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

The DI Wire sat down with Tony Chereso, president and CEO of the Institute for Portfolio Alternatives, to discuss the trade group’s IPAVision 2019 held on September 23-25 in Toronto, Canada.

IPAVision 2019 is coming September 23-25 in Toronto. What are some key industry themes that will be highlighted at this year’s event?

The alternatives future. We’ll be exploring the dynamic growth of portfolio diversifying investments (PDIs) over the next year and far beyond – with both existing and new market participants alongside each other.

We’re excited to have hundreds of dedicated industry thought leaders together as we look at the marketplace and dive deep into the new products and policies that are pushing this industry ahead.

As CEO and president of the Institute for Portfolio Alternatives, I’m looking forward to senior thought leadership from across the PDI community engaging in strategic conversations around advancing main street investor access to PDIs. IPAVision continues to be the only industry event where conversations lead to actions that produce positive and tangible change. The thought-provoking agenda includes among other things:

  • PDI Data & Research – the cornerstone to the IPAs strategic plan
  • The IPA Tech Lab highlights the fintech advancements that streamline investor onboarding
  • New / Emerging Sponsor workshop – First ever workshop to help sponsors navigate the launch of their offering
  • Industry leadership on PDI inclusion in defined contributions plans and 401ks

The event comes as non-traded alternative investments, which the IPA refers to as portfolio diversifying investments, continue to see renewed growth and expansion throughout 2019. Can you talk about the industry and elaborate on this positive momentum?

PDI products have significant growth potential driven by large scale socio-economic trends and an evolution of the industry to meet this growing demand. It’s no secret that Americans have had to take on more personal responsibility for their retirement savings over the past few decades, with defined contribution plans replacing traditional pensions and defined benefit plans as the primary long-term savings and investment vehicle for millions.

While America’s retirement investing has shifted more of the burden to individuals, the tools and investment products that institutions have traditionally used to diversify their portfolios and maximize risk adjusted return haven’t been widely available to retail investors. That is until now. That’s why I’m so excited about the future of PDIs, as our industry is knocking on the door of a massive market in need of the investment benefits we have to offer.

Individual investors will ultimately seek out access to alternative investments that provide the diversification and non-correlation benefits institutional investors have relied on for years.

This is generating interest among more financial advisors and RIAs, who want to learn about the benefits PDIs can offer their clients. To meet the demand for more diversification, our industry has been creating innovative and transparent products that are also attracting the attention of the wirehouses – which are now rapidly increasing distribution.

There have been a lot of new names raising capital in the alternative investments space the last few years. You’ve had a successful career in this industry. What excites you most about the new entrants?

As new players enter the space – particularly big institutional names – it’s thrilling to see the positive momentum they bring to the industry overall. The new entrants are a clear sign to me that more people are seeing the market potential and that they recognize alternatives’ ability to meet investors’ demand for long-term retirement income.

We’ve seen remarkable industry growth throughout the year. In fact, Stanger just reported that non-traded REIT sales are up 118 percent year-to-date over 2018. Sales of all non-traded alternative products through July – including non-traded REITs and BDCs, interval funds and private placements – are nearly at full-year 2018 levels and expected to exceed 2018 sales by 50 percent or more.

Couple that momentum with an increased focus on transparency and performance reporting, and you understand how more financial advisors and investors are gaining new insight into PDIs, and in turn building long-term confidence.

Can you tell our readers about the New & Emerging Sponsors Workshop at IPAVision – specifically relating to firms who are considering raising capital in the space?

New this year at IPAVision is a dedicated workshop for firms who are considering entering the PDI space. We’ll help potential new entrants gain a general understanding of the retail investor market and discuss the unique needs of individual intermediaries, from independent broker-dealers and RIAs to wirehouses and direct-to-consumer platforms.

We’ll also cover a wide swath of product structures, both public and private, and focus on areas such as Regulation D exemptions, compliance and accredited investor management as well as the structural efficacy of REITs, BDCs and more.

Finally, we’ll help identify the right technology platforms and resources from operational success. As we aim to reach more retail investors with our products, it’s imperative to leverage the latest technology in pursuit of increased efficiency and better long-term investment results.

Workshop attendees should walk away with the tools and knowledge for them to seamlessly go to market and raise capital, regardless of their unique needs and product structures.

The industry overall has seen marked progress in product innovation, transparency, research and reporting. How will this be highlighted at this year’s conference?

Much of our industry’s recent growth and success is due to a greater commitment to product transparency, research and reporting. But as we continue to grow and with more and more players entering the space, we must double-down on our commitment in these areas.

I’m proud to say the IPA is leading a new data and research initiative that should have wide-reaching positive effects on future industry growth. This is part of the IPA’s long-term strategic growth plan endorsed by our board of directors, which we’ll showcase at the conference. We’ll also focus on enhanced transparency initiatives and the opportunities to update performance reporting, ultimately generating more frequent valuations.

There have been many developments on the policy front in the industry, most recently an SEC concept release around giving more investors access to private investments. How has this been received and how are the IPA and its members responding to the issue?

It’s encouraging to see that the SEC is open to new ways that would level the playing field for retail investors by providing them easier access to private placements and Portfolio Diversifying Investment products, in addition to allowing emerging companies to more easily raise capital. However, there is some significant work to be done and the IPA is making it a priority to advance the industry’s policy objectives in Washington at this opportune moment.

The IPA has established a working group to address the SEC’s concept release, which is comprised of 10 members and three committees tasked with addressing all facets of this issue. We’re focused on ensuring our message resonates with the SEC and other policy makers.

I’m pleased with how far we’ve come with policymakers over the last several years. The IPA and our industry’s leaders are now regularly asked to advise regulators and legislators on federal policy impacting PDIs and America’s investors. We’re having positive and substantial conversations about the benefits of alternatives and their role in portfolio diversification and how we can work together to ensure our country’s retirement savers have the same access as institutional players to these important tools.

What are some key takeaways from IPAVision 2019 you hope attendees will walk away with?

That the dynamism, buzz and innovation taking place with portfolio diversifying investments is truly awesome. IPAVision will lay down the roadmap for how the industry can capitalize on this moment and the growth potential for products and firms. It’s my personal hope that attendees walk away with a clear vision for how all parties can take advantage of this ongoing evolution over the next few years.

We have momentum, but we need to keep it rolling. Attendees will also gain an appreciation for the important policy discussions happening in Washington that directly impact so many of us. And we’ll give you a clear understanding of how to plug into those conversations and have your voice be heard.

You’ll also collaborate with the innovators, thought leaders, advocates and trendsetters who are the future of this industry. Perhaps you’re one of them! I’m excited for another great IPAVision and if you’re joining us, please seek me out – I look forward to meeting you.

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