Eligible clients must meet certain asset and income qualifications, in part because the investments have limited liquidity for several years, depending on the terms. The financial threshold for clients to participate in these programs is commonly $70,000 income and $70,000 net worth, or $250,000 net worth, although there are variations by state.
"We get into them for the income," Sidder said. "[These instruments] are paying an income stream — coming from tenants paying rent, companies paying back interest payments on equipment leasing, and BDCs paying back loans.
"Within the last year or two, broker-dealers have become more comfortable with these products, because they can now be held within an advisory account," he added.
According to Don Wilde, CFP and owner of W Financial, "these products have a structure similar to a mutual fund, with a sponsor and a management company who does risk analysis and makes investment decisions."