← Masters in Business
Masters in Business
Building 'The World's Alternative Investment Marketplace' with Lawrence Calcano
00:58:58
Loading summary
Transcript126 lines
- [00:00]
Apple Card Announcer
This message is brought to you by Apple Card Spring always feels like a reset, clearing things out, simplifying what you don't need. Apple Card is built with that same idea in no annual fee, no late fees, and no foreign transaction fees. No fees, period. Get started and apply in the Wallet app on your iPhone today. Subject to credit approval. Variable APRs for Apple Card range from 17.49% to 27.74% based on creditworthiness rates as of January 1, 2026. Existing customers can view their Variable APR in the wallet app or card.apple.com Apple Card is issued by Goldman Sachs Bank USA Salt Lake City Branch terms and
- [00:37]
Public/Apple Card Sponsor Announcer
more@applecard.com okay, before we get into it, little side note for the IT leaders listening in. I was reading up on a Microsoft Commission survey the other day and learned that teams using Windows 11 Pro PCs report 62% fewer security incidents compared to Windows 10 PCs, including three times fewer firmware attacks. Pretty significant. With security built in, you'll have AI ready it that sets you up for operational efficiency as well as long term resilience. Upgrade to Windows 11 Pro@Windows means business.com
- [01:12]
Cincinnati Insurance Announcer
if you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But in life, even the best strategies can't prevent every bad day a fire, a loss, a disruption that demands immediate attention. When that happens, what matters isn't just what you planned, it's who shows up. That's where Cincinnati Insurance comes in. For more than 75 years, they've helped individuals and businesses navigate life's toughest moments with care, expertise and personal attention. Together with independent agents, Cincinnati Insurance focuses on relationships, not transactions. Their approach is grounded in experience, follow through and trust built over time. Bad days happen, and when they do, you deserve an insurance partner who understands risk, respects what you've built, and is ready to help you move forward. The Cincinnati insurance companies Let them make your bad day better. Find an independent agent@cin fin.com
- [02:15]
Apple Card Announcer
Bloomberg Audio Studios podcasts Radio News
- [02:23]
Cincinnati Insurance Announcer
this is Masters
- [02:25]
Apple Card Announcer
in Business with Barry Ritholtz on Bloomberg
- [02:28]
Barry Ritholtz
Radio this week on the podcast. Wow, another great conversation. Lawrence Calcano really has built iCapital since 2013 into what's become the dominant financial technology platform for alternative investments, for wealth managers, for advisors, for banks. I found this informative and really quite interesting and I think you will also, with no further ado, my discussion with iCapital CEO Lawrence Calcano.
- [03:01]
Lawrence Calcano
Thanks Barry. It's great to be here.
- [03:02]
Barry Ritholtz
It's great to have you? I've been looking forward to this for a while. Before we get into your time with iCapital, I want to sort of work back through your career, starting with you get a bachelor's from Holy Cross and an MBA from Dartmouth. Talk. What was the original career plan?
- [03:23]
Lawrence Calcano
Boy, I don't know that I had one coming out of the gate. My dad was raised in an orphanage. His dad had died when he was 2 and so he was in an orphanage till he was 18. He went into the army and then he came out and he had to sort of put himself through school. And so he didn't have a regular sort of path that would sort of lead him to say to me as a teenager, here's the way to do it. So he was learning and I was learning a little bit. I was a hockey player and I did get recruited to Holy Cross to play hockey. And when I was there I was an economics major and a theater minor. Spent a lot of time doing theater there as well. And then I went off to Morgan Stanley and that was a really interesting decision because I was in a professional play and had sort of been asked to be in a second play and I had a little bit of a career crisis, if you will, early on. In terms of what was the first
- [04:18]
Barry Ritholtz
play, it was called the Murder Room.
- [04:20]
Lawrence Calcano
It was a James Sharkey slapstick play. And I played a young Texas millionaire who was engaged to a wealthy British woman. And we were. The play takes place at her father's manor in the uk. It was full of sight gags and jokes and so forth.
- [04:37]
Barry Ritholtz
On Broadway or Off Broadway?
- [04:38]
Lawrence Calcano
Off Broadway, yeah. Anyway, it was a lot of fun. I was offered a role as pater in the Diary of Anne Frank as a follow up. And I had also at that point gotten an offer to go to Morgan Stanley. And I was sort of in an early trade off mode and ultimately figured I needed to eat. I had a lot of student loans and I decided to go off into the world of finance.
- [05:01]
Barry Ritholtz
So you spend a few years at Morgan Stanley. What were you focused on while you were there?
- [05:04]
Lawrence Calcano
I was at mortgage finance, so we were both helping SNLs raise capital, do M and A and also, also structuring some of the new products like some of the Ginnie Mae Securities, Fannie Mae securities, remix, cmos, things like that. A lot of the structured type investments.
- [05:21]
Barry Ritholtz
This is late 80s, early 90s.
- [05:23]
Lawrence Calcano
This is late 80s, yeah. 85 to 88. And then I put in one application to business school. A good friend of mine who was an analyst before Me left and went off to Tuck. I visited him. I had an offer to stay on at Morgan as an associate, but decided that after my weekend at Tuck, that would be a good thing for me to kind of stop, reassess, figure out what I wanted to do, and I went off to Tuck.
- [05:51]
Barry Ritholtz
So I have to ask this obvious question. There's a whole industry helping students figure out which is the right schools for them. Their first school, their safety schools, their reach. It's a whole side industry. You apply to one MBA school.
- [06:07]
Lawrence Calcano
I applied to one MBA school. And part of the reason for that is I had accepted the job to become an associate. And I went off to the visit, as I mentioned, and I just had this sort of feeling like I was making the wrong decision. I just staying was the. I loved Morgan. It was a fantastic firm. But I just had this sort of sense that maybe that wasn't sort of the right thing to do and going off to business school for two years would be the right decision. And I loved it. I mean, it was an incredible two years. I'm on the board of toc.
- [06:39]
Barry Ritholtz
Okay, but why just apply to one school if you're deciding, hey, this path isn't exactly how I want to get a mba. If you're applying to Dartmouth, you could apply to Stern, to Columbia, to wherever.
- [06:53]
Lawrence Calcano
Yeah.
- [06:54]
Barry Ritholtz
Why only one school?
- [06:55]
Lawrence Calcano
You know, I just was sort of wrapped with it. You know, I went up there. It's a small school. When I was there, there were 160 or so in the class is very focused on team, you know, study groups and teamwork and so forth. And I. It's hard to say. I just felt really like it was the right place for me. And, you know, I wasn't too worried about it. If I didn't get in, I was going to become an associate of Morgan Stanley. So it wasn't like I had, you know, it was putting all your eggs in one basket, so to speak.
- [07:25]
Barry Ritholtz
Really, really interesting. How did you end up at Goldman Sachs? Was that at. While you were in business school or afterwards?
- [07:33]
Lawrence Calcano
Yeah. So when I went to business school, I sort of said to myself, I'm going to think about all the different things. I. And after about two months, I said to myself, you know what? I really did like finance a lot and I want to go back there. So I applied for summer internships and had a few offers, more than one.
- [07:50]
Barry Ritholtz
I did.
- [07:51]
Lawrence Calcano
I applied to all the summer internships and obviously coming out of Morgan Stanley was pretty helpful to my candidacy. Ended up getting an offer to be a Summer associate at Goldman, which I took and was fortunate and pleased to have an offer to come back on post graduation, which I did and spent obviously a long time there and had a very, very good experience there.
- [08:13]
Barry Ritholtz
So I'm really curious, they're such large and yet such different firms, what was the culture differences like? What did you learn from each?
- [08:24]
Lawrence Calcano
Yeah, so they are different and both by the way, there are a lot of different ways to skin the cat. Right. Goldman had a very team oriented culture and I think Morgan Stanley does too. But Goldman, it's sort of right there in front of, you know, they've got 14 business principles, the first of which is our clients come first. By the way you think about what are the things you learn early on in your career. There were several things from that experience that really stuck with me. Starting with business principle number one, your clients interests always come first and then secondly, broadly just the importance of working as a team. And I, you know, my wife used to make fun of me because I would be in the office early and if there were a party or some social event, I was always the last to leave and she would say to me, dude, you don't have to actually be there till the end. But it was just, I loved it so much and I just thought that camaraderie was so, it was powerful, smart from a business perspective, but mostly as a person it was just fun. I mean it was really fun being in that group of folks.
- [09:31]
Barry Ritholtz
So you end up co leading Goldman's global technology banking group. Was your focus on tech and financial technology deliberate or did that just evolve organically over time?
- [09:43]
Lawrence Calcano
It just evolved. I, I was a generalist in corporate finance. It was then called global finance actually. And my Morgan Stanley friends used to make fun of me and call it intergalactic finance, but it was global finance and I did that as a generalist for a couple years. And then I was asked to, to start the east coast tech group which I did.
- [10:03]
Barry Ritholtz
This is mid to late 90s, this
- [10:05]
Lawrence Calcano
is early 90s, I was a third year associate and I did it and it was great. It was sort of late 92, early 93 and you know, we started to win some business and as you recall the Internet started to really kick in with Netscape's IPO in 95 and we went from having a really good business to being on fire and drinking, you know, from a fire hose given all that was going on with the Internet.
- [10:35]
Barry Ritholtz
Really, really fascinating. So, so you're there right through the dot com boom and bust. Probably the most transformative technology of the last 30 years, at least, before AI, what did that teach you about how capital markets operate, the way investors behave? That had to be a wildly instructive era.
- [10:56]
Lawrence Calcano
It was wildly instructive and it was all happening so quickly. And as you recall, people were trying to figure out, how do we even value these companies? But there was one thing. We had a great team of folks, the research team, the salespeople, the bankers. We all worked really well together. And we would go out and we'd sort of make presentations to potential clients and we'd always talk about where we saw the market going apart from valuation. So what did we think the adoption was going to look like? And we had these. What then was viewed as wild assumptions about Internet adoption. At the time, people were afraid to put their card numbers in a computer to buy anything. Right. But what happened was for a while, the valuations sort of kept pace and at times exceeded the sort of hysteria, if you will. But even though the valuations came back at the end of mid 01, the Internet valuations came down mid 02, the Comtech valuations came down. The reality of what was happening was even wilder, if you will, than what our projections suggested. That is the adoption rate of the Internet and how it would fundamentally change people's lives. The way they bought things, the way they reviewed things, the way they communicated with each other. It was so powerful. And we saw that wave. You saw the communications equipment wave. Now we're obviously looking at a different wave. And for me, there are several massive lessons there, one of which is you're never safe. When I started, the big technology companies were called DEC and Wang. You remember those companies? Oh, sure, probably most.
- [12:44]
Barry Ritholtz
Wang Computer, Not. Not Wang. Who own Computer Associates. Wang Computers.
- [12:49]
Lawrence Calcano
Wang Computers. Not Charles Wang.
- [12:52]
Barry Ritholtz
That's right.
- [12:53]
Lawrence Calcano
So those companies all got replaced, you know, first by client server, then a lot of the client server companies got displaced with the Internet. And now you're seeing another interest, potential risk of displacement. And I think one of the big things is you cannot be afraid of new changes in technology waves. You've got to adopt it. You can't. By the way, some companies, if you remember back when Amazon was growing and many of the Borders, the bookstores, the music stores, et cetera, hope is not a strategy. You can't hope this is going to go away. You got to adopt it, even if it means you got to change your business, even if it, your business model has got to sort of change and maybe your margins aren't going to be the same as what they were. You've got to adopt to new technology. Now, the one thing I would say is this always takes a little longer than people think. It's not like you snap your fingers. The hype is always ahead of the reality. I think there's a little of that right now. But AI is a massively important trend. We're spending a lot of money on it, as are lots of companies. But I think you've got to be willing to adopt or run the risk of dying.
- [14:12]
Barry Ritholtz
If there's any lesson to be drawn from Elon Musk and Tesla, or maybe the lesson comes from Amazon and Jeff Bezos that your margin is my opportunity and if you don't pivot hard, they're going to come along and eat your lunch. It happens so regularly, the cycle never stops turning. So at what point did you decide, hey, I could do a lot with this technology and various platforms. What led you to move from Goldman to helping to build and lead iCapital?
- [14:51]
Lawrence Calcano
Well, the real story is I left in 07 and with one of my former partners, we were going to start a technology buyout fund. But you may remember there were some events in 07 and 08 that were not too pleasant. Don't really recall something like gfc. Oh, that. Yeah. It reminds me of the Leslie Nielsen joke in Airplane. I picked a bad month to stop sniff and glue. So there was a little of that. We went off to start a private equity fund in the middle of the gfc.
- [15:20]
Barry Ritholtz
So you should have started a distressed asset fund.
- [15:22]
Lawrence Calcano
Probably. We weren't smart enough to figure that out. So anyway, so we put that on pause and actually it was a little bit of an unplanned cleansing in a sense, that I coached my kids, football teams and lacrosse teams, and I worked kind of from home and it was actually very exciting. Did a few entrepreneurial things. But then with a great group of folks, we looked at what was happening in the independent space, a space you obviously know quite well. We saw a lot of firms, a lot of advisors sort of going off and starting their own firms. And that trend was significant. There were hundreds of billions or early trillions of dollars that were now being managed by these independent RIAs. And one of the things that we looked at was almost by definition, the firms who were leaving were the firms with the largest asset bases and generally speaking, the largest clients. And those clients typically invested in alts. And so as we thought about it,
- [16:28]
Barry Ritholtz
we thought, meaning like family offices, ultra high net worth.
- [16:31]
Lawrence Calcano
Yeah. Like think about some of your clients and what types of products they're interested in buying. So when you leave. The Wirehouses did a phenomenal job and still do of providing outstanding products, support services. They do a great job. And so when somebody leaves to be independent, they don't have a platform. So we felt like we could create a platform to help advisors have access to Alts in the right way. And it's different because at that moment in time, there was no technology. Investing in Alts was a highly manual
- [17:06]
Barry Ritholtz
process to a large degree for a lot of firms it still is. It doesn't seem like the various funds all play well together.
- [17:15]
Lawrence Calcano
Yeah, I think there's a big and we'll come back to this experience point. But we felt like firms that were independent really needed a technology chassis. They needed access to product, they needed education, diligence and they needed a technology platform. We felt like we could build that end to end. Not just the diligence or not just fund sales or whatever. It was the whole end to end solution. And we started to build that out and we realized that it was something that clients really needed. The other really interesting thing that we found out along the way, and I would say this was not a pivot as much as an expansion. We had assumed that the Wirehouses had absolutely everything they need because they knew every manager in the world. They had close relationships. What they didn't really have at the time was much technology. They had a lot of people who were doing a great job serving advisors, but they didn't have technology. And so we felt like we could offer them a full technology platform. And we basically sort of rethought our role, if you will, in the ecosystem, to be one where we were gonna serve advisors wherever and however they chose to practice. We wanted to be able to serve them end to end. And that's allowed us, I think, to be able to serve advisors at the Wirehouses, advisors who are RAAS or at IBDs, and really help create a great experience for them and for their clients.
- [18:44]
Barry Ritholtz
Coming up, we continue our conversation with Lawrence Calcano, CEO and chairman of iCapital, discussing how he built the firm out to a trillion dollar platform. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
- [19:07]
Apple Card Announcer
This message is brought to you by Apple Card. Apple Card is designed with your iPhone in mind, making it easy to get started and even easier to use. Apple Card is a no fee credit card you can apply for right from the Wallet app on your iPhone. Apple Card has no annual fee, no late fees, and no foreign transaction fees. No fees, period. Every credit card should be this easy. Get started in the Wallet app today. Subject to credit approval, variable APRs for Apple Card range from 17.49% to 27.74% based on creditworthiness rates as of January 1, 2026. Existing customers can view their variable APR in the Wallet app. Oracle card.apple.com Apple Card is issued by Goldman Sachs Bank USA, Salt Lake City Branch terms and more at applecard.com Support
- [19:50]
Public/Apple Card Sponsor Announcer
for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto, and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend small cap stocks with improving operating margins, or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by
- [20:44]
Barry Ritholtz
Public Holdings Brokerage Services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by ZeroHash Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com disclosures so there's a
- [21:03]
IBM Announcer
lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common questions, not noise Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM
- [21:34]
Barry Ritholtz
I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Lawrence Calcano. He is the chairman and Chief executive officer of iCapital, where he has been helping to build the firm since 2013. They now service over a trillion dollars in client assets on behalf of advisors and other professionals. So how should a traditional 60, 40 investor thinking about some allocation to private equity or private credit, how do they access your platform? Is it directly through their advisor? Tell us what the process is like.
- [22:19]
Lawrence Calcano
Yeah, it's really, it's very much an advisor business. We are very focused on helping financial advisors serve their clients. It's not a B2C model, it's a B2B2C model. And so really all the clients at iCapital are advisors, you know, and, or obviously the GPS that are trying to reach those advisors. And so for financial advisors, if they're large, we can build a whole white label capability for them so they can in effect have an operating system to run their alts structured investments or annuities business as well as the data aggregation that they have to do. For clients with information, that's everywhere. For advisors that are maybe a little smaller, that don't have sort of a persistent need, they can come to our marketplace and see a menu of hundreds of funds where they can avail themselves of those funds for their clients.
- [23:12]
Barry Ritholtz
Really, really interesting. So I like the description of iCapital as the world's alternative investment marketplace for advisors and wealth managers. When you joined in 2013, what problem were you trying to solve?
- [23:30]
Lawrence Calcano
Yeah, we were trying to help the advisors who had left, as I mentioned, left their, their homes to start off their new businesses. And we felt like we could actually create for them an investment platform to allow them to be able to service their clients consistent with how they had previously served them.
- [23:49]
Barry Ritholtz
So the part of the problem we've seen with alternatives over the years, they all seem to be a slightly different widget. They don't all fit on a platform easily. Especially you have to onboard the assets and align the capital with it. You have to go through subscription documents and capital calls and custodian and performance reporting and then all the analytics. They all seem to be a little different and it's a big lift. How have you addressed this issue at iCapital?
- [24:23]
Lawrence Calcano
So we think technology is essential to actually creating an experience that allows you to deal with all of those things effectively and in a way that will be encouraging to you to do the business with your clients where it makes sense. So everything from what happens before you make any decisions. Education, maybe you as an advisor on the asset class, maybe education for your client, the tools to help you build a portfolio, research to help you learn about funds and then once you've worked with the client and develop a portfolio perspective, tools to help you subscribe and then automation to help you manage all the things that happen post investment Capital calls, distribution, redemptions, transfers, reporting, et cetera, and help create an experience that as an advisor will give you time back to serve the client and spend time with the client. We feel very strongly about going through advisors because we feel like there's so much about a client that an advisor will know that a platform will never really be able to know what is their real feeling towards illiquidity. I think one of the issues the industry is dealing with today is the question of illiquidity and people's expectations about that. Advisors have a better perspective and a deeper perspective on how a client really feels about that. So we want to make sure we're partnered with advisors in bringing the solution to the problem.
- [25:49]
Barry Ritholtz
So I'm glad you brought that up because every time there's some issue with illiquidity, it seems that people don't seem to really understand what a lockup means. It should be fairly self explanatory. We saw this a couple of years ago with B REIT where. Which part of seven year lockup was confusing to you? It's always, and I know what happened in 2022, the Fed raised rates and people thought, hey, let's get out of illiquid real estate before. The marks reflect the reality of pricing relative to rates. But that's not how private investments work. How do you educate investors and their advisors as to what illiquidity means?
- [26:34]
Lawrence Calcano
So look, I think it is a journey. There's no one answer to that question. And by the way, we spend a ton of time and energy on education and, and as do most of the gps in our system. When you look at the documents around some of these funds, it isn't on page 98 in small print. The sort of liquidity rules, if you will, are on the front page. Right. So it's, you know, I think the reality is people want to hear what they want to hear. Right? These are illiquid securities, illiquid investments. Whether they're wrapped as a 3c7 private fund, which are clearly illiquid, or they're wrapped in an evergreen wrapper registered fund, the underlying investments are still illiquid. Now, some are shorter duration than others. Private credit is shorter duration than private equity or real estate. But the fact is that private credit investment is still an illiquid investment. The problem I think is when they get wrapped in a wrapper that says you can sell up to or Redeem up to 5%. That confuses people. It confuses people. And I think when the industry uses terms like semi liquid, it's really, I don't even know what that means. Semi liquid.
- [28:03]
Barry Ritholtz
I always think of that 5% gate as widows and orphans clause. If somebody is suddenly no longer a suitable investor for this due to the person who made the investment passed away, now the wife and kids can get out of it. It shouldn't be, oh, I could sell 5% a quarter for as long as I want.
- [28:23]
Lawrence Calcano
People should make these investments because they think they're going to provide medium to long term positive impact in their portfolio. If you're buying it to get return this quarter or next quarter, it's probably not the right investment. I'm not a financial advisor, but you need to buy these things with the right duration in your mind and that's not a short one. The products do provide what I think of as liquidity features, opportunities if things change in your life to potentially either redeem all of it if there's not a big queue, or Redeem up to 5% if you need to. I think that's a flexibility and a liquidity feature in the wrapper. But it doesn't mean that the product is liquid and people should invest thinking that these products are going to solve an investment need they have that's medium to long term, not short term.
- [29:22]
Barry Ritholtz
So let's talk a little bit about the demand for this product we've seen, at least on the institutional side flows into alts now exceeding a trillion dollars a year. As that scales, what do you think are some of the challenges and bottlenecks for advisors to allocate more to privates?
- [29:41]
Lawrence Calcano
So I think education is still a very important issue for advisors. And if you think about where we are, a lot of the advisors in the mix have been doing it for a while. There are still a lot of advisors who haven't really gotten into these products yet. And so they're going to need more education. Point one, point two, how they invest is probably going to be different. So for example, a lot of advisors use models with respect to their liquid portfolios. We believe that models will be a very important way in which people invest in alternatives. And that might mean models of just alternatives that get married to an otherwise liquid portfolio or models that include both liquid and illiquid investments. Together we have brought both those types of products in partnerships with some managers into the market as well as partnerships with the infrastructure players. But I think models will represent an important way in which advisors allocate client assets to alternatives.
- [30:45]
Barry Ritholtz
So I've been hearing more and more about interest overseas in a global alternative platform. What do you think Is driving the demand internationally versus what's driving the demand here Is the same thing or is it a sort of different approach?
- [31:00]
Lawrence Calcano
I think it's the same thing. The adoption's a little bit behind the US adoption. On our platform in the alt space, we have over $65 billion of alternatives allocated from investors who live outside of the United States. Half of our 20 offices are outside the United States. We think it's a really important growth area for the market and our business. But I think a lot of the same things that drive advisors to introduce these products to clients, potential for incremental return, portfolio diversification, et cetera, are the same types of things that drive international interest as well.
- [31:39]
Barry Ritholtz
Let's talk a little bit about end to end technology. I know this is more than just a menu of alternative funds. Tell us a little bit about your whole tech stack and what it provides for any of your clients.
- [31:54]
Lawrence Calcano
I think a lot of what people want help with out of the gate is just how do you build these portfolios? We talked about education, but how do you build the portfolio? How do you construct portfolios that help match what a client's goals and objectives are? So we've built technology to do that, which include all structured investments, annuities, along with all the liquid products that they might need. And then the ability. One of the things we've tried to do as an organization is not only build an end to end solution out for alts, but do the same thing for structured investments, because those are important products for advisors and clients as well as annuities and insurance. And what's happening in the market today, which I think is a really interesting and ongoing trend, is people are sort of looking at the different types of wrappers. They could be ETF wrappers, insurance wrappers, et cetera, wrapped around things like hedge funds or private equity funds, credit funds, et cetera. And so being able to help advisors think about how the products should be structured, how could they address client needs, is a really important part of what we're doing. And then as I mentioned earlier, just being able to automate the whole workflow is really critical. I'll make one other point as it relates to tech, and that is, I think one of the issues for the industry is, is around data management. When you think about we live in an ecosystem. When we first started the company, people used to say to me, oh, you guys are so disruptive. And I would always sort of very politely correct them and say, we're not trying to be disruptive, we're trying to be Enabling. There are a lot of infrastructure players out there that we're trying to help sort of achieve their goals. We're not trying to like Amazon did to Borders. We're not trying to push them out of business. We're trying to enable them to participate. And I think one of the things that has to happen now in the industry is all the different big constituents have to work together to help support clients. That means administrators, transfer agents, custodians, firms like iCapital Advisors, GPS. We all work together. And I think if we can get all of our systems to be better connected, things like tokenization and blockchain will help with that. It'll end up paying huge dividends for the advisor and for the end client.
- [34:18]
Barry Ritholtz
So it's funny you mentioned disruptive in 2013. There was nothing to disrupt. It was just a series of private offerings and nothing really. No umbrella, no platform that really pulled everything together.
- [34:34]
Lawrence Calcano
That's right. It was really a green field, which is why I say we're sort of enabling, not disruptive. And the truth is that we're still scratching the surface. I mean, BCG does a report every year and they look at global wealth. So last year, late in December, they put out a report that said there's $153 trillion in wealth owned by individuals. Okay, that's a huge number. It rivals the size of the institutional market. So there is a massive number of dollars that Today in the US I think the estimates are something like 2, 2.5% allocated to ALTS. Outside the United States, it's even less. There's a significant amount of wealth that is going to be, look, looking to build even more sophisticated portfolios. So tools, technology, AI, tokenization, all of these things have to evolve to create a great experience for advisors and clients to make the best decisions they can in the asset allocation world.
- [35:36]
Barry Ritholtz
Really interesting. So let's stay with technology and innovation. You guys have built a number of fairly innovative technologies. You've bought, you've partnered. What is the calculus like? How do you decide whether you're going to buy something, build something, or just partner with a provider in the space to build out the platform?
- [35:57]
Lawrence Calcano
It's a combination of things. It's time to market it's culture. Everything that we have purchased, we've made 24 acquisitions. Everything that we've purchased, we've integrated. And to me, that's really important because. Because if the goal is to provide an integrated solution for advisors and tps, if you don't integrate the things you buy, you're not really Doing that. Point one and point two, if the people who join aren't integrated, then it doesn't work either. It's not just about technology. It's actually more about the people. And so spending a lot of time on culture and trying to figure out how do you bring things together, how do you create what I often refer to as one eye? Capital is really critical. And I would say as time has evolved, I was always very focused on culture from the very start, when we were a couple of people. It's even more important than ever, and it probably continues to occupy a very significant percentage of my time in trying to get people working together, put people in the right seats for them to be successful, and creating simple ideas that people can rally around. I mentioned this earlier. Clients come first. What is it we need to do to help our clients succeed? And everything we do, we have to do together. Those two things are really unifying to our culture.
- [37:26]
Barry Ritholtz
So you guys did a big capital raise in 2025 that valued you at a pretty substantial multibillion dollar level. What are you looking at for further raises? How are you deploying that sort of capital? Is it just build, build, build, and eventually you become the biggest player in the space?
- [37:47]
Lawrence Calcano
So we've announced a couple of acquisitions since then. We're about to close our acquisition of Heckscher. Heckscher provides an E app for annuities. So as I mentioned before, the complete verticals. So that helps us complete our annuities vertical. So M and A will continue to be important sort of use of cash, and we continue to sort of actively look at what's out there. We continue to grow organically, but the model is self financing, so we don't need outside capital to run our business. I'm a believer, though, when you think about, we talked about the duration of these assets. When we talk to financial advisors, financial advisors have to know that we're financed to be around for a long time. And so we've tried to finance ourselves in a way that our partners can look at us and say they're going to be here to support me. And so a lot of it is just making sure we have a strong balance sheet to support our clients.
- [38:43]
Barry Ritholtz
It's always interesting when we see these big private entities go public in the alternative and private space. How do you think about that? How do you think about the Blackstones and Carlyle's of the world and Apollos and whoever else?
- [39:02]
Lawrence Calcano
Well, look, I think going public allows firms to have access to capital, to have growth, leverage their growth, provide secondary markets if you will, for employees and other investors. I think for us, we spend very little time actually thinking about that other than wanting to make sure we run the company with the discipline of a public company. We get our quarterly reports turned around, our monthly reports by the second day of every month, quarterly reports by the third day of the new quarter. And we turn the year end results in a fair period of time as well. And so the process of being public creates some disciplines that we want to make sure we have, but it's not something we're that focused on. There's two sides to every coin. When you go public and the stock is going up, everyone's really excited and everyone's really happy. When you go public and you have massive corrections, which we live through pretty regularly, I'd say, and the stock goes down now you've got to deal with the opposite of motivation. There's concern and so forth. And so you've got to make sure your employees aren't staring at the. I was going to say quotren, but only you and I would know what that means.
- [40:30]
Barry Ritholtz
You know, it's so funny. I had a buddy whose firm got bought by Yahoo in 96 and he was telling me, in 99, people just refreshing the screen constantly, that's all they did.
- [40:41]
Lawrence Calcano
I think there's an element to it that's super unproductive. So that's why we're in no rush to do that. We want to make sure, as I said, we have a strong balance sheet, strong capital structure. Equity is an important part of our compensation for everybody. 100% of the employees have stock at iCapital. To me, that's a big cultural point in terms of bringing people together. But you need to, if you're going to provide that as part of someone's compensation, there needs to be some opportunity for people to get some liquidity. So over our history, we've provided four such opportunities for people to get a little liquidity. And as long as we stay private, we'll continue to try to find a way. It's limited, of course, but we try to find a way for people to get some liquidity from their equity hold.
- [41:29]
Barry Ritholtz
Really interesting. Coming up, we continue our conversation with Lawrence Calcano, CEO and chairman of iCapital, discussing how he built the firm out to a trillion dollar platform. I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.
- [41:55]
Public/Apple Card Sponsor Announcer
Support for the show comes from public. Public is an investing platform that offers access to stocks, options, bonds and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend small cap stocks with improving operating margins or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by
- [42:49]
Barry Ritholtz
Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC registered advisor crypto services by ZeroHash sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com disclosures so there's a
- [43:08]
IBM Announcer
lot of noise about AI. But time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a Global workforce of 300,000 can use AI to fill their HR questions. Resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [43:37]
Cigna Healthcare/Okta/4imprint Announcer
IBM for many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around material masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.
- [44:11]
Barry Ritholtz
I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Lawrence Calcano. He is the chairman and Chief Executive Officer of I Capital, where he has been helping to build the firm since 2013. They now service over $1 trillion in client assets on behalf of advisors and other professionals. So so let's talk about what's going on today. Obviously, alts have been very hot for the past 10 years or so, increasingly so they've been in the news for other reasons the past few months. But let's talk about the underlying structural shift before we get to any of the noisy stuff that's going on. How are advisors and individuals changing the way they access alternative structured investments, annuities, any of the products on your platform?
- [45:09]
Lawrence Calcano
Sure. So I think for the, if I can maybe make some divisions by wealth, the wealthier clients have tended to buy the private funds. Perhaps they'll invest either directly if they can make a $20 million investment, or if not, if they're a million, 5 million or whatever, they usually come through a vehicle that we'll set up for them to access and then we aggregate that capital and we look like one large investor to the institution, to the gp. So the wealthier clients tend to invest through those private vehicles across the board. And we think from a platform perspective, the way you've got to build these portfolios, if you have a credit in equity portfolio, debt and equity portfolio, and you want to build them or rebalance them, you can do that with a few mouse clicks. With all, if you target an allocation, it's 10 or 15 or 20%, you've got to build that. So it's really important.
- [46:07]
Barry Ritholtz
That takes time. In other words, it takes time.
- [46:09]
Lawrence Calcano
You need to make sure that you have sort of persistent access to quality product across all the strategies. So equity, credit, real estate, infrastructure, et cetera, hedge funds. And so our platform tries to provide that. But that wealthy individual will probably use private funds to build it for the accredited investor. They'll probably use the registered funds to be able to build that. And they will either buy individual registered funds or they might buy registered funds wrapped together. That's something that we're seeing a lot of the market do today, where they'll wrap three or four or five different funds together to give people an exposure to. Maybe it's equity, maybe it's a growth oriented product where there's sort of a buyout, a growth, a venture kind of component. Or maybe it's an income oriented product where you've got credit and real estate, or maybe it's multi asset where you've got all of that sort of wrapped together. We think there's lots of different ways every individual has a different set of needs and objectives. And so we think it's really important that there's a lot of flexibility in the system so people can allocate precisely what's important to a given client.
- [47:21]
Barry Ritholtz
So what you're describing sounds fundamentally different from how portfolios used to be constructed. How significant are These changes compared to, I won't Even mention the 90s, but the 2010s.
- [47:36]
Lawrence Calcano
I think what's happened, which is a good thing, is clients have access to more products to potentially meet their needs. Doesn't mean these products, by the way, are right for everybody. They're probably not right for a lot of people. But for those that have the ability to make these investments, the willingness to tolerate the illiquidity we talked about before, these products provide more opportunities to build the right portfolio. You think about the public markets. I mean, you spent a lot of time thinking about them. I know There are probably 150,000 private companies with sort of EBITDA or revenue revenues greater than $100 million. And there are 5,000, 4,000 public companies. The private markets are so much larger than the public markets. As you know, the public markets are increasingly dominated by a small number of stocks. And so accessing the private markets gives you access to a much broader set of possible investments. Again, not right for everybody. But for those who are looking to build more involved portfolios, there's an opportunity that the private markets enable you to pursue that you just don't get by buying just stocks and bonds.
- [48:55]
Barry Ritholtz
So that's one compelling reason you can access companies you wouldn't get otherwise. What are some of the sell us on the other reasons? Why else should an investor or an advisor who is alt curious, why should they explore this space?
- [49:12]
Lawrence Calcano
Well, look, I, I'm decidedly not trying to sell anybody on anything, to be clear. But I think, you know, it's like anything else in life, you know, when we're all better off and we have some more choices. Now, by the way, there's a way in which those choices can be bucketed to make it easier for you to go through that decision making process. But I think if you have more choices to build on portfolio where you're seeking longer dated returns, you're seeking more portfolio diversification. These products provide you with more flexibility to create a diverse portfolio, potentially have a higher returning portfolio. But ultimately every person's got to make a decision that they can live with the products.
- [49:58]
Barry Ritholtz
During the 2010s, we had 0% interest rate, ZIRP and QE and all that fund fed stuff. And I think that's where private credit really caught the attention of a lot of investors and a lot of advisors. What do you mean? My bond portfolio is yielding 3% when, all right, you're trading off a little liquidity and you get 5, 6, 7, 8%. That's pretty attractive relative to the Alternatives, okay, you got to deal with the K1, which nobody likes, but still
- [50:31]
Lawrence Calcano
your
- [50:32]
Barry Ritholtz
accountant will deal with it for double the yield you're getting in traditional Treasuries or corporates. How has that moved from just straight up credit to private infrastructure, private equity, private real estate? It seems like that whole world has opened up dramatically.
- [50:54]
Lawrence Calcano
It has. And I would say that a lot of the private credit investments you could look at are floating rate. And so they still can provide opportunities for excess return. Real alpha, because of the way they float. In fact, it was interesting in the early part of the century, coming out of COVID this decade, you had people to your point, very actively buying private credit. And then when interest rates went up to like 5%, some people are earning like 10 to 12% on their private credit investments. And so they were then looking not about private credit versus public credit, they were looking at private credit at 10 or 12% versus private equity. And it being shorter duration, was that the right mix for them? And then right now we're seeing a lot more people focusing on equity as well. But you definitely had a period of time where private credit was very, very attractive. And I think where we sit today, I think a lot of people are very anxious to understand what the underlying credit quality is in these products. And I think there's certainly disruptive forces from AI that we've talked about, the industry talks about every single day. It's not clear to me that the existing portfolios are really in bad shape. I actually think the portfolios are likely in better shape than people think. I've spent a lot of time trying to talk to various managers of both equity and credit as to what they're seeing in terms of adoption. And while everybody is working on how to implement AI, it's not like existing software vendors are seeing their businesses dry up. That's not happening. A lot of those are the bottom borrowers of these private credit assets. So we'll need to get more information over the next several quarters on where we are with private credit. But my guess is the portfolios are in a lot better shape than people think.
- [52:59]
Barry Ritholtz
So we could talk about navigating some of the headlines, but you mentioned AI, and now I'm legally obligated to ask you a question. What are the most meaningful near term applications of artificial intelligence within the alternative space? Is it administration and workflow? Is it identifying better or less great funds? Is it all of the back Office? How is iCapital using AI in your business?
- [53:30]
Lawrence Calcano
We're actually, we have pilots going on across what we do. So if you take our tech stack, there are really two ways to think about it. One of which is the tech we use to empower clients and the technology that clients engage with. And the second is the technology we use to run our business. And there are big applications in both and to give a couple of applications. When a manager comes to iCapital to raise a fund, we sort of build a subdoc. AI can build that subdoc for us very, very quickly. When a client comes to the site and wants to, they come to our marketplace and they want to describe to us what they're interested in and they hit toggles, et cetera. They go through a few steps to kind of inform us what they're interested in. AI can do that really, really quickly. There are a number of ways. The way we collect data, one of the services we provide to clients is we help advisors aggregate client data because a client might have held away data in lots of different places that you want to aggregate so you can present a holistic picture to your client. How we get that data, how we retrieve the data, how we extract data from documents and then how we reassemble. AI can help drive a lot of that. So the applications of AI are sort of significant across our entire platform. Yeah.
- [54:57]
Barry Ritholtz
Really, really interesting. And we've been dancing around some of the negative headlines. How are you helping advisors navigate that these days? For the most part, it's a relatively small handful of companies. Everybody knows their names, but the cockroach theory has people waiting for the next GFC to unroll. We haven't really seen much like that.
- [55:21]
Lawrence Calcano
Well, I think think this is such a smaller magnitude than the tfc. I don't think that we're anywhere near those types of concerns. We're big believers in communications. I made a point earlier about how the ecosystem needs to work together. It really needs to work together now in terms of helping people understand what's happening. I think generally speaking that the industry, and when I say the industry, I mean the asset management industry has to be even more transparent today than ever before. And I think, by the way, that's a good thing going forward. I think the alternative asset managers probably need to be more disclosive, more transparent to clients over time. But I think being out in front of clients, helping them understand the landscape and what's going on has been a big part of how we. We've spent a lot of time and one of the things we're doing now is trying to organize the industry to get people on the GP side. Working together. I talked about transparency, getting information, educational material, not promotional material, but educational material to try to help create again a better and deeper level of understanding about these products.
- [56:39]
Barry Ritholtz
So I've been hearing a little bit about convergence lately between public and private markets. You're known as dealing with the private side. Do you ever see a day where private and public both ends up on your platform completely full wallet, share, etc.
- [56:58]
Lawrence Calcano
I think for us, you know, we're really focused on helping people have very successful journeys with their private investments, their structured notes, annuities, et cetera. And so I think the way in which we will interact with the public markets will be more around these model portfolios I talked about and collaborating and partnering with the GPS and other more the public company people who either provide models or have public investments and helping to create these model packages for investors to be able to invest holistically in a portfolio. I think think that's probably how we'll play the public space in partnership and in concert with people who are experts in that area.
- [57:44]
Barry Ritholtz
Makes a lot of sense. Last question before our speed round. Given all these major technological shifts, what do you think is going to help redefine asset management going forward? We talked about, you mentioned tokenization. We hear about blockchain, AI, data analytics. What's the next big thing, by the way?
- [58:02]
Lawrence Calcano
I think the next biggest thing is the deep implementation of those technologies. We're still scratching the surface. Tokenization hasn't even hit private markets in any meaningful way yet. AI, same. So I think there is significant application of those technologies that will be meaningful and I think really for the financial advisors. This reminds me 10 years ago when all the robos were coming out and there was this big debate, robo advisors versus human advisors. And I always thought that was a false choice. I always thought the best answer for clients was a great financial advisor who leveraged technology to create an incredible experience for their clients. And I think the same is true today. The best financial advisors are, are going to not be afraid of technology. They're going to adopt it and they're going to embrace it to create an incredible client experience. And that's sort of how I think the market will evolve in a constructive and positive way.
- [59:06]
Barry Ritholtz
All right, so let's jump into our speed round. These are really just quick answers so people kind of get a flavor of who you are. Starting with who are your mentors who help shape your career.
- [59:18]
Lawrence Calcano
I had a lot of mentors growing up and I think I always tried to watch people and see what they did there. Were several senior people at Goldman Sachs that I learned things from. I remember the head of investment banking once told me when I was a young associate, he said, the loneliest job on the planet is the CEO's job. So if you want to be a successful investment banker, make a friend of the CEO and be a sounding board and you'll have a good career. That was pretty good advice. But I remember the other piece of advice I got from another senior partner in banking was you always have to be intellectually honest. And a lot of people are afraid to be intellectually honest because they're calculating what's happening in the room versus being true to what you think and saying it and not being afraid to do that. And I've tried to, to really do that in all the things that I've done as I've grown in my career.
- [60:18]
Barry Ritholtz
Really, really interesting. What are you reading these days? What are some of your favorite books?
- [60:22]
Lawrence Calcano
I'm overwhelmed with work reading right now. Between what we're doing in our business and client stuff. I'm reading a lot of stuff on AI that, if I were to admit the honest thing is I keep reading new AI books about, you know, AI and technology, AI in general. There are a lot of incredibly positive things about AI. There are a lot of risks with AI. And a couple of the books I've read recently were really focusing on the risks around unemployment, around control and governance. And when you get to natural intelligence, when AI reaches sort of human intelligence, what happens then? So there's a really exciting and bright side and there's really a dark side that's gonna need a lot of governance to protect all of us.
- [61:13]
Barry Ritholtz
A lot of guardrails. So if you don't have time to read, you have time to listen to podcasts or watch anything. What are you streaming?
- [61:20]
Lawrence Calcano
One of the so that I'm married 33 years.
- [61:23]
Barry Ritholtz
Same.
- [61:24]
Lawrence Calcano
And honestly, my wife and I are just binge watching a series of shows. We've gone through the whole Yellowstone saga, the prequel.
- [61:33]
Barry Ritholtz
Did you get to Landman yet?
- [61:34]
Lawrence Calcano
Finished Landman. Love Landman. Looking forward to watching the Peaky Blinders movie, which we haven't seen, but probably, you know, when I get home, when I'm sort of when I put the work down, my wife and I tend to watch shows together.
- [61:48]
Barry Ritholtz
That sounds fun. Our final two questions. What sort of advice would you give to a recent college grad interested in a career in alternatives or investing?
- [61:59]
Lawrence Calcano
I would say the world owes you nothing. This is, by the way, what I have several kids who have graduated college and what I said to them, and I'd say to anyone at iCapital, generally, the world owes you nothing. And what you get in this life is a function of what you work for. And I think that people need to be flexible. They need to have an open attitude. And that to me, at a given level of intelligence, that's what attitude makes the difference. It's funny, we all went through this work from home during COVID and now some people want to continue to work remotely. And when you asked about mentors, a lot of the mentorship that I got, probably a lot of people got, was just being in the office, watching people, listening to people. How do they act, how do they treat other people? You know, how do they behave in meetings? Like that stuff. That's super valuable. Osmosis learning you don't get when you're sitting in your apartment on a zoom screen. Zoom screen is one dimensional. Life is multi dimensional. And so I'm a huge. Some people in the company love this, some people don't. But I'm a huge work from the office person because I believe that that multidimensional experience is much more powerful and it's better for every individual from a learning perspective.
- [63:25]
Barry Ritholtz
Yeah, I couldn't agree more. Although I do love those Fridays from home. No doubt. And final question. What do you know about the world of alternatives? And investing in technology today might have been useful back in the mid-1980s when you were first just getting started.
- [63:45]
Lawrence Calcano
I think probably I'll generalize that a little bit, is patience. You know, I was sort of young and just, you know, hard charging and so forth. And as a lot of us are, but you just, you have to be patient. You know, it's funny, we sponsor golfers and I watch golf, I love golf. And you see people, they bogey holes. Jon Rahm won the Masters a few years ago. He double bogeyed the first hole. I remember I was standing there watching it and I was like, it's over. It wasn't over. It was one hole. And it reminds me, my youngest daughter graduated at Dartmouth a few years ago, and Roger Federer was the speaker.
- [64:26]
Barry Ritholtz
I recall that speech, and it was really amazing coming from him.
- [64:32]
Lawrence Calcano
It was an amazing speech. And one of the things he said is, in his career, he's won. I may get the numbers slightly off 80% of his matches and 54% of his points. And his point was, it's just a point.
- [64:48]
Barry Ritholtz
Right?
- [64:49]
Lawrence Calcano
You know, and I think that's a huge lesson. It's just a point. It happened. You lost it you won it, you lost it, you move on. I think that's great advice and advice I wish I had had when I was younger.
- [65:00]
Barry Ritholtz
Lawrence, this has been absolutely fabulous. Thank you for being so generous with your time. We have been speaking with Lawrence Calcano, CEO and chairman of iCapital. If you enjoy this conversation, well, check out any of the 650 we've done over the past 12 years. You can find those at itunes, Apple, Spotify, Bloomberg, wherever you get your favorite podcasts. I would be remiss if I didn't thank the crack team that helps put these conversations together each week. Alexis Normal is my video producer. Sean Russo is my researcher. Anna Luke is my podcast producer. I'm Barry Ritholtz. You've been watching Masters in Business on Bloomberg Radio.
- [65:49]
Cincinnati Insurance Announcer
If you follow markets, you know the value of long term thinking. You plan, you diversify. You prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments. With expertise, personal attention and independent agents who focus on relationships, not transactions, the Cincinnati Insurance companies let them make your bad day better. Find an agent at Cin Fin
- [66:25]
Lawrence Calcano
these
- [66:25]
Cigna Healthcare/Okta/4imprint Announcer
days it seems like AI agents are just about everywhere you turn, every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agents identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta you turn risk into opportunity. Secure every agent. Secure any agent. Okta secures AI A business gift should do more than check a box. It should reflect your brand and show someone they're appreciated, recognized and truly seen. 4imprint offers thousands of high quality customizable products like premium apparel, drinkware, tech and more, making it easy to create a gift that feels meaningful and on brand. And with 4imprint's expert support and their 360 degree guarantee, you can be 4imprint certain your order will arrive exactly as intended. Explore gifting with confidence@4imprint.com for Imprint for certain.