New iCapital platform gives advisors turnkey access to alternative investments

In line with the growing appeal of alternative investments and more diversified portfolios, fintech platform iCapital has launched iCapital Marketplace to connect financial advisors to global providers of alternative investments on a single platform.

The platform, promoted as a tool that “bridges the structural divide that has historically separated asset managers, advisors, and clients from alternative investments,” evolved from iCapital’s existing technology platform that launched in 2014.

The main distinction is that the new platform combines multiple white-labeled platforms run by participating alternative investment providers.

“We’re bringing it all together to make it easier and more effective for both parties,” said Lawrence Calcano, iCapital chairman and chief executive.

Up until the Wednesday morning launch of the Marketplace, iCapital’s system was made up of more than 200 individual platforms that each general partner firm used to provide its own alternative strategies to advisors. Calcano said the impetus for the Marketplace came from both advisors looking for other alternative platforms and general partners looking for more advisors.

“Now advisors can see all the funds in one place working with iCapital, and GPs get access to the aggregated audience of advisors,” he said.

Calcano refused to disclose fees, but said advisors are charged fees based on the investments they access. The platform does not collect fees from the product providers.

Calcano said the various platforms had more than 100,000 unique advisor visits over the past 12 months, and he expects that number to grow substantially as the products and strategies are combined onto a single network.

Some white-label platforms at banks and brokerages will continue to operate independently from Marketplace, but Calcano said he expects the new platform to include access to hundreds of alternative strategies.

“Advisors and clients can benefit from exposure to this asset class, but expanding access requires a comprehensive technology platform that optimizes the process with the right technology, tools, and education,” he said.

Tim Welsh, founder and CEO of Nexus Strategy, compared the Marketplace to the mutual fund supermarkets “that transformed distribution decades ago.”

“These digital marketplaces will make it easier for asset managers to deliver their investments, content and education, while at the same time creating a network effect to expand all aspects of the alternative investing industry,” Welsh said. “As technology continues to drive efficiencies and lower costs, it is no surprise that everyone in the investment management value chain is expanding their digital footprints to remove friction and make it easier to do business.”

The Marketplace is designed for financial advisors, and individual investors won't be able to access it directly. And most of the products and strategies on the platform offering access to areas such as private equity, private credit and hedge funds, are only available to accredited investors and qualified purchasers.

But Calcano said there are already some products on the platform that don’t require accredited investor status, and the addition of more products available to retail-class investors will depend on the appetite for such products.

“We are servicing advisors,” he said. “We would expect more advisors will come to the site looking to determine whether there are products suitable for their clients on the marketplace.”

Chuck Failla, founder of Sovereign Financial Group, said he expects to see more platforms offering ease of access to alternatives.

“There is absolutely a land rush in the alts space and the main players are building out platforms to make it easier for advisors to get access,” he said. “There are also a growing number of secondary players getting into the space.”