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29 Sep Boston Cardinal

Moving firms as an advisor, but stuck with Alternative Investments?

Picture this.

You’re a financial advisor or team who has just found the perfect new-partner firm.

You’ve done your due diligence exploring options in the industry. You’ve compared and contrasted various platforms, analyzed the net payout rates, and negotiated your offer putting you in the best possible position to succeed. 

Did I mention it’s also the perfect culture fit for you and your team?

Everything is lining up beautifully for a smooth and seamless transition.

Before officially committing to the new firm, you provide them with product information detailing past investments sold to your clients. You talk with product experts to learn what will be available for sale after you make the transition.

A couple days go by, and you get a call from the new firm. There are Alternative Investments in your product mix held across your client accounts that cannot transfer with you because there are no agreements in place with the issuer or your new firm.

It’s not a huge portion of your business, but these Alternative Investments are held by some of your best clients and minimizing disruption for your business is a top priority. 

Since many of these investments will not reach their maturity for several years or have highly oversubscribed Share Repurchase Programs (SRPs), it seems to bring the entire decision to move firms completely into question. You feel trapped!

This is a common issue faced by advisors moving firms. So where do you go from here? What can you do?

One of Vantage Impact’s network partners in the industry, Cox Capital Partners (COXCP), can help solve this problem.

Are you overwhelmed by the idea of transitioning firms? Download our free list  of 150+ Due Diligence Questions for Financial Advisors to ask along the way ≫

Cox Capital Partners Endowment Style LiquidityHow does Cox Capital Partners help advisors with non-portable, alternative investments?

Put simply, Cox Capital buys these alternative or non-traded fund shares at fair prices, generating cash for clients and solving their liquidity issues. 

Once the transaction is finalized, what was previously non-portable can now be moved with other types of investments.

Prior to Cox Capital, advisors would either be stuck leaving non-portable products back at their prior firm, wait until the investments complete a liquidity event, or just stay with a firm they no longer wish to run their practice at. Better yet, Cox Capital is open to any sized lot and nearly any position, making it a favorable solution to solving issues with product portability regardless of how much or how many clients are impacted. 

Cox Capital analyzes the fair market value and can offer the same price to all clients, whether it’s 1 or 5+ products, across 1 or 40+ clients.

Cox Capital Partners process for alternative investments

What does the Cox Capital Partners process look like?

A financial advisor can turn to Cox Capital Partners whether they have one or an entire portfolio of Alternative Investment products. 

Cox Capital then conducts a price analysis based on the current market value of traded offerings with similar portfolios.

For large publicly registered non-traded funds like FSGCO (FS Global Credit Opportunities Fund) or MSC (MSC Income Fund) or about 40 other common products, the price gets turned around in 1 business day.  

Less common or obscure products, like firm-specific feeder funds, can sometimes take a bit longer (between 5 - 7 business days) as Cox Capital digs into the underlying portfolios.

Once the price has been established, Cox Capital will then facilitate the digital or wet signature process for all of the advisor’s clients depending on the advisor’s preferences. 

Even if you’re not making a transition, you could run into situations where it might be a great call to consult with Cox Capital. For example, you may be in the midst of an estate settlement where the executor is trying to settle the estate, or you could be running into other liquidity issues where your client wants out of an investment.

Check out Cox Capital’s Liquidity Dashboard for more information about non-traded products and positions.

Vantage Impact Takeaways Cox Capital partners

Vantage Impact Takeaways - Cox Capital Partners

Moving firms is a complex process that requires a thorough understanding of all the different variables involved.

We don’t see product non-portability come up as an issue every day, but it can be an important consideration for advisors who have a portfolio filled with Alternative Investments and non-traded funds. 

The last thing you want to be worrying about is when you’re making a major transition is how to deal with these funds. Depending on your clients’ asset structure and new firm’s investment offerings, Cox Capital Partners’ quick turn-around can provide you with liquidity and flexibility so you can focus on other things - like maximizing your clients’ retention rate when you move.

For those who need it, we recommend our advisors work with Cox Capital early on in the transition process. Building off the momentum from the other parts of the transition can help ensure all the proper paperwork is completed, and you can start the rebalancing and remapping process with confidence.

If you’d like to talk about exploring a change in firms and whether or not there’s an opportunity to work through liquidity issues with your Alternative Investments, schedule a consultation here. We’d love to talk to you and help you through the process.

Are you overwhelmed by the idea of transitioning firms? Download our free  Transition Guide for Financial Advisors for over 150 helpful questions to ask  along the way ≫

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