Have you been broadening your clients’ exposure to alternative investments over the past few years, especially in areas like real estate, private equity, or private debt? If so, you’re not alone. A long run of low interest rates has prompted advisors to diversify client portfolios more broadly, as well as to target new areas of opportunity. Alternative investments seem perfectly suited to both tasks.

Advisors have found that alternative strategies can help them:

  • Add diversification with noncorrelated assets
  • Reduce overall portfolio risk
  • Tap into new sources of return
  • Demonstrate value to clients

4 Ways Custodians Can Hold You Back

The financial industry has responded to advisors’ call for alternatives with extraordinary innovation, creating hundreds of new strategies and products. There seems to be an alternative solution for virtually every client need.

The problem is custodians haven’t kept up. Many still refuse to accept alternative assets on their platform. Others impose strict limitations, accepting only certain types of alternatives. At times, custodians also seem determined to make valuation of alternative assets as difficult as possible, requiring time-consuming manual efforts to keep data updated. Advisors need a custodian who will support the purchase, custody, pricing and provide tools to track the performance of alternatives all on one custodial platform.  Advisors and their clients should have line of sight to their entire book of alternatives and standard assets with a click of the mouse. In addition, advisors need this to be automated, meaning it should not require keypunch or systems that are duct taped together.

Today, an advisor looking to expand into alternative assets is likely to find custodians who:

  • Refuse to accept alternative assets, or are extremely limited in their support
  • Employ staff who aren’t knowledgeable about alternatives
  • Have little if any technology wrapped around the custody support
  • Charge extremely high fees for the privilege of custody

Or a combination of all four.

This seems an odd approach for custodians to take. Aren’t your strategic partners supposed to be helping grow your business—not holding it back?

Why We Take a Different Approach

At Equity Advisor Solutions (EAS), we’re firm in our belief that you know what’s best for your clients. As a custodian, it’s our job to make sure you have the tools you need to manage your clients’ money, and the freedom to do it your way.

That’s why we fully embrace the use of alternative investments on our platform. Our approach enables you to:

  1. Custody traditional and alternative assets on a single platform. We enable advisors to custody equities, fixed income, mutual funds, ETFs, and cash alongside non-traditional assets such as private equity, real estate, precious metals, private debt, REITs and  hedge funds.
  2. Holistically manage and report on a client’s entire portfolio. One-stop custody makes it easier to track valuation and performance across all of a client’s holdings through a single portal, offering a more relationship-centric view of your clients’ wealth. You can save time, reduce manual errors, and spend more of your day focusing on your clients.
  3. Rely on the support of an experienced team. A services team that only deals with mutual funds and ETFs is not likely to understand the nuances of REITs or private equity. That’s why we employ specialists who are well versed in alternative assets and can guide you through their intricacies.
  4. Consider a wide variety of alternative investments.

The world of alternative investments continues to grow and innovate. If you want to evolve your business along with it, be sure your custodian isn’t holding you back.

At EAS, we pride ourselves on offering advisors world-class capabilities combined with the one-on-one service of a boutique. Like you, we are independently owned, with no lines of business that compete with yours, and no interests that conflict with helping you grow. We’d be happy to show you how we can help you expand your use of alternative investments.

Custody and Administration Services provided by Equity Trust Company. Equity Advisor Solutions is an affiliate of Equity Trust Company. Equity Trust Company is a directed custodian and does not provide tax, legal or investment advice. Any information communicated by Equity Trust Company is for educational purposes only, and should not be construed as tax, legal or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.