Edward Jones joins the crowd to sell more alternative investments

Add Edward Jones, the closely held private partnership with more than 20,000 financial advisors and $2.2 trillion in client assets, to the roll call of firms expanding or revamping its list of higher-risk alternative investments for its financial advisors to sell. 

“Firms are doing this,” said Kevin Gannon, chair and CEO of Robert A. Stanger & Co. Inc. “There’s a big pull to alternative investments right now because of volatility of the stock market.”

Edward Jones said on Tuesday morning it will start offering alternative investments to wealthy clients with at least $10 million in assets to invest.

Alternative investments for individual investors or families have exploded in popularity in the past decade, as institutional investors such as Blackstone and Apollo have aggressively entered the retail market. Advisors sell and recommend alternative investments typically as vehicles that are not tied or correlated to the broad stock market, as well as a way to mitigate risk. Such investments, which include private equity funds, nontraded business development companies, and nontraded real estate investment trusts, also carry more risk and are designed for wealthier investors who can better stand those risks.

Beginning May 5, Edward Jones’ high-net-worth investors will have access to alternative investments focused on private markets, according to the company. The firm plans to expand the range of alternative investment options and client reach over time.

CAIS, an alternative investment technology platform for advisors, worked with Edward Jones to develop the platform.

Edward Jones likely had limited or almost no alternative products for its advisors to sell up to this point, said one industry executive, who spoke privately to InvestmentNews about the matter. In February, Edward Jones hired alternative investments veteran Mark Knezevich as senior alternative investments product manager to be one of the leaders of the new program.

“The challenge for Edward Jones is that these products are new to all their advisors so it’s a big education process,” the executive said. “And for the alternative investment industry, this is a potentially massive development. Everyone’s been waiting on Jones to get into alternatives.”

Edward Jones is one of a handful of firms revamping or updating their alternative investment platforms for advisors.

LPL Financial and the Charles Schwab Corp. recently announced platforms they built in-house. Over the winter, LPL Financial debuted LPL Alts Connect, a full-service platform, where advisors can research, purchase, and manage alternative investments. And Charles Schwab this month unveiled Schwab Alternative Investments Select, a platform available to all eligible retail clients with more than $5 million in household assets at Schwab.

And a new firm, PeakAlts, launched a platform this year to serve RIAs, family offices and endowments. Industry veterans from Goldman Sachs, Hightower Advisors and H.I.G. Capital opened New York-based Peak Altitude Partners, or PeakAlts, which aims to be a high-end service for RIAs, family offices, multi-family offices and endowments to access private market investments.