In my erstwhile career as a Digital Consultant with first Accenture Digital and then Mckinsey, I have had the privilege of building Digital Banks and Fintech platforms from scratch. There were two key takeaways I had from all these experiences put together:
- Digital channels, if used efficiently, could transform the customer experience by offering better products at a much lower price point by eliminating useless intermediaries.
- By the time any financial instrument reaches retail hands, a large portion of the profit pool has already been siphoned off. It is a rather simplistic but fairly accurate argument that institutions benefit from early access to investments, which at a later stage gets distributed to unsuspecting retail investors.
I went looking for a white space in the finance industry armed with these two hypotheses, and soon found one.
Over a period of six months from January 2019 – June 2020, I personally spoke to over 200 High networth investors and about 50 family offices across 5 APAC countries. The entire group had a few complaints and requirements:
Issues with current wealth managers:
- If they didn’t offer their entire portfolio to one private bank, they wouldn’t take them seriously. Anything short of double digits, and you won’t get the advisory or access you need
- Mostly unsure on how much trust to place on their Relationship Managers.
- High and opaque fee structure which made returns look ordinary.
What do they really want:
- Institutional Access to exclusive products that helped enhance portfolio returns but without the potential of steep drawdowns. Not equity baskets or mutual funds that everyone else is offering under the garb of managed AUM or roboadvisory.
- Clear and unambiguous understanding of products on offer. No opaque language or unnecessary jargon
- Clear and transparent pricing that doesn’t try to fleece at the cost of returns. No kickbacks to funds or investment managers
- An easy self-directed process to invest using digital channels rather than being chased by Relationship managers
- Support who is readily available and knowledgeable to answer queries, handhold during the investment process. But no hard sell or repeated follow-ups
Ergo! Torre Capital
We built Torre Capital with the sole intent of providing a platform that looks out for investor interests before anything else.
We bring our investors access to asset classes at low minimums so that they can invest even with modest portfolios. We do with only the top decile of funds and startups and other assets that have an excellent track record of protecting and growing investing principal. And we do this at AUM fees that are 5x lower than traditional players.
We currently bring you access high quality Private Equity Funds, Venture Capital Funds, and Pre-IPO startups. Create a login in 2 minutes to check out the available opportunities.
Why should you care as an investor for private markets?
Better Returns and lower volatility
In multiple articles that follow on this blog as well as my LinkedIn profile, I will demonstrate how returns in PE/VC/Pre-IPO opportunities are calculated and why they make sense. For now, I will borrow from Bloomberg and Goldman Sachs to illustrate the point. They looked at overlapping data for hedge funds, private equity and real estate 1990 to September 2017. A traditional 60/40 portfolio of U.S. stocks and bonds — as measured by the S&P 500 Index and the Bloomberg Barclays U.S. Aggregate Bond Index — returned 8.2 percent annually during that period, including dividends.
Adding a 10 percent allocation to each of the three alternative investments — as represented by the HFRI Fund Weighted Composite Index, the Cambridge Associates US Private Equity Index and NCREIF Fund Index Open-End Diversified Core Equity, respectively — would have added 0.7 percentage points a year. And thanks to hedge funds’ ability to short stocks and the fact that private assets aren’t subject to the whims of public markets, adding alternatives would also have resulted in smaller declines during each of the last two bear markets.