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Advisors and sophisticated clients have interest in alternative assets. That is to say lack of interest typically isn't what holds back alts adoption.
Rather, it's liquidity or perceived lack thereof that prevents more advisors and small-to-mid-sized institutions from embracing alternatives. On the surface, this conundrum makes sense. After all, many advisors are accustomed to ease of transaction and robust liquidity with traditional assets, such as equities and fixed income.
Assets such as private equity, private debt, life insurance policies and non-listed business development companies (BDC) and closely held real estate aren't exactly known for their underlying liquidity. That can be a thorny issue for advisors to navigate with clients because lack of liquidity can translate to an inability to realize expected profits on particular assets and/or holding those assets long than expected, tying up precious capital in the process.
Obviously, this is a problem in need of a solution and the Beneficient Company, also known as “Ben,” has the solutions. Put simply, Ben specializes in providing liquidity for private equity, private debt, life insurance policies, feeder funds, fund of funds, BDCs, venture capital and much more,
Bet on Ben for Alts Liquidity
Ben's value proposition is clear because many brokers don't want to engage in alts liquidity and when they do, the costs usually aren't favorable.
“These brokers often have no financial incentive to work with small-to-mid-sized institutions, those with $1 billion or less in investment assets, or the HNW individuals who have $5-30 million in investable assets,” notes Ben. “Secondary-market intermediaries conduct deals worth eight or nine figures, charge high fees for complex transactions that may take 12 to 18 months to complete, and deliver full liquidity historically at discounts to Net Asset Value (“NAV”)—none of which is feasible for smaller entities and HNW individuals.”
Providing enhanced liquidity in the alts space can facilitate adoption of the asset class. Think about it like this: Some advisors discuss alts with clients because those clients want to access investments that are viewed as the territory of big institutions and it is those large institutions that are able to effectively source alts liquidity. Ben levels the playing field, bringing that liquidity to smaller alts investors and that can lead to broader adoption.
“If all investors know they can potentially tap liquidity for their alternative investment at any time at or near NAV, with the same flexibility as large institutional investors, then this model has the potential to modernize access to liquidity in the alternative asset space and could make the marketplace more transparent, more liquid, better priced, and more accessible,” adds Ben.
Ben Right Firm, Right Time
The services provided by Ben are accessible at an opportune time. Not only are alts increasingly relevant today from a portfolio perspective, but adoption is in fact increasing.
“Meanwhile, the marketplace for alternative investments rapidly expanded. In 2008, the alternatives market held $3.1 trillion in assets under management globally, according to Preqin. More large institutions entered the space, and private banks started to put more of their HNW individuals and small-to-mid-sized institutional clients into alternatives,” according to Ben.
Putting it altogether, advisors that want to add value for clients via alts have a partner with Ben and it's a partnership advisors should capitalize on.
Related: Beneficient Bringing Beneficial Liquidity to Alternative Assets