Why Vestmark is All-In On Supporting Advisors with Alts

Last month, Vestmark and our partners iCapital®, BlackRock, and Dynasty Financial Partners announced the launch of a tax-managed unified managed account (UMA) with private assets, commonly referred to as “alts” or alternative investments. 

For RIAs and wealth managers, this has become something of a holy grail over the past few years. While some other account management platforms have positioned themselves as including alts in an account, these efforts either haven’t truly allowed unified management across investment types (for example, including alts in a dashboard view of multiple investments isn’t the same as being able to rebalance across those investments) or have represented a technical capability, not an actual product. 

The wealth media immediately recognized the significance of our new solution, as seen in the multiple reports and stories written in the days that followed the announcement. One more story I want to tell is what this says about how Vestmark approaches product development and innovation within the wealth management industry. 

Moving to where the puck is going: Tracking trends and client feedback 

Private assets have been around as an investment option for as long as there have been investments, of course. Equity in a private business, real estate, commodities, and more have a long history of providing risk management and diversification for investors. So offering alternative investments isn’t new for RIAs and wealth managers. What Vestmark and our partners observed were converging and intertwined trends that made it clear we couldn’t wait to develop a solution to meet what today is a wave, but tomorrow we believe will be a surge. 

• Alts are becoming less “alternative”: Private assets have traditionally been focused on the high-net worth market. They tend not to be as liquid as exchange-traded equities, they are less transparent and more challenging to evaluate. Today, the market has become much larger, and specialized asset managers now pool and manage alts in ways that balance risk and make them more accessible to more people. The creation of new forms of highly-publicized alternative investments, especially cryptocurrency, has made the market even larger, more visible, and more accessible.
• Investors are aware of alts and want in on the action: What we heard from our wealth management and RIA partners, as well as observed in the marketplace, is that more and more investors want to include alternatives in their portfolio. And the trend is moving to the mass affluent and middle-class markets – investing in private assets used to take special connections and an investor willing and sophisticated enough to accept the risks and limitations, but media coverage and access to public data means more people know the potential of alts and want them as part of their portfolio.
• Advisors need to keep up with investor demand and want to stay ahead of the competition: Advisors and RIAs feel pressure to include private assets/alts from two directions. First, from the increasing number of investors who want them as part of their portfolio, and second, from competitors who want a piece (or all) of their client’s wallet.
• Ease of access is a game-changer: Vestmark has seen the value of making things easy for advisors. Our recent product launches have focused on using our powerful rebalancing engine behind an intuitive user interface to make it easier for advisors to offer sophisticated, personalized investing with less effort. The key to unlocking the alts market for advisors lay not just in access, but easy, unified access that advisors can utilize plus seamlessly apply high-value services such as systematic rebalancing. 

Beyond Buzzword-Mining: Delivering real solutions that work 

So what does all of this say about how Vestmark approaches innovation? First, it’s about doing the table stakes blocking and tackling: watching what’s happening in the market and listening to our partners and clients to see where they are feeling pressure. 

But we believe where Vestmark excels is in its partnerships and in our commitment to offering real-world, usable solutions. We didn’t want to announce the availability of UMAs with private assets until they were truly available and in the marketplace. Not only does that make this a real solution that clients can deploy, but working through the logistics of getting investment opportunities from alternative investment asset managers via iCapital, to BlackRock for incorporation into custom models, then through the Vestmark platform to the end advisors at Dynasty has ensured that what we offer works for every partner in the chain. 

Of course, innovation isn’t a one-time event. We have an ongoing roadmap with additional improvements and additions that have the potential to make offering private assets even easier, faster, and more effective. We look forward to sharing more about Vestmark’s role in the alts revolution in the months to come.