Category Archives: Subscribers Only

Inflation playbook – Managing through an inflation cycle

Inflation playbook – Managing through an inflation cycle

April 26, 2023 | MercerInsight Community

Speed read

• After the 2021-2022 inflation shock, we enter 2023 with signs that cyclical inflation is easing, especially in the US. We anticipate inflation stabilizing near central bank target levels over the next one to three years, but recognize there are risks to this outcome.

• Higher inflation and greater inflation volatility, for example, remain long-term risks driven by structural factors, including globalization slowing as the world is factionalizing, inadequate investment in the commodities supply chain and potential public debt monetization.

• As a result, portfolios should remain positioned to weather various economic and inflationary scenarios by including a diversified mix of inflation-sensitive asset classes, while being conscious of current valuations.

Download the Paper

The Importance Of Communication

The Importance Of Communication

October 18, 2022 | Marketing Intent

Everybody understands the importance of communication in projects, in your day-to-day, in work life and in everything that you do. But sometimes the effectiveness of our communication gets lost in the shuffle.


Focusing on Communication

As a marketing firm with multiple clients, we have to focus on our communication. It has to be at the forefront of every morning, every evening and every week of what we do. Let’s go over some of the things that we do at Marketing Intent and review some options on how you can help improve your communication.

One of the first things that we do is hold weekly status updates. Every Monday we get together with our internal team and go over every single project, even if we’re not involved, that way we understand what’s going on. If one of us needs to be pulled in, or if we can offer some insight, we do.

Providing Weekly Email Updates

The other thing that we do is provide weekly email updates. If something’s changing throughout the week and we don’t have a meeting on the books, a quick way to update everybody is through an email. We really focus on making sure that we’re keeping everybody included and aware of what’s going on, even if it’s not time for a meeting.

The Best Way our Clients Receive Communication

When we bring on clients, we follow our onboard process and start off every client the same. Each client starts with a weekly project meeting and then we will also provide weekly status emails, but that doesn’t always work for everybody.

We tune into how clients best receive communication. We may have a client that likes to text, we may have a client that prefers phone calls, or we may have a client that loves emails. As we’re onboarding, we analyze the way that they are receiving our information and we adjust and tailor our communication specific to them. 

We are providing them with the most effective communication that is shareable with key stakeholders that is effective and easily digestible. This is a great way to help smooth out their process for projects and keep everybody in the know, so that there are no surprises that come up.


The Expanding Universe of Business Development Companies and their Real-World Investment Impacts

The Expanding Universe of Business Development Companies and their Real-World Investment Impacts

July 20, 2022 | John Rickman | WealthForge

A recent blog post from WealthForge:

Tax-advantaged, non-traded business development companies (BDCs) are alternative investment funds designed to boost the economy while generating a steady stream of income for both retail and accredited investors in the fund.

BDCs are closed-end investment funds that help finance small, developing, and financially troubled U.S. firms. BDCs pool money from multiple investors and invest that money in business debt and equity. They are also required to provide subject matter expertise to the companies they invest in.

BDCs must invest at least 70% of their total assets in so-called “eligible portfolio companies,” which are valued at less than $250 million and typically lack conventional means of raising money or inviting analyst interest to boost their profiles.

Created by Congress in 1980 as part of amendments to the Investment Company Act of 1940, BDCs can be publicly or privately traded. Those that file publicly may elect to come under the auspices of the Act, meaning, among other things, that they agree to Securities and Exchange Commission (SEC) regulation. Election also means BDCs must develop compliance programs and file regular reports with the SEC.

In April 2020, the SEC adopted rule amendments aimed at making it easier for BDCs to respond to market opportunities by streamlining BDC registration processes. The reforms also included disclosure and structured data requirements designed to help investors better analyze fund data.

As of July 2022, there are currently 49 publicly traded BDCs with combined assets of more than $121 billion, according to which monitors listed and non-listed BDCs. The universe of non-traded BDCs is smaller with $95.6 billion in assets across 58 funds. Assets or gross assets are total investments including leverage and doesn’t take any discount into account.

2021 was a big year for publicly registered, non-traded BDCs, which raised more than $15.7 billion that year, according to The Stanger Market Pulse. This year looks to be even bigger, with the same category of BDCs having already raised more than $13.8 billion through May, according to Stanger.


The universe of BDCs may be swiftly expanding, but the funds themselves — and the businesses they invest in — are down to earth, and certainly not as lofty in investing in the Amazons of the world,’s John Cole Scott tells Altigo:

“These aren’t large corporate deals, they’re small- to middle-market investments. The average BDC loan size is around $11 million, with the average BDC portfolio containing roughly 100 such investments,” says Scott. Interest rates for about a third of BDC loans come in under 6.5%, with the rest averaging around 7.31%, he notes.

“BDC companies are both geographically and industry sub-sector diverse and are often operating in your own back yard. They really are impacting communities everywhere, not just in New York or California,” Scott adds.


A continuous offering over time, BDCs have the potential to provide both retail and accredited investors with a steady stream of distributions stemming from interest income, dividends, and/or capital gains when the investments are sold.

Without factoring for inflation or commissions and fees, BDC yields can range anywhere from 5-10% depending on market conditions. However, BDC fee structures are often far more steep than other types of alternative investments.

As with real estate investment trusts (REITs), if 90% or more of a BDC’s taxable income is annually distributed to investors, BDCs may enjoy pass-through tax treatment. This is only allowed if BDCs are registered and regulated as a registered investment company, and most are. BDCs are only taxed once at the stakeholder level, thus, as with REITs, investors must pay ordinary taxes on their investment earnings.

BDC’s low liquidity profile and sometimes lengthy investment commitments make them unsuitable for some investors, and because BDC target businesses are generally small businesses, these types of alternative investments are typically considered high-risk. Therefore, it’s good to collect as much information as you can on any individual fund before making any commitments.


As with other offering types, the investment process for BDCs is time consuming and paper laden. Subscription processing technology like Altigo can reduce investment time from weeks to minutes and virtually eliminate errors associated with paper subscription documents.

With over 200 alternative investment offerings currently available on Altigo, our platform supports a range of alternative investment products such as non-listed BDCs, non-listed REITs, qualified opportunity zone funds, non-listed preferreds, interval funds, direct private placements, DSTs, and private equity funds.

For more information about how Altigo can streamline the investment process for BDCs and other alternative investments, contact us for a brief demo.

Alternative Investments: From Friends & Family To Reg D Private Placements

Alternative Investments: From Friends & Family To Reg D Private Placements

May 25, 2022 | Marketing Intent

Are you looking for ways to ensure success in raising capital? Simplifying your sales story, syncing up marketing and sales efforts, and updating your PPM regularly are a few ways to help you achieve these goals, maximize your marketing and make sure your offering stands out.

How to help your offering stand out with financial advisors, how to sync your sales and marketing efforts and how your PPM can help develop advisors’ trust.

Simplicity and a Good Story

Standing out among the growing number of alternative investment offerings can be difficult. We see many firms dive deep into the jargon of their asset classes to try to explain investment offerings to advisors. And their eyes glaze over.  Simplicity and a good story is the key to helping advisors quickly grasp what you’re doing and why.

For example:

• Industrial buildings = Amazon packages

• Farmland = the need for food

• Residential = solving the housing crisis

Sync Marketing & Sales

Once you have your simple story down, it’s time to make sure that your marketing and sales efforts are synced up. I know this can be a sensitive topic for people, because of the battle that marketing and sales can have. 

It is really important for us to re-think marketing and sales and how they can help each other be successful with a feedback loop. Whether it’s sales getting feedback on what’s resonating with advisors, what a common objection is, or how something should be explained, marketing can help answer those questions for advisors and help engage them for the sales team. 

This can often result in more warm leads and conversations that lead to capital being raised. 

Use Your PPM to Build Trust

Once those conversations start leading to capital raising, the next most important thing to do is develop trust with advisors. We don’t often think of the PPM as being a marketing tool, but it needs to be updated continually. Especially depending on how rigid your law firm is on what you can say with or without it being updated in the PPM. For example, if you’ve acquired properties and you haven’t updated your PPM, you may not be able to discuss them with advisors. That looks like a communication gap from their standpoint, versus you being proactive and letting them know what’s happening with your offering. 

Updating your PPM can provide advisors with what they need to give their clients updates –and to continue to present your offering and raise capital for it. Get ahead of the curve and think about how you can regularly update your PPM so you can get updates out to advisors and continue to develop their trust.

To recap…

• Simplify your sales story. Think about your asset class and what it means to advisors and how it translates –to sync up your marketing and sales efforts, because it is really important for them to have open communication and have a feedback loop.

• Plan for your PPM to be updated regularly. This enables you to get information out to advisors quickly, which helps develop trust.


If you need help maximizing your marketing to raise capital, contact Marketing Intent. We have deep experience in the financial services and the alternative investments space. 

iCapital Brokers Deal to Buy Stifel’s Feeder Fund Platform

iCapital Brokers Deal to Buy Stifel’s Feeder Fund Platform

March 11, 2022 | Private Banker International

Financial technology firm iCapital Network has finalised a deal to buy alternative investment feeder fund platform from Stifel Financial.

Financial terms of the deal were not disclosed. The transaction is expected to close later this quarter.

Stifel’s feeder fund platform facilitates the distribution of an array of hedge fund strategies.

Following the transaction, iCapital will provide its white label technology to manage and automate and the onboarding, subscription processing and lifecycle operations of Stifel feeder funds.

Furthermore, the firm will also support advisors and their high-net-worth (HNW) investors Stifel.

Stifel will remain responsible for sourcing alternative investments for its clients and offering them guidance on the role of alternative investments within a diversified investment strategy.

Investors in these funds will remain as Stifel’s customers.

iCapital CEO and chairman Lawrence Calcano said: “Stifel is an industry leader and iCapital is honored to be entrusted with the management of their feeder fund business.

“We are grateful for the industry’s adoption of our technology as the standard alternative investing operating system, which provides a best-in-class digitalised investing experience.”

As part of the deal, Stifel’s employees who currently support operations for the feeder fund platform will join iCapital. This team will remain responsible for supporting the fund portfolio.

Stifel senior managing director Tom Lee said: “We look forward to expanding our partnership with iCapital to continue offering our clients access to high-quality alternative investment opportunities on an updated platform that offers increased transparency and streamlined workflows.

“After careful consideration, we concluded the iCapital technology and team are best qualified to take over the ongoing service of our feeder fund platform.”

In December last year, iCapital secured a $50m investment in a funding round to enhance its platform technology, bolster the breadth of strategies and product types on its alternative investment menu.

CAIS Announces $225 Million Financing Round Led by Apollo and Motive Partners, Exceeds $1 Billion Valuation

CAIS Announces $225 Million Financing Round Led by Apollo and Motive Partners, Exceeds $1 Billion Valuation

January 11, 2022 | Business Wire

CAIS, the leading alternative investment platform, today announced a $225 million round of funding led by Apollo (NYSE: APO) and Motive Partners (“Motive”), with additional investment from Franklin Templeton (NYSE: BEN), which values CAIS at more than $1 billion. This new investment follows a previous investment by Eldridge and accelerates CAIS’s mission to modernize how financial advisors access alternative investments. Blythe Masters, Founding Partner of Motive, and Andrew Gosden, Managing Director in Financial Services & Strategy at Apollo, will join CAIS’s board of directors.

“We are honored to have Apollo, Motive, and Franklin Templeton as our new shareholders and partners,” said Matt Brown, Founder and CEO of CAIS. “This investment advances the critical role CAIS plays in revolutionizing how the alternative investment and wealth management communities engage, learn, and transact.”

Alternative assets are expected to make up to 24% of the global investable market by 2025, according to the Chartered Alternative Investment Analyst Association, up from 12% in 2018. CAIS has doubled its headcount in the last year to meet demand, as transaction volume has increased by 65 percent year-over-year with the number of platform users increasing by 60 percent. Building on that momentum, CAIS will use the proceeds of this financing round to fuel further advancements in technology, enhance the customer experience, invest in the digitization of product operations and processes, and explore strategic opportunities.

“We are excited to invest in CAIS, one of the fintech leaders transforming alternative investment access for wealth management. At Apollo, we want more individuals to access alternative strategies and companies like CAIS help to bridge the gap between asset managers and advisors through their growing platform. We believe this latest funding round will support the Company’s continued growth and success,” said Marc Rowan, Co-Founder and CEO of Apollo.

“CAIS has built a unique marketplace for alternatives through a commitment to excellent service and education. This investment will turbo-charge the technology transformation of the business towards a modular, flexible cloud-based architecture, which will modernize the way investors gain access to this asset class, allowing managers, investors, and their advisors to focus less on process and more on value-added interactions,” said Blythe Masters, Founding Partner at Motive.

CAIS serves the independent wealth management community, which has been historically under-allocated to alternatives when compared with large national broker-dealers or institutional investors, whether due to complexity, higher minimums, and fees, need for education, or other barriers to entry. As the first truly open marketplace for alternative investments, where financial advisors and asset managers can engage and transact at scale, CAIS seeks to remove these barriers, enabling advisors to enhance outcomes for their investors and providing managers with centralized access to a highly fragmented wealth management community.

“We believe that individual investors should have access to the same alternative investment solutions as large institutions, and CAIS is doing just that through its innovative and user-friendly platform,” said Jenny Johnson, President and CEO of Franklin Templeton. “CAIS shares our goal of making it easier for advisors and individual investors to diversify into alternatives to meet their investment objectives.”

Financial Technology Partners served as financial advisor to CAIS on the transaction.

About CAIS

CAIS is the leading alternative investment platform for financial advisors who seek improved access to, and education about, alternative investment funds and products. CAIS provides financial advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, private credit, real estate, digital assets, and structured notes, allowing them to capitalize on opportunities and/or withstand ever-changing markets. CAIS also provides an industry-leading learning system, CAIS IQ, to help advisors learn faster, remember longer, and improve client outcomes.

All funds listed on CAIS undergo Mercer’s independent due diligence and ongoing monitoring. Mercer diligence reports and fund ratings are available to advisors on the CAIS password-protected platform. CAIS streamlines the end-to-end transaction process through digital subscriptions and integrated reporting with Fidelity, Schwab, and Pershing, which make investing in alternatives simple.

Founded in 2009, CAIS, a fintech leader, is empowering over 4,400+ unique advisor firms/teams who oversee more than $2T+ in network assets. Since inception, CAIS has facilitated over $13.8B+ in transaction volume as the first truly open marketplace where financial advisors and asset managers engage and transact directly on a massive scale. CAIS has offices in New York, Los Angeles, Austin, and San Francisco.

Securities offered through CAIS Capital LLC, member FINRASIPC.

About Apollo

Apollo is a global, high-growth alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade to private equity with a focus on three business strategies: yield, hybrid, and equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of September 30, 2021, Apollo had approximately $481 billion of assets under management. To learn more, please visit

About Motive Partners

Motive Partners is a specialist private equity firm with offices in New York City and London, focusing on growth equity and buyout investments in software and information services companies based in North America and Europe and serving five primary subsectors: Banking & Payments, Capital Markets, Data & Analytics, Investment Management and Insurance. Motive Partners brings differentiated expertise, connectivity and capabilities to create long-term value in financial technology companies. More information on Motive Partners can be found at

About Franklin Templeton

Franklin Resources, Inc. (NYSE:BEN) is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 165 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the Company brings extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has over 70 years of investment experience and over $1.5 trillion in assets under management as of November 30, 2021. For more information, please visit

Media Contact

Nadia Damouni

For Apollo:
Joanna Rose, Global Head of Corporate Communications
Noah Gunn, Global Head of Investor Relations

For Motive Partners:
Sam Tidswell-Norrish
Investor Relations

For Franklin Templeton:
Matthew Walsh

Alternative Investment Exchange (AIX) Announces Integration with UMB Fund Services’ Systems

Alternative Investment Exchange (AIX) Announces Integration with UMB Fund Services’ Systems

November 30, 2021 | Alternative Investment Exchange (AIX)

Alternative Investment Exchange (AIX), an alternative investment technology firm that makes it easier for wealth managers and fund sponsors to do business in alternatives, announced the development of a direct data connection with UMB Fund Services (UMB), a national leader in registered and alternative investment fund administration. The direct data connection was developed with UMB that enables AIX to digitally transmit subscriptions and new accounts without costly manual intervention and reliance on paper-based processes.

“Alternative investments have always required a high degree of manual intervention. Paper documents, wet signatures, and PDF documents that must be re-keyed made it especially challenging to automate processes such as opening accounts and onboarding new customers,” explained AIX’s COO, Brad West. “With true digital, straight-through processing, AIX can move data seamlessly to UMB, minimizing NIGOs, reducing its administrative headaches, and eliminating unnecessary back-office costs.”

During the height of the pandemic and despite quarantine orders, many paper-reliant fund administrators were forced to keep offices open so that redemption requests could be processed, and compliance requirements were met. This underscored the inefficiencies of paper, and the liability risk for having business processes tied to such antiquated practices.

“UMB is committed to adopting the latest technology to enhance customer experience and support our growth,” explained Mike Huisman, SVP, Director of Transfer Agency at UMB Fund Services. “The pandemic accelerated our path in leveraging technology to automate our business, create efficiencies, and address risk and liability issues tied to paper and manual processes. Our vision, which has been realized by integrating with AIX, was to automate the subscription, maintenance, transfer, and redemption processes of alternative investments.”

Unlike other tools that only mimic a paper process by enabling e-signature and sending PDFs, AIX enables data flow across and into backend systems. The standard is data, seamlessly flowing across all parties, creating efficiency and transparency, all while reducing risk.

“Committing to this standard delivers an entirely different level of impact and experience. Automating backend manual processes through data connectivity removes friction felt by all involved, but is only fully appreciated by those that must otherwise manually stitch steps together,” explained West. “Partnering with UMB to create authentic data connections truly changes the game. We are experiencing low NIGO rates and enhanced compliance while advisors tell us they do not want to do business any other way. Everyone wins.”

About AIX:

Alternative Investment Exchange (AIX) is an end-to-end digital platform purpose-built to improve the processes related to buying, owning, and selling alternative investments. AIX’s technology reduces friction, mitigates risk, and creates value across all alternative investing stakeholder groups – wealth managers, asset managers, custodians, transfer agents, and fund administrators. By evolving beyond documents to make data the connective tissue between alternative investment players, AIX makes it easier to conduct business and accelerate industry growth. For more information, please visit or LinkedIn:

Media Contact:

Mark Tordik Broadpath (for AIX)
(215) 644-6503

Carter Multifamily Joins the Alternative Investment Exchange (AIX) Platform

Carter Multifamily Joins the Alternative Investment Exchange (AIX) Platform

Seamless data connectivity and paperless processing enables Carter Multifamily to raise greater capital by providing exceptional experience to allocators

February 3, 2021

Philadelphia, PA, February 3, 2021 – Alternative Investment Exchange (AIX), the platform making it easy to buy, own, and sell alternative investments, has onboarded Carter Multifamily Fund Management Company, LLC (“Carter Multifamily”) to the AIX platform. This integration opens the path for allocators to make Carter Multifamily funds a bigger part of their client portfolios. The successful onboarding was coordinated in tandem with Carter Multifamily and its independent broker-dealer and transfer agent partners.

Carter Multifamily is a private company focused on acquiring multifamily real estate investments that offer value-add enhancement opportunities. When the COVID-19 pandemic struck, it made the traditional paper-based processes associated with buying, owning, and selling alternative investments even more difficult and cumbersome for Carter and its partners. For Carter Multifamily, the pandemic accelerated its path toward adopting an efficient straight-through investment process as it shifted operations virtually.

After meeting with AIX, Carter Multifamily was motivated to digitize its entire process making it easier for partners hindered by labor-intensive paperwork, NIGO (Not in Good Order) errors, and other compliance issues. In working with Carter Multifamily and its partners, AIX conducted a seamless technology integration in a mere five weeks. Carter Multifamily is now up and running on the platform and has started the process of integrating a new fund into the AIX platform.

“At the top level, we wanted our broker-dealer representatives to be able to use the AIX platform to process transactions as painlessly as possible,” explained Lisa Robinson, President of Carter Multifamily. “With the help of AIX, we have empowered our representatives, enabling us to sharpen our focus on raising equity, acquiring assets, and more quickly seizing on available buying opportunities.”

The industry average cycle time for current paper-based processes is approximately six weeks from the time an advisor initiates an order to when clearing and settlement is complete. AIX’s end-to-end straight-through processing can take as little as 72 hours, reducing the time it takes to complete a transaction by 90%. What’s more, the alternatives industry sees paperwork errors, or NIGOs, as high as 50%, according to industry estimates. AIX can deliver NIGOs under 10% — preventing 80% of these issues before they are even submitted for review.

“Processing an order was previously a very laborious and paper-intensive process. Simply put, with AIX, we can bring in capital faster than ever before, and the system has shown to drastically reduce cycle times between advisors and investors,” added Robinson.

Solutions that digitize only account opening and subscription processes by generating digital versions of signed subscription documents remain cumbersome, time-consuming, opaque, and prone to errors. AIX addresses the entire lifecycle, digitally connecting all parties involved and seamlessly transmitting data through respective stakeholders’ systems.

Momentum continues to grow for AIX. Carter Multifamily joins a growing list of forward-thinking investment sponsors available through the AIX platform. “Carter Multifamily’s efforts in making a transformational impact on its business is inspiring and serves as a reference point for the industry,” said Brad West, AIX COO. “With the AIX platform in place, Carter Multifamily is creating better experiences for its investment advisor representatives which will, in turn, help reduce error rates and ultimately see efficiency savings passed back to them and individual investors.”

About AIX:

Alternative Investment Exchange (AIX) is an end-to-end digital platform purpose-built to improve the processes related to buying, owning, and selling alternative investments. AIX’s technology reduces friction, mitigates risk, and creates value across all alternative investing stakeholder groups – wealth managers, asset managers, custodians, transfer agents, and fund administrators. By evolving beyond documents to make data the connective tissue between alternative investment players, AIX makes it easier to conduct business and accelerate industry growth. For more information, please visit or LinkedIn:

Media Contact:
Mark Tordik
+1 215-644-6503

Blue Vault Bowman Alts Week 2020 Kicks Off May 4

Blue Vault Bowman Alts Week 2020 Kicks Off on May 4

Blue Vault and Bowman Law are teaming up to drive dialogue about alternative investments at this unprecedented historical time. Join us for the inaugural launch of Alts Week May 4-8, 2020. This event will be broadcast virtually each day of the week. Hear from asset managers, fintech leaders, and industry veterans as we figure out together what to do, how to proceed, when to act, how to respond, and what our new normal will look like moving forward.

While attendance to this event is open to all industry professionals, some sessions are restricted to BDs and RIAs only.

Register today here.

Click here to view the agenda.


Real Estate’s Enduring Qualities, Part 2

Real Estate’s Enduring Qualities, Part 2

October 25, 2018 | Beth Glavosek | Blue Vault

From time to time, it’s good to revisit the basics about why commercial real estate (CRE) makes sense for many investors.
CRE is broadly defined as any property that can produce income. The most common categories of CRE include office, retail, industrial, medical, hospitality, multi-family, land, and other leasable commercial space.
In addition to providing diversification benefits for investor portfolios, real estate can deliver capital appreciation, current yield, and inflation hedging.
Capital Appreciation
Picture your own house and the potential for selling it for more money than you paid for it. CRE also offers the opportunity to invest in a hard asset that can increase in value. A real estate fund will receive capital appreciation if it sells the properties at a higher price than it paid for them. Investors may receive these gains when they sell their shares at a higher net asset value (NAV) or the fund reaches a liquidity event.
Current Yield
Real estate is considered by many to be an “income play.” Because real estate portfolios usually pay dividends, investors can expect to be paid quarterly or they can reinvest the dividends to purchase additional shares. With interest rates having been at or near historical lows for an extended period of time in recent years, traditional income-based investments such as investment grade corporate or municipal bonds haven’t provided the current income that many investors need. Real estate, as a complement, can fill that void.
Inflation Hedging
Real estate has a strong track record as an inflation hedge because its values and rents go up as inflation rises. Tenants who sign long-term leases generally have rent escalators built in so that rental income can keep pace with inflation. Standard lease terms also protect landlords from increasing costs because tenants usually pay expenses such as utilities, insurance, and maintenance. Shorter-term rents can be reset to market levels.
In short, with real estate’s “total return” emphasis (the opportunity for appreciation plus income), it can be an attractive and important part of many investors’ portfolios.

Diversification as One of Real Estate’s Enduring Qualities

Diversification as One of Real Estate’s Enduring Qualities

October 11, 2018 | Beth Glavosek | Blue Vault

From time to time, it’s good to revisit the basics of why commercial real estate (CRE) makes sense for many investors.
The opportunity for diversification is one of the main characteristics that has attracted investors to this type of investment through the years.
Diversification from the Stock Market
Most investors are familiar with the ups and downs of stocks, bonds, and mutual funds. The stock market is subject to the day-to-day “emotions” of the market based on investor sentiment, events of a political, economic or social nature, and any number of other factors. Real estate has its ups and downs too, but it’s generally considered to operate independently of the stock market. Therefore, investors can expect allocations to real estate to perform differently than other investments within their portfolios, thereby providing diversification.
Diversification by Sector
CRE also provides opportunities for diversification within the real estate sector itself. CRE is broadly defined as any property that can produce income. The most common categories of CRE include office, retail, industrial, medical, hospitality, multi-family, land, and other leasable commercial space. Investors can allocate to these sectors according to their investment objectives.
Further, investors can take advantage of growth opportunities created by societal or demographic trends. For example, industrial real estate is attractive at the moment because of the growth in e-commerce and the need for distribution facilities. As another example, investments in student and senior housing facilities have taken off because of population shifts that are fueling demand. In other words, there are many opportunities for even further diversification within real estate’s overall diversification benefits.
Diversification by Property Characteristics
Investors can also look at characteristics such as geographic location, quality of property, and tenant attributes when making allocations to real estate. Such considerations might include:

• Are the properties located in established major metropolitan markets or urban centers (New York, Los Angeles), or are they in up and coming markets spurred by population shifts (Orlando, Austin)?
• Where do the properties fall on a quality spectrum, from core (most conservative) to opportunistic (most risky, but perhaps with greater appreciation potential)?
• Who are the tenants? In addition to tenant quality and creditworthiness, what industries do they represent?

In future blog posts, we’ll look at real estate’s other characteristics that appeal to investors, such as the opportunity for capital appreciation, current yield, inflation hedging, and more.

Going the ‘Last Mile’

Going the ‘Last Mile’

August 29, 2018 | Beth Glavosek | Blue Vault

It’s no secret that e-commerce has taken off exponentially, and part of what drives consumers’ online shopping behaviors is the ability to receive products quickly.
Getting products delivered in as timely a manner as possible requires “reducing the friction.” In a broad sense, this friction includes any obstacle that would discourage customers’ purchases or cause them to abandon items in an online shopping cart.
Speed of delivery is certainly part of the buying decision process. That’s why e-commerce is a strong and growing industrial demand driver in the current market. Storing goods closer to the end user obviously decreases the amount of time that they’re spent in transit.
Demand projections
According to the latest report from the U.S. Census Bureau, e-commerce is growing in the double digits year over year. Each quarter since early 2017 has posted a 15%-16% increase over the same quarter the previous year.
With e-commerce sales currently accounting for 9.6% of all retail sales and growing, demand for industrial facilities continues to increase. In fact, it’s been said that online retail fulfillment centers require three times the square footage of warehouse space as traditional warehouses used to stock stores. In addition, bricks and mortar retailers are also investing in their supply chains to improve distribution channels.
Going the ‘last mile’
Supply chains have traditionally relied on ‘bulk’ suburban centers that are larger in size (typically more than 500,000 square feet) and are in regional or national/global locations outside urban core areas. These are your large buildings with high ceiling heights and deep truck bays.
While there’s still a need for bulk warehousing, light industrial buildings are providing more nimble coverage of heavily populated cities. These warehouses are closer in proximity to the urban core and are smaller, narrower buildings that can more easily deliver efficient last mile service. In most cases, the customer lives near the facility.
In an in-depth look at last mile delivery, Supply Chain Dive identified city warehouses as one of the trends and solutions for delivery demands and eliminating ‘friction’ between initial purchase to package drop-off.
The report cited Amazon Prime as a major disruptor and stated that “there were at least 58 Amazon Prime Now hubs in the U.S. last year for customers demanding same-day instant delivery. The growing trend is for companies to build or take advantage of this urban warehouse space and have easy access to products for fast customer deliveries.”

Recent activity among nontraded REITs
On March 9, 2018, Blackstone REIT acquired a 22-million square foot industrial portfolio for approximately $1.8 billion.  The Canyon Industrial Portfolio consists of 146 last-mile infill warehouses and distribution buildings concentrated in Chicago, Dallas, Baltimore/Washington DC, Los Angeles/Inland Empire and South/Central Florida. The tenants include Amazon, FedEx, DHL, Fiat Chrysler, and the US Government. The last-mile industrial market is a coveted asset class, outperforming the bulk industrial market thanks to the rising demand created by e-commerce, tighter supply chains and population growth in urban areas.
Cole Office & Industrial REIT (CCIT II) derives 12% of its lease income from It owns an Amazon distribution center in Petersburg, Virginia, and an Amazon distribution center in Ruskin, Florida.
Since January 2018, other nontraded REITs have completed nine transactions to acquire warehouse/distribution centers encompassing a combined 3.3 million square feet of leasable area. The REITs and the number of transactions include Black Creek Industrial REIT IV (3), RREEF Property Trust (3), Griffin Capital Essential Asset REIT (2), and Cole Real Estate Income Strategy (Daily NAV) (1).
Recent Activity Source: Blue Vault

SEC Receives an Earful on ‘Reg BI’

SEC Receives an Earful on ‘Reg BI’

August 15, 2018 | Beth Glavosek | Blue Vault

Ever since the long-debated Department of Labor (DOL) Fiduciary Rule faded away earlier this year, regulators have attempted to keep the spirit of the ruling alive by implementing a substitute rule.
In April, the Securities & Exchange Commission (SEC) introduced its Regulation Best Interest– or Reg BI – in an effort to establish a standard of conduct for broker-dealers and associated persons when they make recommendations to retail customers involving securities. The proposed standard of conduct is to act in the ‘best interest’ of the retail customer and not place the interests of the broker-dealer ahead of the interest of the retail customer.
As reported in Investment News, the proposal includes a best-interest standard for brokersnew disclosure requirements for brokers and investment advisers and financial adviser title reform; and an interpretation of the fiduciary standard that currently applies to investment advisers.
The SEC opened up a comment period to receive public feedback, and this period recently ended on August 7. Not surprisingly, such a regulation has been met with continued skepticism and resistance from those in the financial community who believe that it does more to confuse than clarify.
What are the controversies?
The following are among the proposed ruling’s controversial aspects:

Attempts to control ‘titles’ in the advisory relationship. While some responders support the SEC’s intent of helping retail investors better understand financial professional roles and services, they also believe that restrictions on the use of titles could create unintended consequences. For example, restricting the use of the term ‘advisor’ could lead to a proliferation of other titles that add to customer confusion.
 Reliance on disclosure to protect investors. As one advisor points out, clients are already not reading complicated prospectuses. So, relying on them to read complicated disclosure documents is probably not the answer to helping them better understand the terms of their financial advice.
Suitability and client choice. Opponents believe that the current proposal doesn’t do much to increase real investor protection, yet, like the old DOL ruling, it limits some advisors’ ability to provide a complete array of products and services. As one advisor puts it, “Diversity in product, service and compensation are good for the industry and ultimately for the client when used appropriately.”


A number of financial industry leaders responded to the call for comments, and their feedback can be read here or in a recent article published by Financial Planning.

Blog Post: Are Flat-Fee TAMPs a Boon to RIAs?

Blog Post: Are Flat-Fee TAMPs a Boon to RIAs?

August 2, 2018 | Beth Glavosek | Blue Vault

In an era in which fees have come under scrutiny, one major selling point of the Registered Investment Adviser (RIA) model is the channel’s commitment to transparency, lower fees, and the highest level of fiduciary care.
A Turnkey Asset Management Platform (TAMP) can offer advisers the opportunity to provide off-the-shelf portfolio solutions to clients with clear and straightforward pricing. A TAMP takes the guesswork out of the process of actually managing a portfolio, including selecting the individual investments, monitoring the portfolio, and making investment changes on an ongoing basis. The TAMP structure gives advisers the peace of mind of leaving portfolio management to an outside expert and allows them to focus on developing their own businesses and clients.
However, reasonable compensation is still an issue when it comes to determining fair pricing for the advice and services an adviser provides. While TAMPs have frequently followed an assets under management formula for determining compensation, the latest generation of TAMPs is taking fee simplicity to a new level with flat fee pricing. In a recent interview with Wealth Management, flat-fee TAMP creator Sheryl Rowling said, “the economics [of flat fees] should attract many smaller advisors who see assets under management-based fees eating into their bottom line. Fee-based advisors typically charge clients in the neighborhood of 1% of the assets they manage, so a third of that could be going to a TAMP if they use one. For small firms, the percentage is critical because they need every penny available to continue to grow their business.”
Fellow flat-fee TAMP creator Scott MacKillop would agree, and he also adds that the fiduciary standard benefits of using a flat-fee TAMP are substantial. “Because our fee is both a flat fee and a low fee, it’s very appealing in an environment where there’s a great deal of scrutiny of fees and pricing. When advisors are able to offer services on a flat-fee basis and create a pricing advantage for themselves and for a 401(k) plan too, it gives them an edge in the fiduciary world we’re in these days,” he recently told ThinkAdvisor.
Rowling, for one, is attracting a loyal following. Her home-built TAMP, InStrategy, was launched a little over a year ago and has already taken in more than $1 billion.

Why Are More RIAs Looking to Alternatives?

Why Are More RIAs Looking to Alternatives?

July 19, 2018 | Beth Glavosek | Blue Vault

Registered Investment Advisor (RIA) advisers have historically shied away from alternative investments because of the fees associated with them and a lack of access to alternatives on their investment platforms.
However, with adjustments in fee structures that make alternatives more permissible for RIAs, the tides are turning. Statistics show that adoption of alternative investments by RIA advisers is trending upward and showing no signs of slowing down. According to Investment News, a survey of 250 RIAs with at least $500 million in assets under management conducted late last year showed that advisers planned to tap alternatives to help hedge the markets in 2018. In fact, 45% of advisers said that they would increase allocations to alternatives, and 48% said that they would at least maintain current allocations.
Factors such as low interest rates, low yields from traditional instruments such as bonds, and stock market jitters have led advisers to seek new ways of generating returns. In a recent interview with Financial Times, Brendan Lake, president and chief executive at PPB Advisors, said, “Interest in alternatives is up in part because many RIAs and their clients see listed equity as highly priced. Others fear an equity market downturn and are seeking protection in products with a lower correlation to stock indices.”
Some advisers believe that adding alternatives to a portfolio allows clients to be less dependent on “good” performance from stocks and bonds, in light of the fairly recent memory of stock market conditions just 10 years ago. With the potential to have better downside protection during market downturns, alternative investments can either replace equities as a means of generating capital appreciation, or they can replace bonds’ ability to deliver steady distributions and a return of principal. In addition to market defensiveness, many believe that historical data have shown that more diverse portfolios have performed better over the past 25 years than less diverse ones.1
In any case, it will be interesting to see if projections play out, and more retail investors have exposure to alternatives this time next year, thanks to greater adviser access and endorsement of these investments.

1Deborah Mason, “Advisors turn to alternative investments for clients,” CNBC, October 11, 2017.


Industrial: Real Estate’s Hottest Sector?

Industrial: Real Estate’s Hottest Sector?

July 5, 2018 | Beth Glavosek | Blue Vault

According to a recent Wall Street Journal article, development of industrial space in the U.S. is at a 10-year high, and there are no signs of a slowdown any time soon. In fact, roughly 247 million square feet of new industrial space is expected to be delivered this year, the most since 2007, while vacancies are at a 17-year low, according to the WSJ.

Two factors – growth in e-commerce and population growth – have created strong demand for industrial real estate. In an article for National Real Estate Investor, a spokesperson for Jones Lang LaSalle says that, “E-commerce sales have increased by 16% year-over-year and now account for 9% of all U.S. retail sales. E-commerce also accounts for about 12% of industrial leasing activity and an additional 22% to 30% of indirect leasing through closely tied logistics, distribution and 3PL channels.” He goes on to say that we are just seeing the beginning of exponential growth in e-commerce, which will continue to have a significant impact on industrial development for the next few years. One of the biggest drivers for new industrial projects is the need to put distribution facilities closer to consumers, he notes.

In a similar vein, population growth is another factor causing certain markets to expand. A higher population means more shoppers buying goods online. Supply constraints in these markets cause rents to go up, which bodes well for industrial investors.

Industrial real estate includes both large, bulk warehouses and smaller, light industrial properties. In general, a bulk industrial property is a larger building on the outskirts of town with more than 500,000 square feet, higher ceiling heights, and wider truck court depths. Light industrial buildings are closer in proximity to urban core areas, and they’re smaller buildings that are ideal ‘last-mile’ facilities to get packages to urban consumers.

According to Nasdaq, a recovering economy, healthy job market, tax reforms, a healthy manufacturing environment, and high business inventories are likely to drive demand for warehouse and logistics real estate, which will provide significant impetus to industrial REITs.

Are Hybrid RIAs Changing the Industry?

Are Hybrid RIAs Changing the Industry?

June 19, 2018 | Beth Glavosek | Blue Vault

In the last blog post, we talked about some differences between Independent Broker Dealers, Registered Investment Advisers, and Wirehouses, as well as the types of advisors associated with each firm.

RIAs have generally been regarded as completely different models from broker/dealers and wirehouses for providing financial products and advice. For one, RIAs uphold fiduciary standards in terms of acting in the best interest of clients before the best interests of the firm. They also are considered to be “fee-based,” that is, they are compensated based on a client’s assets under management, not by commissions.

However, that traditional divide may be changing with the advent of the Hybrid RIA. A Hybrid RIA is registered as both an RIA and a broker/dealer. As mentioned in previous posts, RIAs must register with either the Securities and Exchange Commission or their state regulators, depending on their assets under management. Broker/dealers register with FINRA. A Hybrid RIA’s dual registration allows its advisors to operate both a fee- and a commission-based practice.

This can open up new channels of business, including services tailored to high-net-worth clients seeking specific benefits in their overall wealth strategy. For example, such a client might have tax considerations that would make certain alternative investments attractive. An advisor connected with a Hybrid RIA is prepared to offer those strategies, which many times compensate in the form of upfront fees and commissions.

As one Hybrid RIA spokesperson said in a recent Financial Planning magazine article, his firm has made recent platform changes in order to retain brokerage services while aligning relationships with firm and client needs. “We have a lot of clients who are fee-based clients that are very interested in investment products that you can only get through a broker/dealer,” he says.

The World of Investment Advice Professionals

The World of Investment Advice Professionals

June 6, 2018 | Beth Glavosek | Blue Vault

In the last blog post, we offered an overview of the types of firms that sell alternative investments. Within the channels of Independent Broker Dealers, Registered Investment Advisers, and Wire Houses, investors can expect to work one-on-one with an investment professional who will provide customized investment advice, financial planning services, and/or brokerage services (such as buying or selling stock or bonds).
Investors may encounter those who refer to themselves as registered representatives, while others are registered investment advisers, financial planners, financial advisors, or brokers. They also may, depending upon their level of training or certification, hold special designations such as Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA). But, what does it all mean, and what are the similarities and differences?
The Financial Industry Regulatory Authority (FINRA) intentionally differentiates advisers (spelled with an “e”) because it says the laws that are specific to governing this type of investment professional spell the title this way. According to FINRA, “Although the terms sound similar, investment advisers are not the same as financial advisors and should not be confused. The term financial advisor is a generic term that usually refers to a broker or a registered representative. By contrast, the term investment adviser is a legal term that refers to an individual or company that is registered as such with either the Securities and Exchange Commission (SEC) or a state securities regulator. Common names for investment advisers include asset managers, investment counselors, investment managers, portfolio managers, and wealth managers.”

Key terminology

An investment adviser representative (IAR) is someone who works for and gives advice on behalf of a Registered Investment Adviser (RIA) firm. Investment advisers who manage $110 million or more in client assets must register with and be overseen by the SEC. Advisers who manage less than $110 million must register with and be overseen by state securities regulators.
A registered representative is primarily a securities salesperson and may also go by such generic titles as financial consultant, financial advisor, or investment consultant. He or she works for a broker, stockbroker, broker/dealer, or other brokerage firm. Broker/dealer firms must register with the SEC and be members of FINRA. Individual registered representatives must register with FINRA, pass qualifying examinations, and be licensed by their state securities regulators. 


It’s worth noting that no special training or designation is needed in order to call oneself a ‘financial planner.’ A Certified Financial Planner, however, is someone who has taken extensive coursework and received certification through the CFP Board. The CFP Board notes, as a word of caution to investors, that financial planners are not regulated as a separate and distinct profession, and are not required to meet basic competency or ethical standards.