Steve Houston, Managing Director and Co-Head of iCapital Solutions for iCapital, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss how the industry is evolving to make alternative investments more accessible to advisors and their clients.
Houston notes that various studies indicate that many individual investors allocate 3% to 5% of their portfolios to alternative investments, with ultra-high-net-worth investors holding substantially larger allocations. Developments in technology, education, and product development are making alternative investments more accessible to all investors.
The volatility in public markets demonstrates the benefits and the merits of private markets. Private markets are long-term investments with lower volatility compared to public markets. Previously, advisors thought alternative investments were riskier than public market investments, but that perception has been changing as they have been provided access to more education in the sector. iCapital’s Architect portfolio construction tool allows advisors to incorporate specific private market funds alongside their public market holdings. The system provides illustrations that can be shared with clients on the benefits of public market holdings.
iCapital is collaborating with GPs and TAMPs to seamlessly integrate alternative investments into UMA accounts. Technology providers are increasingly including private market investments in advisor workflows and tools, such as model portfolios.
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