Automation and Alts: How Firms Use Automation to Gain a Competitive Advantage

September 29, 2021

Automation and Alts: How Firms Use Automation to Gain a Competitive Advantage

September 28, 2021 | James Sprow

A Blue Vault ALTSTECH Series Webinar September 9, 2021


Bill Robbins, CEO of WealthForge
Drew Jackson, President and CEO of Concorde Investment Services
James Brunger, Executive VP National Sales from Capital Square

These industry experts discussed the importance of using automation to scale their alternative investment business and how it helps them create a competitive advantage in the space.

Bill Robbins started out by introducing WealthForge’s straight-through processing platform for alternative investments called Altigo. Today they have over 80 broker dealer and RIA firms signed up and using the platform.

Drew Jackson at Concorde enjoys working directly with advisors and helping them maximize their business and grow deeper relationships with their clients. He believes that a continued focus on practice management and process improvements are keys to long term success in the industry. Concorde serves approximately 130 financial professionals specializing in alternative investments, in particular DSTs and real estate investments.

James Brunger of Capital Square, a national sponsor of tax-advantaged investments, in particular DSTs and 1031 Exchanges. They have about 115 total programs, including Opportunity Zones and a REIT focusing on multifamily assets in the Southeast US.

Stacy Chitty hosted the Webinar and started out by asking what straight-thru processing means to each of the panelists.

Bill Robbins gave a definition of straight-through processing that is a digital experience that automates what today are manual tasks, connecting each participant in the Altigo system to the data that they need rather than the paperwork that they need to do their jobs. It connects each participant to the data rather than the paperwork. It can facilitate not just the buying of alternative investments but also holding and selling those investments. It’s going to provide transparency at each step of the process by connecting each participant to the data and it’s going to foster innovation.

Drew Jackson says it really comes down to visibility, making it easier to process these transactions. There are a lot of additional facets of alternative investments that clients need to understand and doing it in a way that is automated saves so much time for advisors and clients. It takes what used to be an extremely manually-intensive process and makes it a lot faster, helping us with the resources that our advisors are using.

James Brunger says that fundamentally alternative investments are very complex. For Capital Square, Altigo takes a critical component and makes it as easy as possible to give the advisor more time to explore the investment itself, getting to know what they are investing in. It boils down to taking one of the most complex investments any investor is going to make and simplifies the process to allow more time to do the diligence and less time to do the paperwork involved.

Stacy asked what the growth in the DST market has revealed about the limitations of the industry. James Brunger answered that straight-through processing is the only way that the DST market can grow the anticipated three-fold growth rate. Without automation the industry cannot achieve the scalability necessary to handle the growth. They cannot possibly staff the foreseeable growth in the DST industry.

Drew Jackson sees the DST industry doing $8.5 billion this year. They must have the tools and systems to do this volume of business, they can’t possibly staff for that level of investments. Getting their sponsors on to systems that can do things as efficiently as possible makes it possible to do their volume of business.

Drew said they had a sense that 2021 would be a very strong year given the outcome of the election. They wanted to be able to scale up, so they are rolling out the Altigo system and they have a virtual assistant system to help the representatives work on client solutions rather than the paperwork. The more time they can be client-facing rather than spending time on paperwork, the better.

Bill Robbins sees the rapid growth in the DST market as a perfect microcosm that can only be possible as an industry if they are able to automate the systems. It could go from a $5 billion market to a $15 billion market and beyond. But it can’t be done the old fashioned way. The big opportunity is across the alternatives market. His firm is working to provide the tools that will facilitate that growth.

Stacy asked how automation has provided a competitive advantage. What has been the catalyst for adoption of that automation.

James Brunger says you can only automate so much of the commercial real estate investment process. The automation has given them a competitive advantage because they know how quickly they can raise the capital to go back to the acquisitions team and be sure that you are going to be efficient in deploying capital. Instead of hiring operations people, you can staff up the acquisitions side. As a sponsor they can focus on the acquisitions.

Because Capital Square has been one of the early adopters of Altigo, the reps that have signed on are getting rapid execution and money is going to work faster for both the reps and the investors. It allows them to move on to the next program faster.

Drew says Concorde takes a lot of pride in being a good partner with their sponsor firms and the folks they work with. Systems that can get things done faster with fewer NIGOs helps them because the business coming from Concorde is clean and done right. We want to be a good partner with the firms they work with and doing things the right way helps them get some allocations that others may not be able to get.

James Brunger says it’s human nature to want to do more business with partners that make your life easier. That’s especially true right now. The firms that have the most efficient processes and the fewest NIGOs, we’re going to lean on those firms that make life easier for everybody.

Stacy said maybe we’ve been a dinosaur industry for so long, there’s now a tremendous opportunity and we’re finally catching up and seeing a tremendous opportunity ahead of us.

Bill Robbins says, as a provider of automation technology, they also see advantages in information security. Recently three large IBD firms had 200 reps that had their email accounts compromised and those firms were fined $750,000 related to bad actors hacking those accounts. Across 10,000 they had

some of their private information exposed. All of these reps are emailing a treasure trove of private information around. Using email to send all those documents is a bad policy and automation provides another benefit to make all of that information secure.

The panel went on to discuss the key characteristics necessary for a straight-through processing system to provide advisors. They want to be able to consolidate a number of DST investments for the client. They want to be sure that clients are properly reviewing the documentation and understanding the investments they are making. It’s very important to know that clients are qualified to be making these types of investments.

These systems also help in advisor recruiting. They want to see systems that make them more productive and their lives easier. Technology does evolve, so Concorde looks at the enhancements that are coming. They want to work with systems that are improving, as thought leaders and forward thinking. They ask their partners “what’s next” so they can stay at the tip of the spear.

James Brunger answered Stacy’s question, “What’s in it for the sponsor?” James said the more they can get firms to adopt these systems , it really gives them the opportunity to focus their resources to quickly get to scale. It speeds up the processing and allows them to focus more on compliance. As the processing speeds up, they can be sure that the business is done correctly. From the investor perspective they get to focus on what they own.

As an industry, James would like to see all sponsors on Altigo because the easier we make the process the better for all of us and the sooner we can grow the alternatives industry.

As the industry scales up, we can handle the growth if we use our resources correctly and Altigo is absolutely essential to facilitate that growth.

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September 30, 2019

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