How CWB Maxium Financial builds bridges for advisor growth and independence

Firm's alternative approach to lending and business valuation addresses accelerating need for practice succession and buy-in plans

How CWB Maxium Financial builds bridges for advisor growth and independence

This article was produced in partnership with CWB Maxium Financial.

It was roughly six years ago when Canadian Western Bank acquired a private commercial lending company that specialized in providing cash flow lending solutions to several niche markets. Since then, CWB Maxium Financial has evolved its strategy in a number of ways, not least of which is its commitment to help fill a pressing need in the Canadian wealth management space.

“We work with a lot of independent advisors that want to acquire a book of business, sell a book of business, or buy into or increase their stake in a practice they work in,” says John Walker, Managing Director, Cash Flow at CWB Maxium Financial. “We also partner with large aggregator firms or multi-advisor practices who want to provide acquisition facilities for advisors.”

According to Walker, demand for CWB Maxium Financial’s lending services is overwhelmingly driven by succession planning, which has been accelerated by the pandemic. After years and potentially decades of effort and dedication to their practices, many seasoned advisors are recognizing the need for balance in their lives; following the challenges of the pandemic, some have made up their minds to evaluate and implement succession plans and opportunities.

Lockdowns imposed during the pandemic, as well as recent changes in the regulatory environment, have accelerated the urgency for practices to move to a more digital format. That, in turn, has lent itself to more consolidation and succession planning conversations to take advantage of various economies of scale.

“We’ve seen extremely disruptive changes in the past two years,” Walker says. “Based on our experience in the industry, many advisors who are looking at succession planning timelines of two, three, or five years are realizing that they need to start now. We certainly would like to be involved as early as possible in that process.”

Mounting regulatory pressure may prompt more veteran wealth professionals to consider an earlier and more gradual exit. Rather than exiting abruptly, they could sell stakes of their business over several years, as they gracefully step away from their practice. That would allow them to pass on some of the added administrative burden to successors, ensure that everything transitions accordingly, and continue doing the work they love for a little longer before retiring completely.

“By providing advisors with financing and support throughout the whole process, we aim to be the bridge between someone developing their succession plan and bringing that plan to fruition through a transaction and transition to a new advisor,” says Tom de Larzac, Director, Financial Advisory.

Advisors have a variety of financing options available to them as they evaluate various business acquisition or divestiture opportunities. Whether an advisor is buying a full practice, as a partner or shareholder, or simply buying a book of business, each situation requires unique considerations when evaluating the best financing structure. Different options – whether debt is provided by an internal stakeholder, external financial lenders, or other payment arrangements are made – must be evaluated based on a full understanding of the associated benefits and restrictions.

Getting third-party financing from an independent lender like CWB Maxium Financial may provide the most appropriate balance of financial structure and cash flow business valuation, while providing advisors with full operations flexibility that may be needed to successfully grow the practice in the long run.

“What we bring to the table is our ability to offer unique lending structures and arrangements,” says Pierre Sauvé, Director, Originations. “We have expertise and experience in cash flow-based lending, which recognizes that the value of an advisor's practice derives from the predictable revenue generated by their book of business rather than the assets the business owns.”

While others may also offer cash flow-based lending, CWB Maxium Financial has established a strong record of success in underwriting risk for such loans across a number of verticals. For independent financial advisors, it offers loans up to 100% financing, and amortizations up to 10 years, which is secured against the advisor’s practice.

Through its specialized lending capabilities, the firm empowers advisors to grow their business as they see fit. With more financing within their reach and parameters better defined, those looking to buy or sell have more confidence when looking for prospective transactions, have an easier time bringing prospective buyers to the table, as well as enhance the enterprise value

They also provide value-add support throughout the transaction cycle. Whereas traditional bank managers may direct the conversation towards the amount of money that can be lent and rate, CWB Maxium Financial goes further by providing specific guidance around the requirements advisors must have in place to get lending, the specific impacts of structure decisions, timelines, and other aspects of the process that many professionals in the advice industry may not be fully familiar with.

And while there are other small business lenders that cater to the financial advisor space, CWB Maxium Financial stands apart with its dedicated vertical for independent advisors. This speaks to the firm’s commitment of being more than just a transaction-based lender, but a relationship partner that will support client needs for the long term.

“We want to support our clients’ growth, so we’re not just there to support one transaction. It’s more relationship for us rather than transactional,” Sauvé says. “Our objective is to set up a strong base to support advisors as they continue to shift and grow their practices in the future.”