Alternative Investments and the Financial Advisor Community
access is a FinTech company offering opportunities to qualified investors to invest in discrete and well-curated alternative investments. access’ offerings consist of alternative assets from a variety of asset classes that provide investors with contractual current cash flow, future residual value returns and, in some instances, tax benefits.
access strives to make discrete asset investment opportunities available to qualified investors. The access business model permits investment advisors or their clients the ability to create portfolio diversification by participating in alternative asset opportunities that have appropriate risk-adjusted returns in markets not correlated to the public fixed income market or the stock market.
So, how do Financial Advisors and access fit together?
Over the past year, we’ve had many conversations with a wide range of financial advisors and family offices. We have learned that as investment professionals, and importantly fiduciaries, these people are laser focused on achieving attractive investment returns within the context of their clients’ individual goals and risk tolerances.
Many advisors focus on investing only in funds, public equities and fixed income securities. Being limited to such markets, these advisors may be faced with situations where they feel compelled to diversify certain of their clients’ portfolios beyond these markets. Or, these advisors may be directed by clients to diversify their holdings beyond these markets.
As you know, diversification is the strategy of not putting all of one’s eggs in the same basket. By diversifying, one is not relying on any single tactic to achieve a goal. Rather, one utilizes multiple tactics to achieve one’s strategic objectives. In the context of investing, investment portfolio diversification would use multiple types of investments to achieve desired growth, income and asset preservation goals. Investment portfolio diversification would be balancing an investment portfolio not only of stocks, bonds and cash, but also alternative investments.
Alternative investments can come in many forms. Such forms include investments in commodities, hedge funds, venture capital and hard assets. Investing in alternative investments, then, either at the client’s or advisor’s prerogative presents an advisor with a myriad of choices. For those advisors seeking current income and equity upside (and, in certain instances, tax benefits) and limited market risk correlation, alternative investments in hard assets that are discrete, opportunistic transactions may be the alternative investment path that may be most desirous. Yet, given that most financial advisors do not generally have access to, or backgrounds in, these types of alternative asset investments, clients are typically left to their own devices to source such opportunities – requiring them to turn elsewhere, such as their personal networks or other potentially less reliable sources for advice.
The access model, accordingly, may fill the substantive need for many advisors to have the wherewithal to provide to their clients carefully curated, professionally managed, institutional-quality investment opportunities in the alternative asset space. access offers investment opportunities that have varying tenors, varying asset classes with varying returns and risk dynamics. Our investment offerings are discrete, identifiable assets contractually connected to well known, easily identifiable corporate obligors. Our investment model contrasts with other asset opportunities that are structured as blind pooled funds with no identifiable assets or credit counterparties – where the investor is totally dependent on the fund manager to make quality investment decisions over an indeterminate period.
The “deals” we offer are typically transactions that involve investments in hard assets operated by well-known corporations. These hard assets can be in a variety of industry sectors (transportation, infrastructure, and real estate, to name a few), and are structured as a lease or other form of secured obligation. Investors in these transactions receive regular monthly or quarterly cash flow payments from the underlying corporate credit for a predetermined period, as well as distributions from the disposition of the underlying asset at the conclusion of the investment period (which may include an equity upside).
A useful way to look at these deals is as a “hybrid” debt and equity investment. The “cash-on-cash” regular return component is very similar to a corporate debt obligation, like a bond. The value of the asset, at some disposition point, then represents a return of the residual value with the potential for equity upside for the investor. access is very careful to incorporate conservative valuation assumptions, and always seeks to outperform the initial targeted valuation assumptions. This is how our professionals have done business with an array of large institutions for over 30 years, and it is how we will perform for access’ investors, and their financial advisors.
The members of the access team have originated, structured and placed over $100,000,000,000 of these types of transactions with some of the largest institutional investors in the world over many years. Advisors can also take comfort, from a risk mitigation standpoint, that access engages the services of industry partners, who are best-in-class managers/servicers in their respective industry segments or sub-segments. These partners not only help source investment opportunities for us, but also service the transactions throughout lives of the deals.
If you are an innovative financial advisor interested in expanding the breadth of investment opportunities for your clients, please click here to schedule a one-on-one call today with our CEO.