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Today a nation stands on the precipice of its next frontier in finance – one that is aimed at instilling a culture of FINancial FAIRness
As opposed to relying on large financial institutions and government entities for capital, emerging businesses have begun turning directly to individual investors to fulfill their financing needs. Shifting trends in mass communications, advancements in technology and regulatory overhauls have now made it possible to raise large sums of money by pooling it from the masses. This new “crowdfinance” constitution is not only resolving inefficiencies and inequality in conventional market structure, it is empowering a new generation of retail products and investing platforms that are essentially reuniting the “people’s capital” with growth, yield and innovation.
Welcome to FinFair 2015, Wall Street’s inaugural conference featuring the leadership, products and technologies that are driving the crowd-centric retail alternatives market and democratizing the investment landscape.
Crowd-centric retail alternatives are a new class of retail alternatives designed to bring non-correlated yield and pre-IPO equity growth to mainstream investors’ portfolios. Specific products can include funds, managed accounts and online platforms that provide retail investors with to access to private alternatives such as peer-to-peer, peer-to-business and peer-to-real estate debt as well as JOBS Act inspired equity offerings.
Wall Street is about to discover the remarkable amount of financial innovation occurring in the crowd-based retail alternatives space – much of which is emanating out of first generation of marketplace lending (MPL) and equity-crowdfunding platforms, and made possible by a modern regulatory regime – especially Regulation A+.
Online marketplaces are presently revolutionizing the way people invest, and making it easier for investors to obtain the yield typically swallowed by banking establishments as well as to access the deal flow previously only available through brokerage relationships. The SEC’s recent promulgation of Reg A+ coupled with a sound venture exchange framework is leading us toward a more level IPO playing field for both smaller issuers and investors. Instead of serving as an exit strategy for the financially privileged, through Reg A+, the investing public will once again be able to partake in the appreciation of coveted pre-IPO growth stocks.
But, Reg A+ is much more than a vehicle to facilitate small business capital formation. With its ability to also convert illiquid debt and real-estate assets into publicly attainable securities, the applications of Reg A+ have begun to expand well beyond the equity markets and will soon play a key role in the engineering of new retail fixed-income products. Eventually, many of the private debt, equity and real estate opportunities – once reserved only for accredited investors – will make their way to the mass market.
“Alternatives are now migrating from institutional to retail markets, just as the use of asset allocation models did several decades back… The market for retail alternatives is huge, growing and still in its infancy.” – SEI Investments Co.
Emerging to support crowd-centric investment products are a host of analytics, tools, mobile apps and technologies designed for both financial advisors and retail investors. We’re witnessing the emergence of funds that bring institutional MPL returns to retail investors as well as the development of tools that help financial advisors actively manage their clients’ MPL holdings. We are also seeing innovative custody solutions that will enable financial advisors to actually hold these alternative asset classes under management. Groundbreaking mobile apps are being created to help the masses more realistically and achievably prepare for retirement. And new technologies are being employed to transform the way offering memorandums are structured, and the way in which securities are marketed to retail investors.
All of these innovations – which were proudly be featured at FinFair 2015 – will have enormous implications for the future of financial services.
Thanks to everyone who joined us both in person as well as virtually via the live broadcast. We appreciate you helping us cement crowd-centric retail alternatives in Wall Street history.