Q&A with Artivest CEO on the growing importance of alternatives to RIAs

BlackRock recently partnered with Artivest to offer a private renewable infrastructure fund on their platform. Below is an excerpt from a conversation between Artivest’s CEO, James Waldinger, and the head of BlackRock’s Registered Investment Advisor (RIA) business, Hollie Fagan, about latest trends in how RIAs are using alternatives.

Can you talk about some trends you are seeing in alternatives in this market environment?

Waldinger: Interest in alternatives (alts) is growing rapidly. Roughly 5% of clients’ portfolios are devoted to alts, but we recently found that more than 75% of advisors believe that percentage should be higher, with many advocating for a 15% to 25% allocation, according to a survey we did at this year’s Morningstar Investment conference.1

Many advisors now believe that alternatives, specifically private placements (i.e. qualified purchaser / accredited investor investments), are critical for attracting and retaining high-net-worth (HNW) clients, as these unique opportunities can help differentiate their business.

Interesting you mention that. We recently surveyed about 400 elite RIA firms in partnership with InvestmentNews Research and found that RIAs continue to go upstream with a greater emphasis on high-net-worth investors, so it seems that alts will continue to grow in importance for the industry.

Waldinger: That’s why we think what we’re doing is so relevant to today’s environment. Generally, private placements have been reserved for institutional investors and a limited number of ultra HNW investors. Our platform enables greater access to these opportunities for a larger segment of HNW clients.

We want to make the advisor’s job easier. They should spend less time on administrative tasks so they can focus on the things that matter—clients.

Can you talk a little bit more about the Artivest platform and what it does for advisors and their clients?

Waldinger: Well, take our recent partnership with BlackRock. For the first time, a much wider audience of clients are able to invest in a traditionally private BlackRock offering, accessing opportunities previously held for institutions such as endowments and pensions. And you can do so with lower minimums and an easy-to-use online experience.

On top of that, we can distill complex fund information into a concise digital pitchbook and enable you to complete subscription documents through a seamless interface that has compliance considerations built in each step of the way. Reporting is also streamlined and can be integrated with a custodian of choice. We want to make the advisor’s job easier. They should spend less time on administrative tasks so they can focus on the things that matter—clients.

What sort of opportunities do you offer on the platform today?

Waldinger: Many advisors emphasize private equity over hedge funds or vice versa, but our view is that both are critical to diversification and performance. Private equity is interesting as it has historically offered outperformance over public markets on average, and particularly when initiated in weak markets and weak U.S. economic growth regimes.2

We’ve partnered with a few asset managers so far to provide access to private equity opportunities, and we're constantly working with partners like BlackRock to expand our product line-up.

In the field, I’ve noticed that RIAs are particularly engaged with renewable infrastructure investing. What do you think makes that market attractive?

Waldinger: There's been dramatic improvements in the cost competitiveness of wind and solar power. Pair this with an ever increasing awareness of climate change and you can see why renewable infrastructure, specifically, offers exciting investing opportunities. Also, in this yield challenged environment, the right infrastructure opportunities can potentially provide investors with stable, long-term income.

We're proud to partner with BlackRock to help bring this investing opportunity to the RIA community. I think advisors will be impressed with the experience the Artivest platform provides to advisors and their clients.

James Waldinger
C.E.O. of Artivest.
Hollie Fagan
Head of BlackRock’s dedicated Registered Investment Advisor and Retail Investor Platforms.