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The DI Wire Q&A with Tony Chereso, President and CEO of the Institute for Portfolio Alternatives

Tony Chereso, President and CEO of the Institute for Portfolio Alternatives sat down with The DI Wire to discuss the trade group’s upcoming IPAVision 2018 conference, the increased demand for non-traded alternative products, how the industry is evolving, and its current regulatory initiatives.

IPAVision 2018 is coming up on September 24-26 in Chicago. The annual event has become known for its “State of the Industry” approach. As we sit here in September 2018, what is the state of non-traded alternative investments?

Non-traded alternative investments, also known as portfolio diversifying investments (PDIs), are experiencing renewed growth and expansion, driven by the ongoing shift of retirement dollars from traditional defined benefit (DB) plans to self-directed defined contribution (DC) plans and IRAs. Individual investors, working with their financial advisors and registered investment advisors (RIAs), are looking for new ways to diversify their portfolios with real assets, as institutional investors have done for years.

Amidst that environment, direct participation programs – including 1031s/DSTs, opportunity zone funds, Reg. D offerings, private debt offerings and energy programs – have seen an explosion of new demand. Interval Funds continue to gain traction and REITs and BDCs are expanding into new distribution channels, including wirehouse broker-dealers.

Our industry has a tremendous long-term opportunity to serve the needs of retail investors, and Institute for Portfolio Alternatives (IPA) members are working together to lead the industry’s evolution.

The IPAVision agenda focuses on several areas of evolution and growth in the industry. Talk about the specialized education tracks you’re offering this year, and why you chose to highlight those topics. 

The evolution in our industry is nothing short of remarkable. We’re seeing new firms – including some of the largest, most storied financial institutions – enter the space on a daily basis as the demand for diversification continues to accelerate. And many of the firms who have worked in the alternatives space for years are creating new product structures that adapt to the needs of today’s retail investors.

At IPAVision we will highlight this evolution and provide unique insights around four specialized education tracks titled: Evolving PDI Strategies; New Distribution Channels, New Opportunities; Expanding Strategies of Direct Participation Programs; and Qualified Opportunity Zones and the Growth of Tax Advantaged Investments.

Of course, we’ll also take a look at the current macro-economic conditions of the industry in addition to the latest updates on the IPA’s regulatory and legislative advocacy priorities. We’re excited to offer our attendees both a deep-dive on the trending investment products and strategies of today, while simultaneously viewing the general industry with a wider lens.

More recently, the IPA has offered a Due Diligence Symposium in connection with its conferences. What is the value of that format for your members, and how is it evolving?

The Due Diligence Symposium has evolved over the past few years. The IPA membership includes both investment sponsors and broker-dealer firms. But we’re also fortunate to have the industry’s top independent due diligence firms, attorneys and accountants, and a range of operations technology providers as members. Virtually all corners of the industry were looking for the same thing – more efficiency – and asked that we use both the IPASummit and IPAVision conferences as a platform for an industry due diligence event.

As our Due Diligence Symposium continues to grow and evolve, we’re working to maintain a balance and make sure every IPA member firm has opportunities to participate. Most importantly, we want to offer broker-dealer and due diligence professionals an efficient forum to do their work. We understand the daily time constraints that our members face, and the Due Diligence Symposium is specifically designed to address those factors.

The IPA focuses primarily on its regulatory and legislative work at the IPASummit & Hill Day event in Washington, D.C., during the spring Congressional session. That said, it’s a highlight at IPAVision as well. Can you update our readers on the IPA’s current advocacy work going into the mid-terms?

The IPA is a constant and proactive advocate for the industry’s public policy priorities. We continue to focus on the Securities and Exchange Commission’s (SEC) Regulation Best Interest proposal. In addition to submitting our comment letter, we’ve recently met with SEC Chairman Jay Clayton and his fellow commissioners, as well as staff in both the Commission’s Division of Trading and Markets and Division of Investment Management.

In addition to major regulatory initiatives, like Regulation Best Interest, the IPA also substantial time to making progress on other policies important to different segments of the industry. One example is the Small Business Audit Correction Act of 2018, which provides Public Company Accounting Oversight Board audit relief for small, privately-held, non-custodial broker-dealers. We’re pleased to say that the House Committee on Financial Services plans to review the bill this week. Another example is the IPA’s consistent support and efforts to advance the Fair Investment Opportunities for Professional Experts Act, which would update and expand the definition of an accredited investor.

We also work closely with the Treasury Department on regulatory issues relevant to the real estate sector, including applicability of the Section 199A deduction for qualified business income for 1031 like-kind exchanges and new regulations related to Opportunity Zone Funds. And as we head into the fall, the IPA will be focused on several issues including an SEC roundtable on the proxy process, an SEC proposal to expand private investment opportunities for main street investors and a “Tax Reform 2.0” package being considered in Congress.