For small and midsize firms, those that are too large to qualify for a Small Business Administration loan and too small to attract private equity investment, Brian Rice of Aequitas Capital says his firm has a solution to help them grow.
Rice is executive vice president of Aequitas Capital and president of Aequitas Wealth Management, a private credit and equity firm that focuses on the health care, education and financial services industries.
“We’re focusing our wealth management platform predominantly on the $300 million to $800 million RIA shop,” Rice told ThinkAdvisor in February. “That is, we believe, the fastest-growing segment of advisors right now.”
Rice said Aequitas looks for firms that have a high-net-worth focus, an appetite to grow, either organically or through acquisition, and an appetite for alternatives.
“That’s really where we tend to focus, and we’re seeing some good opportunities, good growth, when those firms really define the type of clients they want to work with, what their ‘secret sauce’ or focus is, and then develop a specific marketing plan to go out and achieve that,” Rice said.
Firms with a focus on alternatives are attractive to Aequitas because it’s the “fastest growing asset class today and it makes up less than 5% of the allocation of investments,” Rice said. He estimates that by 2020, it may be as much as 15% of the portfolio. “With the evolution of wealth management and these products being brought down into the retail/high-net-worth area, folks now have access to this institutional-type investing that used to only be available for large institutional endowments.”
Bob Jesenik, CEO of Aequitas, said independent advisors as well as those in wirehouses who are unable to access alternatives are a niche for the firm. “We’re actually able to help facilitate and provide access in the platforms that we’re involved with, which they might not be able to access today, and that’s going to be a bigger and bigger challenge for many of these advisors,” he said.
Interest in alts doesn’t stop at advisors, either. Clients are looking for yield and with today’s low interest rates, they’re putting pressure on advisors to invest in those products, Rice said.
As advisors work to serve those clients and grow their firms by attracting others in the high-net-worth space, Rice said education is critical. “We formed what we call the ACP Alts Academy. We did this with Circle Squared Institute, Jesenik and his team.”