Chicago-based fund data provider Morningstar has entered into a partnership with alternative investments platform iCapital that gives advisors on its Morningstar Advisor Workstation access to iCapital’s alternative assets and analytics platform. This gives advisors a way to access private equity and debt, venture capital, real estate and hedge funds. iCapital’s platform also gives advisors direct access to educational materials and research, as well as due diligence on alternative investments.
Morningstar’s platform is known for allowing advisors to research and analyze investments and build investment proposals for clients.
After the two companies completed the first phase of their partnership, there are some 170,000 advisors accessing the iCapital tools on Advisor Workstation. The first phase added the iCapital Marketplace to Morningstar’s interface. This platform includes a selection of alternative investment funds, due diligence and fund subscription processing.
In the second phase of implementation, going into effect in the first half of 2024, advisors will be able to take iCapital data and incorporate it into proposals for clients, said Lawrence Calcano, the fintech firm’s chairman and chief executive officer. In a joint press release form Morningstar and iCapital, the companies said phase two also allows the platform to use iCapital analytics to create Morningstar’s portfolio risk score.
Before now, advisors who wanted alts had to go outside Morningstar’s platform to some other offering. Kevin Reed, global head of platform partnerships at Chicago-based Morningstar, said this was inefficient for them.
“Not having the ability to do this work with alternatives has put them in a position where they’re really selling alts as a one-off solution versus incorporating it into the portfolio,” he said.
“We think it's more powerful to integrate that compatibility directly with Morningstar where 170,000 advisors are building the rest of their portfolio,” Calcano said. “Even though those advisors could come to iCapital, we think working collaboratively in partnership with Morningstar we can create a more unified … end-to-end experience, which makes it easier for the advisors themselves and makes it much easier to serve their clients.”
Reed said the minimums for alternative investments have come down, and that’s piqued more interest from advisors, who hope such access will allow them to differentiate themselves from competitors. Having the investments side-by-side on the platform lets clients see alternatives on equal footing with traditional investments and as part of the core portfolio.
“I think they want to be able to view alts in a similar way to the way they view their existing 60/40 portfolio,” Reed said.
iCapital is based in New York City.