Here are two choices:
- A pioneer in high yield, non-traded REIT’s
- A crowdfunding entrepreneur
I’ll dispense with the suspense … the answer is both A. and B.
Mr. Schorsch’s impressive fortune building career (now 10 figures) hit the big leagues in 2002, not that long ago, when he teamed up with Lew Ranieri (of mortgage backed securities fame) to launch his first REIT. And he certainly played a smart “product” card by subsequently specializing in non-traded, high yielding REITS that had an innovative twist … built in liquidity events to enable retail distribution.
With that pioneering change in non-traded REIT structure, this category of asset backed, alternative investment became very successful, in large part because of its comparative risk/return benefit and the increasingly low interest rate environment. It also didn’t hurt that sales of non-traded REIT interests carried high fees, making it pretty easy to build retail distribution network relationships. Mr. Schorsch’s company, RCS Capital, is now the industry leading wholesale broker-dealer in non-traded REIT investment products.
Fast forward to 2014 …. RCS Capital just launched “We R Crowdfunding”, a CF platform that includes an integration of investor relationship management software from Trupoly, which RCS acquired earlier this year. Initially, the platform will be real estate focused, and they are “cutting their teeth” on placements of RCS Capital’s REIT investment product offerings. Perhaps more importantly, it is a “curated” CF model, leveraging the research and origination capacity he has built (and is expanding) in his empire.
The Trupoly acquisition is only one of many completed at RCS Capital recently. It has also purchased several independent broker-dealers that together house nearly 9,000 advisers/reps and over $200 Billion in assets under administration. And they have acquired teams who originate or manage investments in other subcategories of the alternative asset class. It is all part of Mr. Schorsch’s strategic objective, to become a retail broker-dealer power house that is integrated with a broad based alternative asset investment product pipeline.
So, how do you get from being the leading wholesale broker dealer of non-traded REIT’s to becoming a crowdfunding entrepreneur? It’s an interesting tale of strategy development and execution. RCS Capital has committed itself to growth through acquisition of firms in the alternative investment and advisory services vertical. But it has also adopted a view on what role crowdfunding technology will play in the future of the primary focus of this strategy, retail advisory services.
The potential payoff is huge. Look at LPL Financial’s growth and returns for a guide. And one should not underestimate RCS Capital’s interest in crowdfunding. The plan certainly includes using crowdfunding technology to differentiate themselves from the competition. But true to Mr. Schorsch’s innovative past, the intent is to emphasize crowdfunding to such an extent that RCS Capital (according to President Michael Weil) “leads the crowdfunding revolution”.
For those who play in and around RCS Financial’s newly defined sweet spot, it would be wise to keep tabs on developments. This has all the makings of a landscape changer. And even for those with only peripheral interests, there is plenty of intrigue, not the least being what rising rates might do to the core, non-traded high yield REIT business.
A big thanks and credit to my new associate, Rob Klein of www.jesterfinancial.com for his contributions to these thoughts. And as always, thoughtful comments to any post at www.JCJCo.net are invited and appreciated.
