The RIA AlphaCore Wealth Advisory is looking to its latest hire — Brian Habas, formerly of LPL Financial — to further its mission of
La Jolla, California-based AlphaCore announced on Monday that it's bringing on Habas as its next chief operating officer. Habas, who has 24 years of industry experience, most recently served as senior vice president of institutions channel strategy and execution at LPL Financial. He came to LPL in 2014 after working at T. Rowe Price Investment Services for 10 years.
Habas said in an interview on Monday that his responsibilities at both LPL and T. Rowe centered on using technology to help advisors do their jobs. At LPL, for instance, he worked a good deal on the firm's ClientWorks system, a hub for wealth managers'
Now he plans to bring that expertise to bear in furthering AlphaCore's founding mission of further
"They were thinking about how they were going to scale," Habas said about AlphaCore. "And that's really been my background. So it was helping them understand: How do we put the client first? What are some of the problems we want to solve for them, and what will make it easier for our advisors?"
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Looking beyond the 60-40
One of the nuts AlphaCore has been trying to crack since its founding in 2014 is the high barrier to investing in things like private credit, private equity and private real estate. Many skeptics see these markets as
But AlphaCore founder Dick Pfister said in an interview Monday that the firm was born out of his sense that the standard 60-40 portfolio had itself become too risky. That sort of allocation — placing 60% of a client's investments in equities and 40% in fixed income — is supposed to provide a hedge against market downturns in that stocks usually move in the opposite direction of bonds. But the strategy was shown to be anything but foolproof in 2022, when both stocks and bond markets tanked.
Pfister said he'd grown skeptical of the 60-40 portfolio's supposed benefits long before then. When he had a substantial amount of money to invest following his sale of his stake in a previous alternatives firm, Altergis, he founded AlphaCore and became its first client.
The firm's very name is a reference to his belief that skilled wealth managers should be able to achieve "alpha" — or outperform commonly cited benchmarks like the S&P 500 index — in both bear and bull markets. A big part of that strategy, Pfister said, centers on private investments.
"So the concept of AlphaCore started with the idea of putting together alternative investment strategies, not having one manager or one style, but multiple managers, multiple styles as a core allocation to give you diversification and provide balance to a portfolio," Pfister said. "These are alpha generators, we'll call them, and then around that alpha we add traditional stocks and bonds, or 'beta.'"
Like many advocates of private markets, Pfister likes to emphasize the diversification benefits they can bring to standard portfolios. He's also quick to point out that one of their most commonly cited drawbacks — illiquidity — is also one of the main ways they help to hedge against risks.
"In some cases, that's actually good for investors, so they don't panic and sell at the bottom of the market and just take any sort of an allocation," Pfister said. "As long as clients understand that they're going into something that's private and that typically is going to have a much longer-term horizon."
'Democratization equals education'
This need for investors to go in with their eyes open is why Pfister thinks it's essential for advisors to explain in easily understood terms both the perils and promise of private markets.
"To me, democratization equals education," he said. "Because if you put somebody into, let's say, private credit — which inherently has illiquid loans underneath it — but they don't truly understand that, and they think they can get out every single quarter with 100% of their assets, even in times of stress, that can lead to a problem."
Aaron Filbeck, a managing director at the Chartered Alternative Investment Analyst Association, said there's a need for clients to learn more about at least three related subjects: The different types of private vehicles, the various ways of accessing them and the place these vehicles may have in their portfolios. Filbeck's duties include overseeing UniFi by CAIA, which is the professional group's initiative to help advisors and investors both learn more about alternatives.
Filbeck said he advocates for both "front end" and "back end" education on private markets. The front end involves making sure clients know what they will be getting into if they go into alternatives, including the strong possibility that they won't be able to pull all of their money out on a whim.
The back end entails technical matters like the reporting that's required with many private vehicles. But it also involves regularly reminding clients what their investing goals were when they went into alts in the first place.
"So if you're an advisor, you're going along for the journey," Filbeck said. "Even if you're not making trading decisions, you're making sure they understand this is a long-term investment."
Recent reforms
Private investment managers, meanwhile, haven't been oblivious to complaints about illiquidity. Many have responded in part by adopting features meant to ensure investors can take a certain amount of their money out at set intervals, often once a month or quarter.
These sorts of changes — although not providing the liquidity of public markets — have vastly changed the face of private investing since the founding of AlphaCore, Pfister said. He said he thinks improvements will continue to be rolled out and that the notion that private credit, private equity and similar vehicles are somehow "alternative" to public markets will eventually be dropped.
That said, Pfister noted that not all of AlphaCore's clients are now in private markets. Some come to the firm with a heavy allocation in stocks, for instance, and would suffer a large tax burden if they decided to sell a large part of that portfolio and move the money into alternatives.
When it comes to new investors, Pfister said, there's no ready-made formula for deciding how much they should be committing to private markets. Besides expertise in alternatives, AlphaCore offers services like standard financial planning and help with taxes, retirement, insurance and trusts and estates.
"Depending upon their return needs, their income needs, their liquidity needs, you blend all four of those together, and you get your end goal," he said. "Well, that might be 50-30-20, or it might be 60-20-20. It really depends on the client."
Habas said he comes to the firm amid its push to reach out to more investors. The firm's typical client falls into the high net worth category, but even in that select group, there's a strong need for diversification, Habas said.
"We are really at the tip of the spear for this kind of conversation and these processes," he said. "It's about how advisors go about bringing this to their clients, as we look to scale that and make that easier and more transparent."
Growth trajectory
Like many firms in the RIA industry, AlphaCore has attained much of its recent growth through a series of mergers and acquisitions. It announced its purchase of Johnston & Associates, an advisory practice in Denver with $400 million under management, in March 2023, and of Magnolia Lane Financial Advisors, a firm in Greenwich, Connecticut, in January.
Habas is just one among several executive hires AlphaCore has made in recent months. In May, for instance, it announced it had brought on Aidan Walsh, formerly of the RIA aggregator Focus Financial Partners, to oversee its mergers and acquisitions and relationship management team.
Pfister said AlphaCore has slightly more than $3 billion under management and roughly 50 employees. The firm's growth has been driven in part by a capital infusion from the private equity firm Constellation Wealth Capital, which took a minority share in AlphaCore in December.
Despite the similar backing, Pfister said he doesn't see his firm as being akin to
"But only if they're philosophically and culturally aligned with us," he said. "So we're not going to be growing just for growth's sake, and I think that makes us slightly different than the average piggyback shop."
