Transforming the Wealth Management Industry: Interview with Marco Bizzozero, Head of International, iCapital

By Edlyn Cardoza

Alternative investment is a financial asset that does not fall in the categories of conventional investment. Alternative investments include hedge funds, venture capital or private equity, derivative contracts, managed futures, and art and antiques. Often, real estate is also classified as an alternative investment.

High-net-worth individuals or institutional investors usually hold most alternative investment assets. Due to lower levels of turnover, transaction costs are typically lower in alternative assets compared to conventional assets.

Founded in 2013 in NYC, iCapital is a leading global FinTech company powering the world’s alternative investment marketplace. It has transformed how the wealth management, banking, and asset management industries facilitate access to private market investments for their high-net-worth clients by providing intuitive, end-to-end technology and service solutions.

In conversation with Marco Bizzozero, Head of International at iCapital, IBS Intelligence discusses the alternative investment industry.

Could you give us an overview of your service offering and client base?

iCapital is a B2B platform combining technology and strong private market expertise to support banks, wealth managers and asset managers in gaining facilitated access to alternative investments for private clients.

For banks, wealth managers and their advisors, our solutions provide access to institutional-quality alternative investment offerings structured with low investment minimums. Our end-to-end technology solutions ensure a simplified and fully digital experience throughout the investment life cycle, significantly enhancing the advisor and client experience.

Our technology platform supports alternative asset managers to access the growing HNW investors pool and helps diversify their fundraising, which is historically focused on institutional investors. Our technology solutions allow them to scale fundraising from the wealth management channel globally.

How are iCapital’s digital solutions transforming private markets?

In the past, HNW investors and their advisors have faced significant barriers such as high investment minimums, difficulty identifying and accessing top-tier asset managers, a cumbersome, paper-based investment and subscription process. Other barriers included manual client servicing & reporting and administrative complexities, lack of transparency, investment research and education, and a disconnected ecosystem. We have addressed these barriers in several important ways with our technology and solutions.

The first is access. HNW investors need access to the best managers and funds, and they need it in the right investment amounts that make sense in their portfolios: not $5-$20 million “institutional” minimums. They need it at a much lower level ($150,000 minimum or lower), so the investment makes sense in the context of an individual’s portfolio.

Many wealth managers and clients also need comprehensive investment due diligence. Our research team can provide thoughtful information on the fund manager to help them make an appropriate investment decision.

Related to that, wealth managers and their clients need education, which is an ongoing process. The best results flow from investors making thoughtful, informed and educated decisions, and we do a lot of work on this front.

Most importantly, the historical barriers to private markets investment for individuals are eliminated by our technology, which makes the entire process throughout the investment lifecycle fully digital. Given that these funds now have thousands of smaller tickets, wealth managers need a robust tech platform to eliminate the business’s highly manual and error-prone, paper-based nature.

Funds also need an operational infrastructure to outsource that complex and manual part of the business, such as managing capital calls, distributions, and redemptions. We offer an intuitive, end-to-end digital experience that addresses all those burdens. Our technology has been a game-changer for the entire asset and wealth management ecosystem.

How is iCapital creating opportunities for financial advisors and fund managers in the investment landscape?

iCapital’s technology platform and solutions help banks, wealth managers, and advisors scale and diversify their private markets investments cost-effectively while enhancing the advisors and client experience. Our value proposition is based on three pillars:

• First, access: We provide quality alternative investment offerings structured with low investment minimums for individual investors. We also can support origination, facilitate access, and provide investment and operational due diligence leveraging our experienced research team. In addition, to pool the investments of many private investors into one single institutional-sized ticket, our clients rely on our expertise in setting up bespoke feeder funds for a full range of strategies and jurisdictions.
• Second, technology: Our end-to-end technology solutions ensure a simplified and fully digital experience throughout the investment lifecycle, including a digital subscription process, automated transaction processing (e.g. capital calls, distributions), transparent performance reporting and investment dashboard, a centralised and secured document repository with protection and full encryption of client data.
• Third, education: We provide industry-leading insightful analysis, research, and investment-related and investment-specific education for advisors and their clients to support advisors in developing a diversified, sustainable private markets portfolio on behalf of their clients.

Recently, iCapital announced that the platform providing private market investment opportunities to the Allfunds global distributor network was live. What does this mean for iCapital?

This is a key milestone in iCapital’s international expansion. We are pleased to partner with Allfunds, a recognised world leader in fund distribution, to facilitate access for a broader number of investors and advisors to private markets investment opportunities. Our partnership with Allfunds provides banks and wealth managers across the globe with access to significant growth and diversification opportunities in the private markets. This is just the beginning of our work to deliver a comprehensive menu of products in an efficient, transparent, fully digital private investing experience for our clients.

From being founded in 2013 to being recognised by several top companies, how has the journey been so far for iCapital?

iCapital has undergone transformative growth since the company was founded in 2013. As the appetite for alternative investments continues to grow among wealth managers, we continue to focus on meeting the industry’s needs by building out our team in new regions, improving our technical capabilities, and offering the highest levels of support for our partners and clients

In 2021, iCapital grew its workforce to more than 700 people and increased assets by $40 billion (+59%); today, it services more than $113 billion on its platform. We more than doubled investments from investors outside the U.S. to more than $25 billion in international assets.

We continued to invest in its technology platform, education offerings, and global team to support clients – asset management firms accessing the growing pool of high-net-worth investors and wealth managers, enhancing access and servicing alternative investments for clients. Reinforced by two fundraising rounds and two acquisitions, iCapital markedly expanded its investment and educational product offerings and advanced the client experience.

To support a growing international client base, iCapital’s international headcount increased to more than 175 team members comprised of proven industry experts. iCapital expanded its global footprint and opened new offices in Europe and Asia with a presence now in Zurich, London, Lisbon, Hong Kong, Singapore, and Toronto. It also significantly expanded its international team, including:

• Edwin Chan, Managing Director and Head of Client Solutions Asia
• Manuel Faccio, Managing Director and Head of Client Solutions Europe
• Peter Pfister, Managing Director in Client Solutions, focusing on Asset Managers/GPs
• Masato Degawa, Senior Advisor for the Japanese market

We’re now looking to the future and how we can further improve both efficiency and security across the alternatives industry and optimise the alternative investing process for advisors and their high-net-worth investors. Last week, we announced that iCapital is leading a global consortium of leading asset managers, wealth managers, and service providers to develop a distributed ledger-based solution for the alternative investment ecosystem that has enormous potential to transform our service to our clients. This initiative reflects our position as the leading technology player in this market and our unique position in joining up the different parts of the ecosystem.

What does iCapital have planned for 2022 in the alternative investment platform?

Clients come first in everything we do – that’s our compass. We listen to their needs and have continually fine-tuned our offerings as we have evolved. We are expanding across three dimensions:

• Geographically – We are expanding our business globally and circa 20% of our client assets are already international (more than $25) billion out of the total $113 billion global client assets are from non-US investors) and more than 175 employees are outside the US in our six international locations in Zurich, London, Lisbon, Hong Kong, Singapore, and Toronto. We plan to grow our international franchise reflecting our clients’ needs significantly.
• Products and solutions – In addition to fund investments across all strategies within private markets and hedge funds, we will also cover direct co-investments, ESG/impact, structured products. To that point, we recently acquired Axio, a leading end-to-end service provider to the U.S. structured notes market. The acquisition meaningfully expands our menu of alternative investment strategies. At the same time, we’re looking to drive the next generation in operational efficiency, security, and convenience through initiatives such as our recently announced distributed ledger technology consortium. We’re leading a group of influential market participants to develop and utilise a new generation of technology that will optimise the entire alternative investing experience.
• Client segments – We are expanding our offering to cover all client segments beyond professional investors. With this in mind, we recently announced newly registered funds in the US that are specifically tailored to the lower end of the HNW investor profile. These structures have no capital calls, are more diversified, have lower investment minimums than traditional PE funds, and have near-term distributions, all characteristics that are important for wealth managers to cover all client segments, including non-professional investors. In addition, together with our partners from the asset management sector, we are evaluating the expansion of our current range of Luxembourg funds to provide for the needs of an even broader group of investors in the future.

We have more expansion underway with innovations across the three vectors of growth outlined above. We are attuned to our clients and committed to powering the entire global alternative investing ecosystem.