Ballast Rock Group, a diversified investment management firm headquartered in Charleston, S.C., has founded Ballast Rock Private Wealth (BRPW), an independent registered investment advisor (RIA) with a focus on alternative investments, the company said.
Launched with approximately $30 million in client assets and a commitment to $20 million more, spokesperson Christina Diabo said in an email, the newly-formed RIA will cater to accredited high-net-worth individuals, families, business owners, entrepreneurs, and family offices. The addition of an RIA will complement the growth of Ballast Rock Asset Management, which has deep experience in private equity, real estate, and venture capital investments, according to Thomas Carroll, founder and CEO of Ballast Rock Group.
“We formed Ballast Rock Private Wealth because we felt individuals and families would benefit from financial advisors who better understood how alternative investments fit into client portfolios,” Carroll said in a prepared statement. “Given how the broader markets have performed, we know there is demand for advice that takes into consideration all suitable and appropriate options for a portfolio. Through this new offering, our RIA will be better equipped to give clients more investment options.
In an email, Carroll discussed how his newly-launched RIA would deliver the benefits of a diversified client portfolio through the carefully-curated addition of alternative assets. Asked if there was any one class of alternative assets his clients have asked about during 2022, Carroll said he and his team had received multiple investor inquiries for alternative assets with a focus on high income generation, often with some tax shielding, and some type of positive social and/or environmental impact.
“At the beginning of the year, the desire for high-income was driven by demand for yield before the Fed started this recent hiking cycle in March,” Carroll said in the email. “However, demand in the second half of the year remained relatively consistent as public-market valuations across equities and bonds dropped significantly, and clients looked for lower volatility, consistent “brick & mortar” cash-flowing businesses/investments, ideally less subject to the whipsaws of public-market sentiment.”
He said that throughout the past year, clients told him they struggled on their own to find environmental, social, and governance (ESG) investments that not only promoted a positive impact, but also a competitive, risk-adjusted return. When they did find them, Carroll said, many investors overextended their financial commitment, reducing any return on their investment (ROI).
Carroll said that one class of alternatives often overlooked by investors is real estate, but cautioned against making such investments without the support of a financial advisor. He said that direct and undiversified self-managed investments made in a single piece of real estate require much more hands-on effort and personal liability than most passive investors realize or want to spend time actively managing. He also said that investments in a public-market real estate investment trust (REIT) can be just as risky for investors without professional financial management since many are far more volatile, as well as hyper-sensitive to interest rate and market sentiment than investors fully appreciate.
“Private-market real estate investing through a diversified fund with an experienced manager tackles many of the above issues that can create a passive income stream with equity upside, often in a tax shielded format,” Carroll said. “At Ballast Rock Private Wealth, we believe that by utilizing a broader range of asset classes, we can provide our clients with portfolio construction and investment advice that deliver a more effective hedge to public market volatility, while also offering the potential for solid returns.”
Asked if there was one class of alternative assets that he would not advise a client to invest in, Carroll said yes.
“We have no exposure to NFTs, either personally or among our clients,” he said in the email. “It is not a space we look at. Instead, we focus on businesses and technology with current cash-flow, or a specific path to cash-flows, and clear utility. Though there is likely significant utility from the underlying blockchain technology in rapidly establishing and transferring title of ownership for a variety of asset classes (as the technology is refined and regulated), our limited study of this nascent market indicates NFTs themselves have limited monetizable utility in their current form.”
With the launch of Ballast Rock Private Wealth, Ballast Rock Group is restructuring into three separate operating entities. Ballast Rock Asset Management comprises Ballast Rock Ventures, which include the company’s private equity and venture capital holdings, and Ballast Rock Real Estate, which includes the firm’s Sunbelt multifamily real estate funds. The company is seeking regulatory approval for Ballast Rock Capital, a FINRA-regulated broker-dealer.
The company also made several key appointments at Ballast Rock Private Wealth. Andrew Mescon, formerly vice president of wealth management at Integrity Financial Corp., has joined Ballast Rock Private Wealth as CEO, while Christian Salomone, formerly managing director at Bank of America and at Goldman Sachs, has joined as CIO. Jason Thonssen, who previously worked at Coldstream Wealth Management and at Integrity Financial, has joined Ballast Rock Private Wealth as chief compliance officer and director of client service.
Carroll will continue to lead both Ballast Rock Group and Ballast Rock Asset Management, and Simon O’Shea will remain CIO of Ballast Rock Asset Management. However, Ballast Rock Group has appointed Dirk Hall, formerly COO of Impact Health and CEO of medical technology company KKT International, to the position of COO, and Jana Ritt to the position of director of the Ballast Rock Foundation, the company’s charitable arm. Ballast Rock Foundation is committed to alleviating housing insecurity in all its forms, according to a news release announcing the company’s C-suite shake-up.
Founded in 2018, Ballast Rock Group oversees $220 million in client assets across more than 1,000 active investors, according to spokesperson Christina Diablo.