Advisor Group, one of the largest wealth management businesses with networks that have a total of more than 10,100 financial advisors overseeing $515 billion in assets, said Wednesday it chose CAIS to build it a customized alternative investments platform. It won’t be the last exclusive agreement with a large wealth management firm either, CAIS chief executive Matt Brown, told RIA Intel.
There is a strong pipeline of other companies that also want CAIS to build them a customized alts platform, Brown said. And CAIS is prepared to do that. “It’s definitely a strategy to power [and] be the alternative investment platform for the largest wealth management firms in the nation,” Brown said.
CAIS, founded in 2009, has been progressing toward that goal for a long time. Today, it is used by more than 5,300 wealth management firms that oversee more than $2.5 trillion in assets.
Since November 2020, CAIS has raised $375 million in capital, was valued at more than $1.1 billion, and been on a hiring spree, adding more than 100 technology roles primarily focused on building customized CAIS platforms for wealth managers. “Those individuals have allowed us to bring a lot of depth and strengthen our technology capacity to be able to design these platforms,” Brown said about the new employees. Now, CAIS can build a customized platform for a company in as few as 90 days.
Along with Advisor Group, CAIS also partnered with Focus Financial, a publicly traded company that owns more than 80 RIAs managing an aggregate of over $350 billion in assets, and built a platform adaptable to each RIA in the Focus network. “Our ability to be the outsource third-party alternative investment platform for two of the largest wealth firms in the nation gives us a very kind of important position in the ecosystem,” Brown said about Advisor Group and Focus.
CAIS has built several other customized platforms for RIAs and other wealth managers, including William Blair, Northwestern Mutual, Truist, and RW Baird. The company has five unannounced agreements in place to build more.
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Through their own CAIS platform, Advisor Group and others can give their advisors access to a chosen menu of hedge funds, private equity funds, real estate, private credit, and other investments. CAIS can also customize a company’s workflow and reporting. Companies do not charge their advisors to use the customized CAIS platforms.
“Instead of having all of our marketplace funds, [Advisor Group] wanted to curate that menu. And in addition, add funds that they’ve already had in their wealth ecosystem added onto the platform so that CAIS becomes the central single platform for all things,” Brown said.
In addition to the menu of investments, advisors also get access to CAIS IQ, a learning tool launched in 2019 that leverages machine learning to personalize short, “bite-size” lessons for each user.
All funds available through CAIS undergo Mercer’s third-party independent due diligence, which CAIS said will give home offices and financial advisors additional confidence in the funds they select for their clients.
Alternative investments are a growing asset class and CAIS is growing with it.
Global alternative assets under management are expected to increase by 60 percent and reach $17 trillion between the end of 2020 and the end of 2025, far outpacing global GDP and inflation rates, according to alternatives data and research firm Preqin. The number of investments made using CAIS has increased 89 percent year-over-year (the company declined to share more details about the number of transactions). The number of companies using CAIS has doubled during the past 12 months to more than 5,300 advisory firms, the company said.
Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.