Gain key perspectives on alternative investments, operational challenges, and strategic growth in financial services.
Hi Amanda, welcome to Fintec Buzz! You have a strong passion for compliance and operations; can you share your professional experience and what made you choose this career path?
From the very beginning, I knew I wanted to be in the financial services industry, but I was not sure what area. Without a robust alternatives background, I started my career at a private markets company on the compliance team. Through several promotions and after gaining significant industry knowledge, I was ready to take on more responsibility. I came to PPB to do just that and to gain more experience working with PPB’s extensive private wealth advisor channel. As my role at PPB continued to evolve and expand, I began to serve as the Chief Operating Officer in 2023, focusing on the growing need for resources to support the firm’s rapid growth.
Can you highlight the work process of PPB, and how does the company differentiate itself from other feeder fund providers?
The premise of our business model is adapting to meet the demands of wealth advisors so they can successfully execute their private market vision. For nearly two decades, we’ve navigated change and opened doors for private wealth advisors in ways our industry hadn’t experienced. That way, our partners can deliver the most effective and differentiated private market programs that bring a unique source of portfolio diversification, uncorrelated income, and alpha differentiators.
Through our Capital Markets Solutions (CMS) program, wealth advisors and their clients have access to truly differentiated, durable, institutional caliber alternative investment strategies, that they likely would not have heard of, and typically would not have access. While access to these types of strategies is highly sought after, our program stands out for other reasons.
- Collaborative partnerships. Solutions are the results of advisor feedback, reflect their needs, and alleviate investment hurdles.
- High conviction. Our CMS program is not a supermarket. We are highly selective and limit our program to five to eight strategies that complement each other at any given time. We act on only our best ideas, not every idea.
- Unbiased guidance. PPB operates only in the best interests of our wealth advisor partners. Integrity and trust are the foundation of our business and our decisions start with our RIA partners.
What kind of alternative investments does PPB Capital Partners currently make available to its financial advisor clients? Can you tell our readers what inspired the firm to offer alternative investments to this market?
Currently, our CMS program offers a well-balanced range of strategies that all complement each other including Mid-Market private equity, Residential Real Estate, Hedge Funds, and Healthcare Royalties. Areas on our radar include Litigation finance, Energy Infrastructure, and Long/Short Equity.
Simply put, PPB is inspired by our wealth advisor partners’ achieving their vision and our solutions are built based on their best interest. While we offer access to institutional caliber strategies through what is historically known as “feeder funds”, our process is backed with peer idea generation, portfolio construction, and capital introductions. Our strategies are highly vetted, boutique and institutional managers, sourced by our in-house research team, in collaboration with RIAs. That means any given strategy on our platform is there for a reason – feedback from our wealth advisor partners.
What are the specific challenges advisors face when adding private investment to their offerings?
Increased interest among wealth investors to incorporate private assets has brought a significant impact to advisors’ businesses. Our program solves several pain points associated with both alternative asset investing and wealth advisor business operations which include:
- Access and entry points. Access to durable, differentiated alternative strategies is historically reserved for institutions and difficult to access for wealth investors and family offices.
- Operational efficiency. Private market investments bring a significant workload to wealth advisors, and many do not have adequate resources to handle the additional tasks. Increased costs, compounding workload, and managing countless tasks leave wealth advisors struggling to gain effective operational efficiency.
- Conflicts of interest. The alternative investment industry is riddled with conflicts of interest. Many alternative investment platforms are backed by private equity investors who play a significant role in the firm’s decision-making, often introducing conflicts of interest.
- Technology solutions. In-house technology platforms bring limitations in the ability to remain current with the latest enhancements available in the industry, while using up a lot of internal resources.
Why do you think it is important for a financial advisory firm to add alts to their portfolio?
Business growth is critical. Wealth advisors look for ways to bring differentiated strategies and approaches that make an impact on both their practice and their clients’ portfolios. Private market investments solve important challenges that wealth investors face like managing volatility and uncorrelated return streams. In times of market uncertainty, multi-layered diversification adds portfolio durability and downside protection. High valuations and sector concentration further emphasize the need for diversified return streams. In response to market conditions, more high-net-worth investors branch out to private markets. Advisors recognize the need to think differently about how they run their practice, and offering alternative investments can be an important factor.
When a firm chooses to provide alts, there are certain challenges they face. How do you think the challenges ameliorate when they partner with third-party providers like PPB Capital Partners?
I agree, alternative investing is complex. As investors’ appetite for private markets increases, the additional heavy lifting can affect advisors’ businesses. PPB provides access to highly differentiated investment opportunities and brings operational efficiencies to support business growth and address the complex challenges that come with alternative investing. Here are some areas we make a difference.
- Access to strategies that solve business priorities. In many cases, wealth advisors do not have the scale to access differentiated and durable private market strategies and are stuck with supermarket-like feeder funds. We engage with peers for feedback to develop solutions that meet their biggest challenges. In turn, we deliver our best ideas and strategies to solve specific focus areas in sectors that are hard to reach and that many have not considered.
- Simplified processes and streamlined investment options. Cost-effective and efficient operational support alleviates the day-to-day burdens associated with managing alternative assets and frees advisors to focus on what matters most.
- Top-level service. Customized white-labeled fund structures supported by a completely scalable service model help drive revenue and boost AUM growth.
- Aligned decision-making. We are 100% employee and family office owned and our decisions are in direct alignment with wealth advisors and their clients’ needs. We are committed to operating in the best interest of our partners, with integrity and trust at the core.
- Eliminate technology limitations. The current technology landscape is fluid. Our technology platform, PPBx, allows us to be completely nimble and partner with the best resources available in real-time.
From an operational standpoint, what kind of expertise is necessary to manage the complex procedures associated with alternative investments?
Solving the logistical challenges associated with investing in private investments is critical. That’s why extensive operational expertise, reporting, custodial support, access to lower investment minimums at scaled pricing, and independent due diligence are so important. A few areas that require exceptional experience include:
- Streamlining operations. Maintaining books and records, cash flow management, and meeting all regulatory requirements for private funds can be complex. There can be a lot of documents from various sources to manage as well including due diligence records, auditor requests, capital calls, tax documents, and reporting.
- White-glove service. Dedicated back- and middle-office support brings complete efficiency to managing private asset funds.
- Risk mitigation. Paperwork associated with private assets must be executed flawlessly and operating experience, refined processes, and a meticulous team is required. Minimizing conflicts of interest is critical and an experienced team can help identify situations or instances that may create conflicts.
Describe the role of technology in mitigating the operational challenges when investing in alternatives, and how do you make sure that PPB is up to date to provide this technology?
Technology streamlines several operational functions at all stages of the investment process. Secure and centralized encryption are important to analyze private market investments and is required to limit cybersecurity risk. Subscriptions are simplified to save time and create operational and cost efficiencies. Reporting is automated and integrated for transparency and workflow management.
The current technology landscape is fluid and will continue to be over time as the demand for alternative investments increases. Staying current with the latest enhancements is important, but is not easy. Our technology platform, PPBx, allows us to be completely nimble and partner with the best resources available in real-time, and eliminate limitations, providing a one-stop technology solution for RIAs. We continually research the marketplace and integrate with the best and most innovate partners at any given time, transferring cost efficiencies to our RIA partners and investors. We are confident that our financial technology partners are at the forefront to accomplish our private wealth partners’ goals.
A strong technology solution, paired with an experienced operational team that offers white-glove service, leads to an effective way for RIAs to include alternative assets in their clients’ portfolios.
In the near future, how do you think the landscape of alts will evolve for independent advisors?
Alternatives’ demand has caused advisors to evolve their businesses. Growth requires change, leading many wealth advisors to think differently about the way they run their practice. Offering alternatives can elevate their business to the next level when the strategy fits. That’s why it’s critical that RIAs offer differentiated strategies that will help them stand out and scale their operations to manage the business in the most effective ways. Offering exclusive strategies, like unique and emerging managers and asset classes that clients likely have not previously been able to access, coupled with custom development to address the challenges of each client will be powerful components to advisors’ business models going forward.
Give some advice to advisors who want to add alternative investments to their portfolios but are hesitant due to operational concerns.
Advisors who make the decision to offer alternatives investment funds do so for good reason – they can bring powerful impact to their clients’ portfolios. As your clients’ appetite for new or multiple alternative options increases, you need to scale your business to keep up. The additional operational heavy lifting that comes with alternative investments, like increased costs and the need for staff and vendors, can leave you strapped. Human capital is compromised. Recruiting talent is a challenge and existing resources are stretched thin, often straining staff, stalling growth and preventing your business from reaching its full potential. An alternative investment partner is a turnkey, cost-effective way to stay on top of the demand.
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