Tracking Alternative Investments Is Simple With The New Alternative Investment Platform. Here’s How To Do It.
A growing number of advisors are working with their clients to capture investment opportunities beyond the standard stocks, bonds, and model portfolio strategies typically associated with RIA firms.
Orion has always given advisors the ability to manually maintain accounts and assets outside of the typical brokerage or retirement account structure, but with the February 2018 software update, we’ve taken your ability to report on alternative investments in Orion to the next level with the Alternative Investment Platform.
In today’s blog, we’ll show you around the new app and explain how you can use it to help your firm create comprehensive wealth reporting for your clients, no matter the type of invested assets.
Getting to Know the Account Composer app
The Alternative Investment Platform is available within the Account Composer app.
Account Composer is your one-stop app for all accounts that fall outside of the accounts you receive via data feeds from custodians or aggregation services. If you need to track held-away assets or keep your clients’ alternative investment opportunities up to date, the Account Composer is your destination.
How to Get Started with the Alternative Investment Platform
When you load the Account Composer app, you’ll see that the left-side navigation is divided into Held-Away Assets and Alternatives. Under Alternatives, click into the Assets section to see a full list of all the assets you’ve created.
To create your first asset, click the New Asset button next to Actions above your grid.
The first time you add a new alternative asset, you’ll need to create the product itself. You only need a few pieces of information to do this, and creating a product should take only a minute.
On the Alternative Asset screen that comes up, click the blue hyperlink, Need to create a new product?, to go to the Product creation screen. Here, you’ll name your product, choose a custom CUSIP, and select a subtype of Limited Partnership or Private Equity.
Please Note: Choosing a subtype is required because this field is how the Orion system will differentiate an alternative from a traditional product.
Click Save and you’ll go back to the Asset screen so you can continue adding your new asset. You can add the asset to an existing account or create a new one entirely.
Maintaining Alternative Assets
Once you’ve got an asset or account setup, you need to enter transactions or valuations. The Alternative Investment Platform has made transactions simple. Instead of requiring you to do the hard work of ensuring transactions have the correct offsetting transaction or that balances check out, the Alternative Investment Platform will do it all for you.
You only need to record some basic information to help the process flow smoothly.
Transactions and valuations can be edited individually by editing an asset, or you can enter them globally for all owners of a particular product, like a private equity holding.
The information you need to enter is the same regardless of whether it’s a single or global transaction or valuation, so this example will show the global process, which is accessible via the left-side menu.
Add a Valuation
Adding a valuation is a simple process with the Alternative Investment Platform. Choose your product, select the valuation change and date of change, and enter any notes.
With both global valuation and transaction changes, you can preview your update before committing to it. Click Preview to view how your update will affect every account holding the selected asset. You can then save your update from the Preview screen.
When you add a new valuation, the Alternative Investment Platform will automatically create the correct transactions for you.
You can view lists of all transactions and valuations on the left-side menu, or click into an individual asset in an account to see only transactions and valuations on that account.
Add a Transaction
While adding global valuations will likely be the most widely used way to update the alternatives your clients own, you can also create a specific transaction as well.
If you’ve added a transaction for a manual account in Orion, you’ll be right at home. If not, it’s easy to learn.
The best method for alternatives is to use Activity Type rather than Transaction Type. Using Activity Type will automatically create the necessary transactions to balance your accounts, a powerful capability of the Orion platform.
Transactions, like valuations, can be entered globally or one at a time.
Reporting with the Alternative Investment Platform
Alternative assets and accounts you create in the Account Composer app will be available for inclusion in all your Orion reports. When you use the Alternative Investment Platform, you do much more than consolidate your tracking of assets in a single system. You also open up the ability to report performance to your clients on their alternatives, and package all assets owned, both public and private, together in a comprehensive report.
By default, accounts created in the Alternative Investment Platform are marked as managed and included in reporting.
We are also creating new, Alternative Investment Platform-specific subreports to help you clearly show alternative assets and their Internal Rate of Return (IRR) performance in your client reports.
If you have a subreport in a report that displays Time-Weighted Return (TWR) asset-level performance, we will still show your alternatives as TWR based on your specific report settings.
We’ll have more updates on reporting your alternative assets in the weeks ahead. To stay up to date on the latest news about the Alternative Investment Platform, check out the Orion blog.
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