The future of investing: How technology is reshaping wealth and asset management (III)

FIRST MOVEMENTS

Blackstone was one of the first alternative investment management companies to expand its services to high net worth and accredited investors. The retail assets managed by Blackstone have quadrupled in the last 4 years thanks to the opening to these investors of its real estate investment fund (BREIT), its private credit fund (BCRED) and its European private credit fund.

Now competitors like Global Apollo Management are following in Blackstone's footsteps to bring hedge funds closer to wealthy individuals and their financial advisers.

Fintech marketplaces are also making it easier for financial advisors, wealth managers, and asset managers to access private market alternatives for their clients. iCapital is a leader in this space, providing a menu of private equity, private credit, hedge funds, structured notes, and other alternatives on its platform. iCapital services more than $140.000 billion in client assets and supports more than 1.100 funds. The company has raised more than $700 million in equity funding and has a current valuation of $6.000 billion.

iCapital's investor list includes the very asset managers it is trying to unseat, many of whom trade their funds on iCapital's platform. Among them are Blackstone, BlackRock, The Carlyle Group, JP Morgan and others. The fact that these traditional players have a financial stake in iCapital demonstrates the importance of alternative markets for the future of the sector.

PIER is another investment marketplace for accredited financial advisors and investors looking for alternative investment funds, products and training. Investment options include equity, hedge funds, structured notes, and private real estate. The CAIS platform serves more than 6.600 advisory teams and has registered a volume of transactions of more than 18.000 million dollars.

Two other emerging platforms designed for accredited investors are moonfare y Yieldstreet. Moonfare offers individuals access to private equity and venture capital through feeder funds that pool individual contributions to reduce minimum investment requirements. Yieldstreet offers a single fund consisting of multiple asset classes such as real estate, private credit and art, along with custom portfolios and short-term notes.

Opportunities for non-accredited investors (ie the average consumer) to invest in alternatives lie outside of private market funds and wealth managers. Public allows users to invest in traditional products, such as stocks and ETFs, along with alternative products, such as art, collectibles, cryptocurrencies, and NFTs. Republic It allows anyone to invest in startups, real estate, growth companies, cryptocurrencies and much more through open access regulated crowdfunding. Another option is Masterworks, a marketplace dedicated to fractional stocks of artwork.

High IRA Move alternative investments into retirement accounts. The startup offers an alternative IRA with options to invest in art, venture capital, startups, real estate, land, and more through partnerships with other fintech platforms like Republic and Masterworks. There is also a crypto IRA offering, which allows people to trade crypto with their retirement funds directly through Coinbase.

IMPLICATIONS

• Unlocking private market alternatives for financial advisers, wealth managers and their wealthy clients will create a new retail market with a worth hundreds of billions in AUM.

• Alternative investment will allow individual investors diversify their portfolios apart from stocks and government bonds, which cost US households $9 million in losses in the first half of 2012.

• The alternatives will challenge the traditional retirement account, changing what it means to save for retirement. Startups and even some traditional providers (for example, Fidelity with Bitcoin) are offering cryptocurrency, real estate, art, and other products as part of individual accounts and retirement plans.