Janney Montgomery Scott has joined with iCapital Network to access private equity and hedge funds in a move that expands its high net worth offerings and might even better its advisor recruitment prospects.
The move comes at a time when more and more advisors in the industry are looking toward alternatives to help diversify and differentiate themselves in a battle against fee compression.
About a year ago, Janney started asking not just its own advisors but also potential recruits what they were missing in their service offerings to clients, Rob Battista, head of Janney's advisory solutions, says in an interview with FA-IQ.
“When we spend time engaging in the field and talking to our financial advisors about whether there’d be an appetite for something like this, and there absolutely was a need for expansion, not only from our existing advisors, but many advisors that we’ve talked to in the recruiting process — meaning advisors that are considering joining Janney that may be coming from platforms that have a more expansive alternatives offering. So we just felt like not only would this help our current population, but it would make us more competitive for attracting new advisors,” says Battista.
“Alternative investments have become an increasingly important part of client portfolios and given where we are in the current market cycle, we recognize the need to significantly expand our offerings to meet the growing demand from our high net worth advisors or high net worth clients,” says Battista.
But it's not only about expanding access to these markets for the almost 850-strong advisor force at Janney; the partnership will also help advisors with the due diligence and digitization of hefty client documents required to invest in alternatives.
“[Alternative investment] subscription documents can be rather cumbersome to go through; it's a lot of paperwork for clients. And a platform like iCapital allows us to basically send them our client information and pre-fill the documents digitally, and then send it quickly for e-signature. So it wasn’t only to expand the offer in terms of the number and quality of funds we have, but also improving the client and investor advisor experience by having better technology,” says Battista.
Does this mean the Philadelphia-based broker-dealer is setting its sights on poaching advisors from wirehouses and boutique firms that offer strong support for investments in alternatives?
“We have been very successful in attracting advisors from wirehouses over the last couple years,” says Battista, explaining that those advisors probably had a smaller allocation to alternatives and that the firm probably missed out on those advisors that had significant alts exposure earlier.
“But now there’s a new subset of advisor within those firms that would actually consider moving to Janney,” says Battista.
And some experts agree.
“A lot of firms have gone away from alternatives. There are some specialty or niche firms that are heavily involved in the alternative space, but they are fewer and farther between than they used to be," says Jodie Papike, president of recruiting firm Cross-Search, adding, “for those advisors that see that as a good way to differentiate themselves, I’m sure that will be a good recruiting tool for them.”
The partnership with iCapital lets Janney advisors choose from a menu of hedge fund and private equity offerings curated by iCapital on its financial technology platform.