Institutional alternative investment managers need specialized support and guidance to capture growth opportunities with RIAs, independent broker-dealers and family offices
When Brian Conneely, president and founder of Peak Capital Solutions, LLC, launched his firm, there was a clear vision in mind — creating an independent, multi-product distribution platform specializing in the distribution of alternative investments.
With a strong focus on working with alternative asset managers from product design through successful capital raising, Conneely and his team align alternatives solutions with financial advisors who work in affiliation with independent RIA firms, family offices and broker-dealers, and who serve high net worth individuals and households.
Central to how Peak Capital Solutions approaches its business is its emphasis on flexibility in collaborating with sponsors on any managing broker-dealer platform, ensuring that sponsor products are connected with the right wealth management industry partners for each specific product offering.
Equally important, the firm works closely with alternative managers to set the right expectations and position their products in a manner that truly serves as a valuable resource for financial advisors and their high net worth investor clients.
Towards this end, the firm delivers a comprehensive and turnkey suite of solutions and services, with the ability to handle all aspects of distribution on behalf of its alts product sponsor clients.
According to Conneely, “What sets Peak Capital Solutions apart is our unique ability, knowledge, and experience in both setting up alts funds from scratch and enhancing the distribution efforts of existing funds. Our team boasts an impressive average tenure of nearly 20 years in wholesaling and distribution, making us a trusted partner with a deep understanding of the industry.”
As firms and their financial advisors in the retail wealth management space take a closer look at engaging with alts solutions, given continued market volatility and economic uncertainty, there could be opportunities for institutional-focused product sponsors to find new pathways for revenue growth and diversification in partnership with retail wealth management enterprises.
To get a sense of how institutional alternative investment sponsors can most effectively capture market share in the retail wealth management space, Alternatives Watch recently connected with Conneely to share the benefits of his insights with our readers.
Alternatives Watch: Are you seeing increased interest in the retail wealth marketplace from alternative asset product sponsors that have traditionally been more focused on serving institutional investors? If so, what is driving this trend?
Conneely: There’s definitely a surge of interest from institutional alternative asset managers — across real estate, private credit, private equity and hedge funds — in raising capital across the retail wealth management space.
One of the biggest drivers of this trend is the constant search for equity to support their pipeline of projects. Alternative asset managers often encounter a mismatch between the capital available from institutional sources and the funding requirements for their initiatives.
This, in turn, has prompted sponsors to explore new avenues for raising capital beyond their existing investor contacts in the institutional, pension and ultra-high net worth segments of the investment community.
The retail wealth management space presents an attractive solution for sponsors, as it provides them with more control over their capital-raising efforts. By engaging with financial advisors at family offices, independent RIA firms and broker-dealers, alts product sponsors can scale their capital raising significantly.
But at the same time, it’s important for institutional alternatives sponsors to recognize that this source of capital should supplement existing funding channels, versus replacing them.
Alternatives Watch: What are the biggest distribution errors that you see alternatives product sponsors make when they are bringing their solutions to the retail wealth management space for the first time? How can these errors be avoided?
Conneely: When bringing their solutions to the retail wealth management space for the first time, alternatives sponsors often make two significant distribution errors.
The first error is structuring their fund in ways that do not align with the expectations of retail investors and their financial advisors, including fee structures and partnering with providers who are familiar and trusted within the retail space.
The offerings should seamlessly integrate with financial advisors’ reporting systems and fit within their existing processes for handling alternative investments. Understanding and adapting to these specific requirements will increase the chances of success in retail wealth management capital raising.
The second common error is having unrealistic expectations and an unclear definition of success. Just because a sponsor has had success with raising capital among institutions and has generated attractive returns does not mean that retail wealth management firms and their financial advisors will automatically know who they are and trust in their offerings.
It takes time to build credibility in the retail wealth marketplace, which means setting realistic timeframes for achieving success and clearly defining what success looks like from the outset is crucial. Otherwise, you are setting yourself up for failure.
To avoid these errors, alts sponsors should seek and follow guidance from individuals who are experienced and active in the retail wealth management space. This includes bringing aboard team members with expertise in retail distribution to navigate this specific landscape.
Alternatives Watch: Why are third-party distribution firms a better solution than building in-house sales and distribution teams for alternatives product sponsors who are new to the retail wealth management space? And what are the top attributes of third-party distribution firms that alts product sponsors should be seeking?
Conneely: Third-party distribution firms offer a compelling solution for alternatives product sponsors new to the retail wealth management space, which operates in very different ways from the institutional space.
Third-party distribution firms provide access to existing relationships, infrastructure, and market knowledge, facilitating an accelerated and successful entry into the retail market.
When selecting a third-party platform, sponsors should prioritize reputation, relationships, and experience as the top attributes to ensure a successful partnership.
While cost savings can be a factor, it should not be the primary driver for choosing a third-party platform.
Instead, questions along the lines of the following: How is the third-party firm perceived within the retail wealth space? Does the firm have strong relationships with financial advisors and due diligence officers at RIA, family office and broker-dealer platforms are also essential.
Don’t shy away from diving deep on the specific experience of the third-party distribution firm, not only in terms of how long they have been in the space but also their expertise with the specific strategy and structure the sponsor aims to launch.
