As investors look across the various asset classes available to them, there’s a clear sign that demand for alternative investment opportunities is rising. With the risk of stocks potentially topping out at any time after the recent bull market, and the lackluster performance of the commodities and bonds markets, investors are increasingly looking to real estate and private investments that can offer a steady performance and serve as an uncorrelated hedge as part of a truly diversified portfolio.
With that demand comes new product innovation and strategies, all under the backdrop of sweeping regulatory changes expected to create lasting effects on the industry. The challenge for advisors and professionals is keeping updated on all this information, and then communicating it to their clients.
The Real Estate Investment Securities Association (REISA) aims to address many of these pivotal topics at the organization’s upcoming 2014 Spring Symposium on March 16-18, 2014 at the Sheraton San Diego Hotel & Marina. The event features over 40 different panels and sessions, with carefully curated topics and industry leading speakers to cover an expansive list of ongoing concerns affecting the industry. The keynote speech will be delivered by award-winning economist Ulrike Malmendier, Professor of Finance and Economics for the University of California, Berkeley.
“Attendees should expect a wide-breadth of information across a number of high-quality sessions, particularly with education aimed at the broker-dealers and RIAs, as well as superior networking opportunities,” said John Harrison, Executive Director and CEO of REISA. “Our numbers going in look even stronger than last spring. We expect a lot of industry people, and a lot of good sessions.”
Last year, the Spring Symposium attracted over 600 professionals, and REISA is on pace to beat those numbers with this year’s event. With panels outlined into 12 clearly-defined tracks, attendees will be able to meet with other professionals in their verticals, as well as sit in on discussions that offer different perspectives in the industry.
“What I’m very excited about is the quality of our sessions,” Harrison said. “It really is difficult to become a REISA panelists because of our standards. You need to have a good standing in the investment community and in our space, and you really need to have something important to impart with the broker-dealer community before you can be on a REISA panel. It’s a real measure to the quality we strive for that we have to turn so many people away.”
Alternative Investment Topics for 2014
Panel sessions will cover topics related to popular products such as real estate investment trusts (REITs), business development companies (BDCs), 1031s, private placements, Delaware statutory trust (DSTs), and tenants in common (TICs).
But the symposium is also a platform for meaningful discussions on issues from the regulatory and financial innovation standpoint, such as updates and the impact of the JOBS Act’s lifting of general solicitation and the potential of crowdfunding for broker-dealers.
This year, REISA also devotes a considerable amount of attention to behavioral economics, as evidenced by Malmendier’s keynote, “Insights from Behavioral Finance: Investor Decisions and Relevance to Our Marketplace.” There will also be a general session to help attendees understand the wants of investors when marketing and developing new products.
“There are a lot of new things that attendees can expect this year,” said Angela Ahlholm Strauss, of NoMax Group and REISA’s Spring Symposium Chair. “We typically focus on education and training, and generally have sessions for reps, broker-dealers, and sponsors. This year, we’ve added a track with sessions specifically for registered investment advisory firms. We have five different sessions for the RIA firms, focusing on operations, compliance, due diligence, marketing, and building a practice. We also have sessions designed specifically for incorporating social media and technologies in building and managing a practice.”
REISA’s symposium also offers continuing education credits, though attendees have to follow certain guidelines to make sure they do receive credit.
“The conference planning committee worked diligently to come up with a format for a syllabus,” said Strauss. “It will document the type of education and training, and the discussion that transpires throughout a specific session. This particular document will be a tool for broker-dealers to track the avenues that they’ve utilized to help enhance the education of registered representatives.”
REISA’s Expanding Reach
As mentioned above, REISA’s Spring Symposium features 12 tracks: Registered Representative, Broker-Dealer, RIA, Sponsor, Legislative & Regulatory, REIT, BDC, 1031, Energy, Alternatives & Structures, DPP, and Special Projects. The number and categories of tracks serves as a clear reflection on how REISA as an organization has grown over the years.
“What we’re seeing in this symposium is the wide-arm of REISA really starting to stretch themselves,” said Mark Kosanke, President of REISA and a Founding Partner of Concorde Investments Services. “This symposium, more so than any before, really captures the excitement of a broad representation of the alternative investment industry. That’s something we worked really hard on to make happen, and we think it will bear some fruit. We’ve really come a long way to open up our market base, and this symposium is really the first to show that on a very strong level.”
Founded in 2003 as Tenant-In-Common Association (TICA), the organization changed its name in 2009 to better reflect a more diversified and expanded membership in the real estate investment industry. But just a few years later, REISA’s influence is spreading into other areas of the alternative investments space, such as the oil and gas market.
“The great thing about REISA,” said Steven Meier, Partner at law firm Seyfarth Shaw. “It’s a forum where participants from the broker-dealer and representative communities can gather with participants from the sponsor community and affiliates like lawyers and CPAs to exchange views and network to take stock of where we are on a variety of issues. REISA provides balanced and equal-footing opportunities to exchange those views, whereas other conferences are more geared in one direction or another. It’s the best place that I’ve seen for that, and that’s important because we’re all involved in it and we all have a stake in it.”
Meier will be participating in two distinctively different panels at the event. First, he will be speaking on a panel discussing the current state of DSTs and TICs from a number of standpoints. Then he will moderate a panel regarding how the SEC’s bad actor rules and crowdfunding will impact broker-dealers.
Wider Acceptance of Alternative Investments
Whether investors are seeking more avenues for healthy returns or just in need of an asset class that is not correlated with the performance of traditional investments like stocks and bonds, there’s a growing recognition that alternative investment securities should be a part of a truly diversified portfolio.
And they’re performing quite well. As an example, non-traded REITs had a very strong showing for investors last year.
“2013 was a record year for this industry,” said Jim Sprow, Director of Research for BlueVault Partners LLC, which produces reports on non-traded REITs and BDCs. “We estimate that they raised $19 billion versus $10.6 billion in 2012. So money is pouring into this industry, and the sponsors are coming up with new products. They’re also taking a lot of these products full cycle. We had a record number in 2013. This is exciting because it shows that there’s going to be a lot of liquidity as investors put that money back into the industry. So it’s an exciting time right now.”
But according to a recent CNBC report in December, the majority of financial advisors stay away from recommending alternative investments to their clients because they themselves don’t fully understand them.
The story cited a Natixis Global Asset Management survey that “showed 89 percent of advisors use alternatives at least occasionally, but only 25 percent report using them regularly. The top reasons given for not using alternative strategies more broadly are that advisors stick to what they can explain to clients (44 percent) and that clients believe alternatives are risky (44 percent).”
Sprow, who will be a panelist at the symposium, adds that, “Investors abhor uncertainty and risk. So the less information we have, the more uncertainty and risk that we face. Anytime you can shine light on something and reduce the barriers by giving some objective information on it, I think it will make it more attractive to investors because they can track their investments and have a third-party information source beyond their advisor and broker.”
REISA addresses the need for more education and discussion on the professional level, which will then pervade throughout the investor community.
“There’s a huge educational component to REISA,” says Keith Lampi, COO of Inland Private Capital Corp. and a panelist for the symposium. “The first day is dedicated to a Real Estate 101 boot camp … and that’s critical for any advisor focusing on these products to take a forward-looking approach to decide what products to sell heavier in and what assets to pull back on. So at the end of the day, that education component arms the advisor with what they need to successfully drive business.”
Lampi echoes the view that the industry is seeing more investors entering the private real estate market, but also larger deals taking place. The demand for higher-yielding income-generating investments and lack of options in traditional markets is driving that deal flow and transaction volume into the alternative investments space.
“When you look back four or five years ago, you basically had REITs, 1031s, and a couple of funds,” said Kosanke, who is the first REISA president with a representative and broker-dealer background. “Now you have a lot of new and exciting things that weren’t there. So part of our role is to introduce broker-dealers to some of these new products, discuss the merits of them, and show who’s doing best practices with them. When I started as a representative 25 years ago, the only way I learned about new products was to go to events like a symposium. That’s why I think our symposiums and conferences are so important for professionals in this industry to go to because in a lot of cases it’s their first-time exposure to new things in the marketplace.”
Click the link for more information on REISA's 2014 Spring Symposium.
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