisors Network in 2015. They provide services such as developing enterprise platforms, maintaining compliance support, and performing back-office operations to RIA firms. Their aim is to help RIAs operate more efficiently and profitably so they can remain independent while providing exceptional service to their clients.

According to Young, independence is what sets Integrated Advisors apart from other firms. “Our true differentiator is the fact that we are independently owned. We are not backed by an equity partner or anyone we’re trying to drive a return on investment for other than ourselves. We’re really about answering to our advisors.” To maintain that independence, Integrated Advisors has looked to Oak Street Funding to fund their growth initiatives.

Using Debt Financing to Grow an RIA Firm

Responsible debt can be used to finance a variety of organic growth efforts:

• • Bringing on new talent – New advisors can be a great boost to business expansion, but it takes time for them to build their book of business and add to the firm’s profitability. A loan can help cover operating costs until new team members become strong producers.
  • Marketing – Investing in broader advertising and marketing campaigns can help a firm reach new clients and new geographic service areas. A loan can be used to pay for the upfront costs of rebranding and launching a new campaign.
  • Technology – Investing in a new or upgraded CRM system or other technology solution can improve efficiency and help advisors be more productive and profitable. Debt financing is a simple way to fund the investment, and it can be repaid with the increased cash flow it drives.
  • Coaching – Professional coaching can reenergize advisors and help them work more productively. A loan to pay for those services is an investment in team members that can pay big dividends.

Young noted in the podcast that Integrated Advisors has applied debt financing to many of those initiatives. His firm also maintains a line of credit with Oak Street that allows them to respond quickly to opportunities without having to start a new loan process each time.

Advantages of Debt Financing

Using debt financing (as opposed to private equity investment) allows a firm to maintain its independence. The company retains control of its management decisions and is accountable only to its own leadership, team members, and clients.

Debt financing can also be a smart approach to succession planning. When one of the partners of Integrated Advisors decided to move toward retirement, the firm used debt financing to buy out his portion of the business. Young noted that, “We were able to cover our note service, basically, through our increased amount of distribution.” It allowed the firm to keep its capital – as well as the remaining partners’ personal liquidity and investments – intact while using Oak Street’s money to finance the buyout.

→ How to Partner with a Lender

Difference a Strong Lending Partner Can Make

According to Young, Integrated Advisors was attracted to Oak Street because of its long experience working with RIAs and its understanding of the industry. “Understanding the business models of advisors really makes the cash flow lending (Oak Street) practices with a firm like ours make a lot of sense.” They’ve also been impressed with Oak Street’s willingness to work with Integrated’s outside valuation consultant and Oak Street’s excellent communications.

What’s really made Oak Street stand apart, from Young’s perspective, is its focus on client education. “The Oak Street team has gone above and beyond just through the education process. We entered this in a ‘we don’t know what we don’t know’ type of approach, and there’s just been such a great personal connection and an understanding of our industry that has made us really comfortable with the banking experience at Oak Street."

Summary

Debt financing can be a powerful driver of organic growth. Contact Oak Street today to find out how.