INTERVIEW: Mercury Capital Advisors’ Expansion And Changing Face Of Alternative Investments Access
This publication talks to a firm changing how money is raised for alternative investments among HNW individuals and others, challenging banks and traditional “gatekeepers” in this space.
There is plenty of talk in the wealth management space about the attractions of direct investing and non-public markets, but getting to the best deals can be hard. The most popular, highly-regarded investment managers can fill their fund-raising targets rapidly from a select club of big institutions, while others can be frozen out if they lack institutional connections and buying power.
What to do about this? There have been a number of efforts to “democratize” access to areas such as hedge funds, private equity and forms of real estate, such as through use of listed vehicles or indices that allegedly replicate returns of such investments, and so on. (See an example here.) However, there are drawbacks, possible hidden biases and costs. (Closed-ended listed funds can trade at large discounts to their net asset values, for example.) And there is another issue: when it comes to placing private capital investments, banks will often charge a fat fee for all that supposedly rigorous due diligence, leaving the end-client wondering what exactly the value proposition is.
So step forward Mercury Capital Advisors and the Mercury iFunds™ platform. The business argues that its platform widens access to alternative investments like never before. This is a firm which, while headquartered in New York, is expanding, rolling out offices across the country, with an international footprint and a desire to have a wider one. The rise of such a firm is indicative of how some long-established intermediaries – typically banks – are being squeezed, with upstart firms creating new distribution channels, harnessing mobile technologies, apps and the power of video presentations to get access to clients.
“Middlemen [and middlewomen] will continue to be dis-intermediated by technology and this paradigm will be no different in the financial services space. Digital Darwinism is upon us and those that do not adapt will go the way of the dinosaur. That said, the large private banks may ultimately be dis-intermediated because of (1) excessive pricing required to support their infrastructure, (2) the limited scope of their alternatives offerings, and (3) slow embrace of technological efficiencies. This augurs well for all financial services clientele,” the firm told this publication in response to questions.
The firm is currently beating the drum for its Mercury iFunds platform. Mercury iFunds is an end-to-end solution that offer high-end authorized investors access to the company’s aggregated alternative investments. It has two elements: a public side and a private one. The public side is purely informational, and the private side is much more advanced, requiring users to go through a firewall before accessing its features. Mercury iFunds, already up and running, is being rolled out globally next year.
Mercury Capital Advisors has been busy; earlier this year it opened an office in Palm Beach and plans to open further presences in Chicago, Los Angeles, Texas and Bellevue, Washington. It currently also has offices in New York, Boston, San Francisco, London, Dubai, Tokyo and Singapore plus local presence in: Beijing, Shanghai, Lima, Bogota, Santiago, Rio de Janeiro and São Paulo. The business has had plenty to brag about; it scooped
the award for Placement Agent of the Year from Private Equity International in 2015 and finished #1 in the Thomson Reuters league tables in three of last five years.