Alternative asset platform provider iCapital Network is buying AI Insight, an alternative asset learning management and compliance system, according to an announcement. The move will bolster iCapital’s sales capabilities, according to one analyst, while providing advisors with more insight into an asset class that has “piqued” the interest of advisors and investors, alike. Terms of the deal were not disclosed.
AI Insights provides advisors with “unbiased, fund-specific e-learning modules on private investment strategies,” according to the announcement. Professionals enroll in the modules, which will eventually be incorporated into iCapital’s platform, where they will be able to study fund performance, structure and methods for investing in alternative assets.
The software also includes assessments that will serve as demonstration of an advisor fulfilling regulatory and compliance commitments, according to the release. FINRA's e-learning course is available through the platform, providing anti-money laundering (AML) and Firm Element training, as well as CFP CE credits.
iCapital’s purchase makes sense, said William Trout, director of wealth management at Javelin Strategy and Research. Adequate administration and education are major hurdles to iCapital’s vision. While operations are the most obvious, education is actually a “bigger problem.”
“Clients are intrigued by the returns and diversification potential of these investments,” he said. “Advisor interest has been likewise piqued—the problem is that most advisors don’t really understand these investments, least of all the underlying risks.”
“That is why education is so important,” he added. “Education in this case represents an on-ramp for advisors, and from the iCapital perspective, it will help widen the sales funnel.”
iCapital Network is on a years-long crusade to bring digitization and insightful data to advisors interested in alternative assets, according to executives at the firm. “The acquisition of AI Insight supports our ongoing mission to equip independent advisors with comprehensive education and resources to ensure they are fully versed in the complexities of these funds and how they are best integrated in client portfolios,” iCapital CEO Lawrence Calcano said in a statement.
Indeed, alternative assets are at a point where operational concerns are just as challenging as making sure advisors are well-educated, added COO Tom Fortin. “We see a fractured set of capabilities for advisors to navigate.”
Whether its technology is built-from-scratch or purchased as an off-the-shelf component, the firm is focused on removing operational bottlenecks so that the entire experience of an alternative asset transaction, from research to execution, is comparable to the experience of buying a mutual fund.
Ultimately, iCapital wants to overhaul the entire alternative asset ecosystem, said Fortin, creating an integrated experience for advisors that connects education, analysis, research, subscription processing and document management. If it can integrate its new learning management and compliance system into its platform, it will be one step closer to that vision.