Alternative Investments Podcast (Clip 4 of 8) – Evaluating Risk Appetite for Alt Investment clients

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Alternative Investments Podcast – With Strategic Capital & Waterloo Capital

Don Simoneaux talks about Special Status Investor Classes for Alternative investments (e.g. Accredited Investors). Learn how to work with Strategic Capital – Registered Investment Advisors in Austin, Texas.

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 Episode 4 Podcast/audio/video Clip (4 of 8)

Working with Strategic Capital on Alternative Investment Strategies

Meet Don Simoneaux – Alternative Investments Waterloo Capital

Don Simoneaux and Bobby Russell speak to the concept of evaluating risk for investors interested in Alternative Investments


Moderator: “As far as evaluating risk appetite and suitability for clients when you you look at a platform like Waterloo and you say okay well we you know part of your platform is bringing alternative Investments to those that are traditionally at the beginning or moderate phases of the registered investment advisory scale – right so, a lot of the clients that you guys are having probably at intake are between let’s say a million dollars and 10 million dollars right and so those a lot of those clients that will be coming into the fold at a platform like Waterloo might have their first exposure to Alternative Investments at least in a regular investment way, when they come to a platform through say a Strategic Capital and come to the Waterloo Platform how do you guys look at risk appetite and how do you evaluate that from a client by client basis as you intake those clients through a Registered Investment Advisory?” 

Don Simoneaux (Director of Alternative Investments, Waterloo Capital): “Sure, so you know the typical risk questionnaire that a lot of advisors use – it kind of relies on this idea of max pain threshold. The idea of, you know, how comfortable you are with volatility. That type of risk questionnaire isn’t necessarily appropriate when considering the nuanced aspects of a lot of alternative investment strategies especially as it relates to illiquidity; so we have a specialized risk questionnaire that we use for our clients which really helps us evaluate a client’s comfort with number one: investing in startup businesses – you know private equity is inherently more risky than public stocks for instance. So, we want to make sure our client has a certain comfort level with the type of risk that we might be taking in a strategy like this. 

Don Simoneaux (continued): Secondly we need to understand how comfortable they are with a liquidity right, so, as it relates to building out a plan for a client we need to understand: are they a high earning individual that is stocking a lot of money away into their retirement account, you know, if they can withstand some illiquid exposure in their portfolio. A lot of times we can target maybe higher rate of return or more diversified, you know uncorrelated return stream so it really is a collaborative process that we go through with our clients to make sure that number one: they understand what they’re investing in – we want to make sure our clients are fully educated on what we’re recommending to them. And number two: that these types of investments are appropriate, and actually fit within their overall portfolio construction.”