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PENSCO Survey Indicates Increased Allocation to Alts in IRAs

Beyond portfolio diversification, clients seek to leverage their personal insights and business experience into successful alternative investment strategies

Press Release

PENSCO CLIENT STUDY INDICATES INCREASED ALLOCATION TO ALTERNATIVES WITHIN IRAs AS MORE EDUCATION AND ACCESSIBILITY TO ALT INVESTMENTS BECOMES AVAILABLE

SAN FRANCISCO, November 11, 2014 – A majority of PENSCO clients report that they would invest more in non-traded, alternative assets if they had a better understanding of the range of non-traded alternatives available for investment (71%) and had more accessibility to non-traded alternatives opportunities (70%). This finding is based on a study of 682 clients who custody retirement assets in a self-directed Individual Retirement Account (IRA) with PENSCO. In a self-directed IRA, the IRA owner has more control and flexibility when it comes to choosing investments and can expand their asset allocation beyond stocks and bonds to include non-traded alternative assets.

The study also found that individuals consider the most important benefit of using their IRA to invest in non-traded alternatives is “portfolio diversification” (30%), which is closely followed by ‘the opportunity to invest in business/sectors/industries about which I have personal knowledge or expertise” (28%). Half of the investors already consider alternatives a core holding in their portfolio and don’t plan to change their allocation, and an additional 26% plan to increase their investment allocation in the future. 

“Over the past five years we have seen steadily growing interest from individual investors in using retirement dollars to invest in non-traded, alternative assets,” said Kelly Rodriques, CEO of PENSCO. “While many are doing so to achieve diversification, we are also seeing individuals wanting to leverage the ability to grow their assets tax-deferred and to use less liquid retirement dollars to participate in longer term private placement opportunities, especially in light of the growth of the crowdfunding space.”

Among the hurdles with respect to identifying opportunities, one in three investors are not familiar with any detailed, reliable information about non-traded alternatives, and the same number say they lack awareness of other opportunities that exist.

Clients also cited an interest in knowing more about the rules that govern IRA investments, as well as the potential benefits to investing directly vs indirectly. When asked what tools/ resources helped guide their investments, they ranked conversations with professionals, and conversations with friends, family, or colleagues, as the most helpful.

Recognizing the growing interest among individual investors to hold alternative assets in their self-directed retirement accounts, but realizing the challenge in being able to locate and invest in private placements, PENSCO launched the PENSCO Marketplace(TM) earlier this year, a first-of-its-kind network of providers, products and services for alternative asset investors.

The PENSCO Marketplace features several new crowdfunding sites that give accredited investors access to private placement opportunities in a variety of industries. PENSCO has pre-reviewed many of the offerings found on the participating crowdfunding sites in an effort to expedite their ability to accept qualified retirement dollars.

“With the rise of crowdfunding platforms, the range of opportunities is multiplying and, as our study results show, investors and their advisors need additional support and resources to find investment opportunities that are appropriate for their long term goals,” said Rodriques. “We created The PENSCO Marketplace® to be a go to resource to help individuals leverage alternative investment opportunities as part of their retirement planning.”

In addition to the crowdfunding sites, The PENSCO Marketplace® also includes professional resources, such as access to attorneys, financial planners and tax professionals who specialize in real estate, private placements and various other alternative investments and may be needed to help an investor facilitate his/her alternative asset investment.

For additional information about using retirement dollars to invest in non-traded alternatives, please visit our blog and listen to the webinar, “Leveraging Growth Strategies within a Self-Directed IRA.”

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About PENSCO  

PENSCO Trust Company has been helping investors use their retirement account funds to invest in real estate, private equity and other non-exchange traded assets since 1989. 

As the trusted custodian of over $10 billion in assets and 50,000 clients, PENSCO works with asset sponsors, financial institutions, and financial advisors, as well as self-directed investors who typically have a point of view about alternative investments based on their own knowledge or expertise and want to put their tax-advantaged retirement dollars to work in these opportunities.   

PENSCO Trust Company performs the duties of an independent retirement custodian, and, as such, does not provide investment advice, sell investments or offer any tax or legal advice. PENSCO is not affiliated with any financial professional, investment, investment sponsor, or investment, tax or legal advisor; including any who are listed in The Marketplace. Clients or potential clients are advised to perform their own due diligence in choosing any investment opportunity as well as any professional to assist them with an investment opportunity. Alternative investments are not FDIC insured and are subject to risk, including loss of principal. The list of individuals in The Marketplace should not be considered a complete list of individuals/firms with whom you may work, and is being provided for informational purposes only. It is not intended as an individual recommendation, and each individual is encouraged to perform their own due-diligence on any financial professional with whom they intend to work.