Fintech iCapital Network Inc., which provides alternative investments to financial advisers, is building customized technology for global asset manager PGIM to offer institutional-quality alternative investments to high-net-worth investors.
PGIM, the investment management business of Prudential Financial Inc., has approximately $235 billion in alternative AUM and $1.4 trillion in total AUM. The firm typically focuses on providing alternative investments to institutional investors, according to the announcement.
With iCapital’s technology, the asset manager plans to move down-market to help advisers and their clients access PGIM’s products, which include public and private fixed income, fundamental equity, quantitative equity, real estate and alternatives.
In addition, iCapital will design tools to support advisers, including automated subscriptions, administration, document management and reporting, said iCapital CEO Lawrence Calcano.
“Asset managers need technology to manage this part of the marketplace and similarly, advisers need to leverage technology to be able to provide these investment solutions to their clients,” Calcano said.
Historically, alternative asset classes had no technology at all and subscribing to and receiving reports on such investments has been a highly manual process, he said. “Also, alternative asset classes have been the purview of large institutions that wrote large checks into private equity funds or hedge funds, so you had a one-to-one relationship.”
What’s happening now is an industry trend in which firms are leveraging technology to democratize alternative assets, Calcano said. “There’s a very significant amount of interest on the part of financial advisers and their clients to have access to the best alternative managers in the market.”
ICapital has quickly attracted interest from some of the largest names in asset management. In fact, the seven-year-old startup has grown to service nearly $58 billion in client assets across more than 720 funds upon the completion of the Artivest and Wells Fargo acquisitions.
By comparison, iCapital serviced just $8 billion in client assets at the start of 2019, according to the company’s website.
That type of growth has coincided with a number of traditional firms tapping iCapital to provide independent registered investment advisers easier access to alternative investments.
Schwab Advisor Services adopted the platform last October to allow its advisers to prequalify clients and provide them with research on the funds. iCapital also powers alternative platforms at JPMorgan Chase and Fidelity Investments.
Most firms place a limit on advisors’ sales of alternative investments to clients in the neighborhood of 10% a customer’s net worth.
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