iCapital, a New York–based alternative investments platform used by more than 100,000 financial advisors and more than 560 asset managers, has officially launched its portfolio construction tool on the iCapital Marketplace.
Architect allows advisors to evaluate and analyze alternative assets — such as private equity, private credit, and hedge funds — as well as structured investments and their impact on clients' existing portfolios.
According to iCapital, Architect can simulate historical performance, identify macroeconomic portfolio return drivers, and evaluate a projected portfolio against a client’s objectives.
Advisors can also manually add custom, nontraditional assets that are not currently tracked by iCapital and run them through Architect’s model.
Traditionally, alternative investments have operated in silos, separate from how advisors track and manage the typical 60/40 portfolio.
Many alternatives are hard to track and report on and are administratively burdensome for advisors. Architect aims to solve these issues and incorporate alternatives in the construction of a portfolio.
The tool was first released last July as part of a six-month beta testing involving 300 wealth managers, including 150 RIAs. With today’s launch, more than 350,000 financial advisors can now access Architect. Last month, iCapital announced a partnership with Morningstar that allowed more than 170,000 advisors to subscribe to Architect through Morningstar Advisor Workstation.
Advisors can access Architect through the marketplace, but they can also buy the product independently, as well as white label the tool for their firm.
“What we're trying to do with the delivery of this is be really flexible, just as we are with our own platform,” said Lawrence Calcano, chairman and CEO of iCapital. “We understand that people have an existing set of tools that they use today to run their business and for advisors to easily give clients advice. We want Architect to fit into those tools, to work collaboratively with those tools.”
Architect can help advisors make informed decisions about what products make sense for their clients.
“Even if you have access to just great managers, you can't necessarily buy all of them and so how do you decide which product, which credit funds, and which private equity funds or real estate funds, actually help your portfolio and achieve the goals you have set out for it?” said Calcano. “This product really helps people hone in on and focus on building the portfolio and understanding which products and strategies will help that portfolio.”
Calcano sees Architect as an important educational tool for financial advisors, who trail far behind institutional investors in allocation to alternatives, and asset managers to use with clients.
“I don't think people buying more alternative assets without understanding is good for anybody,” said Calcano. “This is just a natural next step in the evolution of education. The more educated the advisor is and the client is on the products, the more likely they are to make good choices for a product to fit into their portfolio and achieve their goals, and lead to hopefully great outcomes.”
At the end of the day, Calcano said, it's about helping the advisor.
“Over the years people have said to me, ‘Boy, you guys are building this really disruptive business,’ and I always kind of correct them and I say: ‘Thank you, but we're actually trying to build an enabling business, not a disruptive business. We're trying to help advisors who do a great job have more tools and capabilities to serve their clients. And we're trying to help as managers want to reach this very fragmented advisor marketplace,’” said Calcano.
