Bottom line on digital platforms: More investments, lower fees for clients
Technology is making it possible for advisors to offer their clients investments they never had access to before, according to a panel of four speakers at Financial Planning’s Disrupt Advice conference held in New York on Wednesday.
Eileen Duff, head of distribution at iCapital Network, said her company can bring private equity and hedge fund investments, traditionally available mostly through wirehouses, to a broader group of advisors and their clients.
“We’re offering the same if not better-quality products at a highly reduced fee,” she said of her company, which launched in 2014 and has since raised about four rounds of equity.
The company has 1,400 advisors on its financial technology platform, roughly 72% of its client base.
Many advisors leaving wirehouses were looking for alternative investment products in “a much more fee-efficient manner,” she said.
New financial technology has also made it possible for clients to invest directly in real estate.
Gregor Watson said Roofstock, an online marketplace for buying and selling tenant-occupied rental property that he co-founded, allows investors to buy and sell homes far from their own residences, something they couldn’t do before.
Most investors typically invest in properties within an hour of their houses, which “doesn’t make sense from an investment standpoint to be highly concentrated in your backyard,” Watson said.
All homes listed on Roofstock's online platform are certified as are their tenants, according to Watson.
Panelist Teresa Orsolini talked about the opportunity to invest in socially responsible companies through Swell Investing, a digital investing company where she serves as chief marketing officer. Swell's investing platform appeals to the socially-minded individuals—millennials in particular—who want to “make money and do good in the world,” she said.
The company offers six investment portfolios, each focused on separate global issues, such as clean water, renewable energy and green technology.
Companies that are attacking today’s biggest global challenges are going to be the leading companies of tomorrow, Orsolini said.
Swell Investing recently dropped its minimum to $50, the lowest in the online impact investing world, according to Orsolini.
The decision was prompted by the fact that minimums were one of the biggest barriers keeping millennials from investing. Now, anyone can get started, Orsolini said.