By Alex Sauickie, President and CEO at CircleBlack
Alternative investing continues to grow and impact Wall Street as alternative funds have seen record inflows throughout 2020 and 2021 despite a worldwide pandemic. COVID-19 is helping to shape societal values with the desire of investors to participate in alternative investments to help address the inequities in our society, reflecting the societal climate of our time:
- Social justice
- Alternative energy and clean technology
- Environmental sustainability
Through accelerating wealth tech, alternative fund managers have been able to move forward by digitizing alternative investing and delivering their products to wealth managers. Wealth managers, in turn, are now positioned to take advantage of diversified offerings that focus on asset growth plus provide investors with investment opportunities to make society and the environment better.
Alternative investment companies considered socially responsible must not put themselves at risk of environmental or social problems that could arise from lawsuits, public issues, or harm or death of any life. Investors rely on their wealth manager to select and deliver funds that consider how the funds are managed. Besides the ecological and business ethics of the companies represented, the fund must affect real change that makes society better—with a profit. These factors must always be in consideration, and if not met, they may cause investors to liquidate the investment, leaving the asset’s market value to decline. That is a heavy lift without FinTech to assist.
“Investors understand ESG issues within a corporate philosophy, and managers are gaining competitive advantage by strategizing internally with ESG in view and launching ESG-friendly products. With the proportion of investors looking to invest in ESG products projected to nearly double in the next two years, the advantage of leading in this charge can serve as a badge of distinction by drawing and retaining key talent and investors.”—EY 2020 Global Alternative Fund Survey Contents.
The wealth management industry relies on talent, technology, and data-driven intelligence to move ahead of competitors. The alternative investment market also requires the same, plus data-science engineers with insights into what the market demands to widen the ever-changing scope of diversity and inclusiveness in alternative investment classes.
A well-designed digital experience that includes a model marketplace with alternative investments enables wealth managers to meet the changing expectations of investors who want to do good for others while increasing their assets.
Alex Sauickie is the CEO of CircleBlack, unified best-of-breed wealth management platform that consolidates data from multiple custodians and allows advisors to choose the best solutions to fit their tech stack.