The Advantages of Working with a Municipal Advisor


Municipal advisors help public entities meet their infrastructure needs.


By David Medanich
Vice Chairman
Head of HilltopSecurities Public Finance

In the United States, government and state entities use municipal bonds and notes to fund infrastructure developments such as schools, medical facilities, and public roads. Municipal securities are a cost-effective method to finance projects over their useful lives while minimizing the impact on property tax and/or user rates. Currently about two-thirds of public infrastructure projects are financed with municipal securities.

Of the many participants involved in municipal bonds, municipal advisors play a unique and key role in how our nation finances its infrastructure. While governments and other agencies are not required to hire a municipal advisor, many do so to help manage risk, provide market insight and recommendations, represent the issuer, and develop an optimal financing and debt-structuring plan.

Advantages of Hiring a Municipal Advisor
There are several benefits of hiring a municipal advisor to help finance infrastructure projects. The greatest is that municipal advisors have a fiduciary duty to deal honestly and act in the client’s best interest.

In 2014, the SEC imposed an explicit fiduciary duty on municipal advisors under the Dodd Frank Wall Street Reform and Consumer Protection Act and granted the Municipal Securities Rulemaking Board (MSRB) the regulatory authority.

These measures provided additional protection for issuers by requiring municipal advisors serve their clients with absolute transparency and honesty. It also clarified the roles and responsibilities for municipal advisors by defining what could be considered advice and prohibiting municipal advisors from serving as the underwriter on the same transaction.

Issuers want to achieve the lowest reasonable interest rate, and using a municipal advisor can help structure the debt in the most cost-effective way. Some municipal entities do not issue and sell bonds every day. A regulated municipal advisor can help to coordinate all parties on the transaction, offer guidance, and simplify the process.

The Value of a Municipal Advisor
The municipal advisor market is diverse and their roles may vary based on the issuer’s level of experience and internal staffing. The following are some of the primary ways a municipal advisor may serve an issuer:

  • Quantify the benefits and costs of structuring considerations.
    A municipal advisor can offer their expertise and knowledge of the municipal capital markets, which is crucial to developing an optimal structuring of the debt issues and to help minimize risk. A municipal advisor will prepare analyses of debt capacity and alternative debt models.
  • Act as a liaison between all parties on the bond issue. As an advocate for issuers, municipal advisors provide an ongoing link between relevant parties such as underwriters, insurers, rating agencies, bond counsel, investors, regulators, trade groups, and other issuers.
  • Recommend the method of sale and ways to minimize borrowing costs.
    To help maximize the marketability of the bond issues, a municipal advisor can ensure the issuer’s bonds are sold at the most favorable rates possible.
  • Identify market opportunities and service restructuring opportunities.
    Municipal advisors who actively participate in the capital markets can provide access to real-time market information and notify the issuer when market conditions change.

Why Do Issuers Hire Municipal Advisors?
While there are over 50,000 various state and local governments and other issuing authorities in the U.S., their population and financial needs can dictate how frequently they need to issue municipal securities. Whether municipal governments issue bonds once a year or once a decade, the Government Finance Officers Association (GFOA) recommends hiring a municipal advisor as a best practice to help identify the best type of financing possible.


Navigating the issuance process without a municipal advisor can prove confusing and frustrating, especially when entities don’t issue bonds often or maintain in-house expertise. Municipal advisors adopt the same goals as their clients by helping them achieve the most positive results and overall experience to help ensure their infrastructure project benefits their community as much as possible.


To learn how a municipal advisor can help your entity, call us at 214.953.4156 or email our Public Finance team today.

This communication is intended for issuers for educational and informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product or service. Financial transactions may be dependent upon many factors such as, but not limited to, interest rate trends, tax rates, supply, and change in laws, rules and regulations, as well as changes in credit quality and rating agency considerations. The effect of such changes in such assumptions may be material and could affect the projected results. Any outcome or result HilltopSecurities, or any of its employees, may have achieved on behalf of our clients in previous matters does not necessarily indicate similar results can be obtained in the future for current or potential clients. HilltopSecurities makes no claim the use of this communication will assure a successful outcome. This communication is intended for institutional use only. For additional information, comments or questions, please contact Hilltop Securities Inc.


Hilltop Securities Inc. (HTS) is a registered broker-dealer, registered investment adviser and municipal advisor firm that does not provide tax or legal advice. This document is intended for educational and informational purposes only and does not constitute legal or investment advice, nor is it an offer or a solicitation of an offer to buy or sell any investment or other specific product or service. HTS is not recommending an action to you as the municipal entity or obligated person. HTS is a wholly owned subsidiary of Hilltop Holdings, Inc. (NYSE: HTH) located at 1201 Elm Street, Suite 3500, Dallas, Texas 75270. Member: NYSE/FINRA/SIPC.

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