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With growing interest in access to private markets, hedge funds and other alternatives, BNY Mellon Pershing aims to remove operational barriers to advisors using these products in client portfolios.
The keeper last week announced that CAISan alternative investment platform with which Pershing is a partner, had unveiled technology changes that simplify the process of integrating alts into advisor practices.
“Outdated manual processes have been one of the biggest barriers to alternative investment fund allocation for the independent wealth management community,” said the Founder and CEO of CAIS. Matte brown in a report. Historically, such investments required a series of contracts, forms and data to be entered into systems that could make trading alternatives a long and cumbersome process.
The platform updates aim to introduce “a new level of integration that aims to make investing in alternatives faster, safer and more convenient for advisors,” the companies say. One of the improvements is that order forms are submitted automatically through an application that links CAIS’s and Pershing’s NetX360 platforms.
Moving away from manual order entry aims to increase efficiency for investors and advisors, “increase data security” and “reduce the risk of transfer errors or lost forms,” the statement said. Press.
The company recently announced single sign-on, or SSO, a secure system that eliminates the need to switch between login and password systems to manage an advisor’s book.
Brokers and financial advisors using the CAIS platform have options such as using CAIS-defined allowances or creating their own alternative wallets in what the company describes as a “modular service.” And if using the platform via NetX360+, users can access CAIS IQ, a “proprietary learning system”.
The changes come amid a perfect storm of market volatility, inflation and rising interest rates that analysts say will boost advisor and investor interest in alternative asset classes.
“As investor demand for alternatives continues to grow, our priority is to make all aspects of the process more efficient and less time-consuming,” said Justin Faydirector of global strategy and product management for Pershing, in a statement.
According Cerulli Associates, the use of alternatives by advisors is expected to increase over the next two years. By 2023, according to the Boston-based consultancy, advisers expect alternatives (excluding liquid alts, such as mutual funds or exchange-traded funds) to account for 3, 7% of client wallets. That’s a 1.1% increase from 2021, when these products accounted for 2.6% of portfolios, according to Cerulli data.
By comparison, advisers except to reduce their use of mutual funds by 3.5%, Cerulli said.
A representative for Pershing did not respond Friday to requests for more details on alt adoption among RIAs on the platform.
In a separate survey conducted jointly with BlueVault Partners, Cerulli found that 69% of advisors add alts to client portfolios to temper public market exposure. Two-thirds say they choose alternatives in order to provide risk protection and 59% say they expect alts to generate revenue for customers, as the publication reported last week. sister to Financial Advisor IQ, FundFire.
But more education may be needed.
A CAIS survey of 300 participants in the Morningstar Investment Conference in May showed that 70% see lack of education as the biggest barrier to accessing alternatives, as reported by FundFire.