RIA Access To Hedge Funds Expanding, Study Says
Contrary to popular belief, independent financial advisors have more access to quality hedge fund managers than their counterparts at wirehouses, according to a recent study.
At a time when independents are looking for more and better ways to solidify their relationships with their clients or prospective clients, that is a particularly important revelation, according to HighTower, a national advisor-owned financial services firm.
Over the past three years, HighTower has gathered data on the availability of alternative investments and hedge funds to wirehouses and to independent advisors through interviews with more than 500 high-net-worth advisory teams, resulting in the report Redefining the Horizon: Shedding Light on Independent Advisor Access to Hedge Funds.
The goal of the study was to explore and demystify the complex world of alternative investments for advisors, including the availability wirehouses and independent financial advisors have to hedge funds.
More advisors will be going independent as fee-only fiduciaries and will dominate the retirement investment market for years to come, HighTower says. At the same time, the availability of alternative investments for independents advisors increased by 46% between 2008 and 2010.
The unanticipated revelation of the study, HighTower says, is that independent firms have access to at least four times as many hedge funds as wirehouses. Independent advisors have access to the funds through wirehouse-like platforms, plus they have access to funds not available through wirehouses.
More asset managers are now focusing their alternative investment distribution efforts on independents than on wirehouses, banks and other non-independent outlets. Asset managers were putting their primary focus on independents 73% of the time in 2010, compared to 46% in 2008, and it is one of the few channels where asset manager efforts increased rather than decreased, according to the study. They decreased efforts aimed at private banks, wirehouses, broker/dealers and insurance companies.
The survey shows independent advisors have significant access to 80% of the largest hedge funds-the same hedge funds that are available to the wirehouses and to many more.
"On average, wirehouses offer access to 15 to 20 hedge fund managers, while independents can choose from potentially 50," Matthias Kuhlmey, head of group investment solutions at HighTower, says. "And asset managers are ramping up their efforts to work with RIAs.
"This data demonstrates that the number of independent platforms offering alternative funds is growing," Kuhlmey adds. "Some of these specialized firms were formed recently, indicating that alternative platforms are multiplying and gaining in popularity. This presents a number of opportunities for independents to access alternative products."
Tiger 21 Expands To Nation's Capitol
TIGER 21 may sound like a sports team, but in reality it is an organization of ultra-high-net-worth individuals with chapters across the country, and it is opening two new chapters in Washington, D.C.
TIGER 21 was founded in 1999 to allow wealthy individuals to exchange ideas, investment advice and personal experiences in a non-promotional, private setting. There are branches in New York City, where it is headquartered, Los Angeles, San Francisco, San Diego, Miami and Dallas, and Canadian groups in Vancouver, Toronto, Calgary and Montreal.