Fintech platform iCapital has announced that it will be launching Architect, a tool designed to make it easier for financial advisors to create the ideal portfolio for their clients using alternative investments.
“Clients can’t put every top performing manager in their portfolio, so they need a tool to help them understand how each individual alternative investment impacts the actual portfolio and which investments … help that particular client with the unique goals they have for the portfolio,” said Lawrence Calcano, chairman and CEO of iCapital.
Advisors can upload their portfolio onto the platform and, using historical data and predictive modeling, the tool identifies the impact a particular investment will have on the overall portfolio and whether it still meets the goals of the client, according to Calcano.
The tool offers analytics that advisors have been requesting, he said. Architect has resources for evaluating historical performance and running institutional-quality risk factor analyses, according to the firm.
Architect is currently in beta testing with financial advisors and has thus far been receiving positive feedback, Calcano said. The firm is eyeing an official launch date of 2024. When it does launch, the tool will be available through the iCapital platform and as an independent module should a client request it. The firm has not yet released the pricing model for use of the tool and Calcano declined to provide further details.
“Advisors have long expressed a need for more comprehensive tools to effectively evaluate the inclusion of alternatives and structured investments in client portfolios,” Calcano said. “These investments have been the blind spot in many portfolio construction offerings.”
The tool highlights alternative investments available on the iCapital Marketplace platform, including private equity funds, real estate funds, and others.
“There really isn’t a tool like this in the marketplace,” Calcano said. “When we talk about democratization, it's about also providing the tools that advisors have the benefit of in their 60/40 portfolios [and] the need to have the infrastructure available to help them include alternatives in their portfolios.”
While the tool can be primarily used by advisors, general partners can also use it, according to Calcano. They will be able to present their products in the context of the client portfolio, he said. So, when they are out marketing their products, they can use the tool to demonstrate how they would work in a portfolio, Calcano said.