It’s Time To Reconsider Forgivable Loans

  • An Inside Look at Recruitment Incentives
  • The Ever Watchful Eye of Regulators
  • Creating Strong and Lasting Relationship

Big incentives is the name of the recruiting game these days. Financial advisors have come to expect big deals and enticing offers from the firms looking to recruit them — and their expectations are being fulfilled. These deals often revolve around three major components: higher compensation, transition bonuses, and forgivable loans. 

Forgivable loans have become a fairly standard part of transition deals and there’s long been a debate over whether they are good or bad. While there’s no right or wrong answer in this debate, it’s starting to look like it will be advantageous for advisors to turn these loans down in the future. Being forgivable, you may ask why you should turn them down. There’s a twofold answer to that question. 

It’s partly due to the change in the industry that’s coming from fiduciary and regulatory pressures. Regulators are starting to crack down on what clients are being charged and broker-dealers’ administration fees are an easy target to start focusing on due to the fact that it’s often unclear what the fees are actually for. Regulators especially might hone in on the practice of client accounts being used to help fund the loan the broker-dealer is using to entice and draw in advisors. In return, increased focus on administration fees could result in a decrease in the size of these forgivable loans as broker-dealers will likely see their revenue reduced. 

In addition to the issue of fees and regulations, turning down a forgivable loan can lead to a better long-term relationship between the broker-dealer and advisor. Opting against a loan and looking for a firm offering a higher payout or reduced fees can be a path that allows advisors to make more in the long run while still acting as a fiduciary. Additionally, advisors are freed from the burden of worrying about being a point of regulatory focus if they turndown forgivable loans.


As recruitment deals become a bigger and bigger part of an advisor’s overall transition decision-making, it’s important to have a transition specialist on your side, guiding you on the road ahead. Remember, today’s recruitment offers may be bigger and potentially better but they are also more complex and filled with nuance language and potentially confusing terms and conditions. 


That’s why so many advisors look to 3xEquity to be their transition specialist. We’ll get you multiple offers from top national and regional broker-dealers in just a few days — all while you stay anonymous. And, we’ll be by your side every step of the way serving as your sounding board giving you up-to-date data and an inside look at the deals on the table. Partnering with 3xEquity can help give you the confidence you need to find a new and better home for your business.

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