The growing retail appetite for alts: Impacts and outcomes

By Alternatives Watch Staff - March 22, 2024

Market volatility and economic uncertainty over the past few years dominoed across investment portfolios large and small. One potentially permanent — and paradigm-shifting — consequence is the rising popularity of alternative investments among retail investors. It is a development that has implications far beyond broadening the scope of investment options for non-institutional investors. The complexities associated with the democratization of alts are not limited to advisor education and end-client knowledge of the asset class and its risk/reward profile. Regulatory hurdles, technology investments, reporting requirements and product due diligence all spring to mind. Then, there are the operational challenges.

Registered Investment Advisers (RIAs) looking to accommodate the expectations of advisors and meet their clients’ appetites, while also expanding their AUM, are working to ensure their back-office infrastructure and solutions can enable alts participation by this growing demographic. How are firms approaching this imperative? Alternatives Watch spoke to three executives to discuss the emerging challenges that accompany this shift, what solutions firms are gravitating toward to meet this demand and the top back-office solutions RIA firms need in order to align alts effectively and compliantly with their advisors and their clients:

We spoke with a panel of experts:

-Tiffany Magri, Sr. Regulatory Advisor, Smarsh, a technology company specializing in digital communications compliance and intelligence

-Paul DeMaio, CEO and Managing Partner, AdvizorStack, a fintech technology platform offering RIAs turnkey access to a curated assortment of third-party solutions providers

-Kevin Keefe, Chief Executive Officer, Realta Wealth, an independent broker-dealer and RIA platform

Q: What are the top back-office solutions RIA firms need to have to effectively, and in a compliant way, align alts with their advisors’ end clients?

DeMaio: While alts have become more and more prevalent in today’s portfolios for high-net-worth individuals and trusts, the problem of reporting on these assets is more difficult than ever. AdvizorStack feels we have the right solutions and integrations with top-tier firms to solve that problem. But we don’t stop at just integrating the platforms. We become the all-in-one service provider and tech support arm for your firm. We not only implement and transition your accounts to these platforms, we also train your personnel on how to best use these platforms.

We believe having an excellent financial planning tool is extremely important when evaluating alts for any client. We partner with financial planning software providers to give us these solutions while fully integrating them into our CRM, allowing the advisor to set a comprehensive long-term plan for any clients or trust accounts.

Third, but not least, is the importance of having a strong risk scoring tool in place to make sure your alts do not throw the portfolios out of the client’s general risk parameters; our offering includes a risk analytics and scoring platform that is also fully integrated into the AdvizorStack CRM, allowing one-stop shopping for all of the advisors’ needs, while giving the advisor the ability to latch onto our institutional pricing. This integrated functionality allows AdvizorStack to be an outsourced chief technology officer and an extension of their firm.

Read More