After previously announcing intentions to raise $1 billion for a private equity fund targeting minority, non-controlling stakes in RIAs and wealth advisory platforms, Constellation Wealth Capital has selected AlphaCore Wealth Advisory to become its inaugural capital recipient due to the firm’s growth record and expertise in private markets and alternative investing. To learn more about the RIA that sparked Constellation’s first strategic partnership, WealthManagement.com recently interviewed Dick Pfister, CAIA, CEO and founder of AlphaCore, for insight.
Pfister says that the story of AlphaCore began after departing from alternative investment firm Altegris to find a financial planner with a less risky investment strategy. “They were using an outdated asset allocation approach,” he says, explaining that the traditional 60/40 stocks-to-bonds ratio was “too risky” in 2015. “I’ve lived through the tech wreck of the early 2000s, where stocks went down 50% or 60%, and I’ve lived through the subprime crisis where the market went down even faster and deeper. You had this dilutive effect on the fixed income side, and if rates were to rise, you could lose money on bonds too.”
Seeking to avoid the anxiety of the potential for substantial losses every couple of years, Pfister devised the AlphaCore investment model, placing alternatives at the core of an allocation strategy that utilizes various strategies and managers.
“Everything from private credit, private real estate, private equity,” Pfister tells the publication. “We also include alternative strategies that are hedging. So, long-short equity, long-short credit, merger arbitrage, global macro. Those are what I would consider alpha generators. Around that, we will consider traditional betas like stocks and bonds because I’m still a big believer in the U.S. economy and that companies will make money over time … but I don’t want to pay a lot for it because you should be able to get beta very cheaply.”
Now, partnering with Constellation marks a new growth phase for AlphaCore, which has achieved a 50% annual asset growth since its establishment, expanding its staff to 30. The capital infusion will support ongoing hiring, enhance client service and facilitate the pursuit of acquisition opportunities.
“We always have a pipeline of advisors interested in joining or being acquired, and that will be ramping up dramatically over the next couple of years,” says Pfister. However, he adds that acquired firms must be aligned with AlphaCore’s alts-centric investment strategy and possess a collaborative mindset.