Survey: Investors Want More Info About, Access To Alts

Nov 11 2014 | 1:01pm ET

Investors would allocate more to non-traded alternative assets if they knew more about them and had better access, according to a new survey by the PENSCO Trust Company.

PENSCO polled 682 clients with retirement assets in self-directed Individual Retirement Accounts and found that 71% would consider non-traded alternatives if they had a better understanding of them and 70% if they had more access.

The study also found that 30% of investors listed portfolio diversification as the biggest benefit to investing in non-traded alternatives while 28% cited the opportunity to invest in businesses, sectors or industires about which they have personal expertise.

Half the respondents already consider alternatives as a core portfolio holding while 26% plan to increase their allocation in future

“Over the past five years we have seen steadily growing interest from individual investors in using retirement dollars to invest in non-traded, alternative assets,” said Kelly Rodriques, CEO of PENSCO. “While many are doing so to achieve diversification, we are also seeing individuals wanting to leverage the ability to grow their assets tax-deferred and to use less liquid retirement dollars to participate in longer term private placement opportunities, especially in light of the growth of the crowdfunding space.”

Among the hurdles with respect to identifying opportunities, one in three investors are not familiar with any detailed, reliable information about non-traded alternatives, and the same number say they lack awareness of other opportunities that exist.

Clients also cited an interest in knowing more about the rules that govern IRA investments, as well as the potential benefits to investing directly versus indirectly. When asked what tools/ resources helped guide their investments, they ranked conversations with professionals and conversations with friends, family, or colleagues, as the most helpful.

One answer, especially in terms of access to non-traded alternatives, may be crowdfunding platforms. Earlier this year, PENSCO launched the PENSCO Marketplace, a network of providers, products and services for alternative asset investors that features several crowdfunding sites that give accredited investors access to private placement opportunities in a variety of industries. PENSCO has pre-reviewed many of the offerings found on the participating crowdfunding sites in an effort to expedite their ability to accept qualified retirement dollars.

“With the rise of crowdfunding platforms, the range of opportunities is multiplying and, as our study results show, investors and their advisors need additional support and resources to find investment opportunities that are appropriate for their long term goals,” said Rodriques. “We created the PENSCO Marketplace to be a go-to resource to help individuals leverage alternative investment opportunities as part of their retirement planning.”

In addition to the crowdfunding sites, the marketplace also includes professional resources, such as access to attorneys, financial planners and tax professionals who specialize in real estate, private placements and various other alternative investments and may be needed to help an investor facilitate his/her alternative asset investment.

Founded in 1989, PENSCO is the custodian of over $10 billion in assets for 50,000 clients.


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