KBS Growth & Income REIT Increases Minimum Investment Amount to $25,000

KBS Growth & Income REIT Increases Minimum Investment Amount to $25,000

NEWPORT BEACH, Calif. (November 5, 2018) – KBS Growth & Income REIT announced that its Board of Directors has approved an increase in the initial minimum investment in its ongoing private offering. The minimum initial investment for its offering will increase to $25,000 from $10,000, effective November 15, 2018. Investors who subscribe and invest before November 15, 2018 may invest at the $10,000 minimum amount.

“KBS is one of the first sponsors to offer a direct-access institutional quality real estate fund without any upfront fees or commissions and seeks to maintain high standards aligned with investor interests,” said KBS Chief Executive Officer Chuck Schreiber. “We believe that by offering investors direct access to monthly distributions and potential NAV growth through high-quality, diversified multi-tenant real estate opportunities, KBS Growth and Income REIT delivers a compelling offering that is unique in the marketplace.”

“Since Q4 2017, KBS is now making shares of KBS Growth and Income REIT available to accredited investors for direct purchase through KBSdirect.com,” said Lew Feldman, President of KBS Direct. “KBS Direct provides a convenient online process for accredited investors to participate in commercial real estate investments on par with large institutional investors. KBS Direct empowers the individual investor and its advisor to invest in institutional quality, professionally-managed, income-producing commercial real estate assets just as public pensions, sovereign wealth funds and large financial institutions enjoy.”

KBS is one of the largest owners of institutional quality commercial property in the U.S. and presently has over $11.4 billion in assets under management with a total transactional volume exceeding $38 billion. The KBS Growth & Income Fund is well established with assets in four major U.S. markets, Portland, Houston, Chicago and Orange County, Calif.

With as little as a $25,000 investment, investors can gain access to quality assets managed by the 8th largest office building owner in the world. Assets within the KBS Growth and Income REIT have been carefully vetted by KBS professionals with decades of commercial real estate experience in key markets across the country.

The increased minimum initial investment is for subscription agreements signed and submitted after November 15, 2018. All related documents and funds for an investment must be received by KBS no later than November 30, 2018 to process an investment at the initial minimum investment amount of $10,000. Once an investor has satisfied the minimum purchase requirement as of the date of initial investment, any additional purchase may be in the amount of $2,500 or more.

Investors can visit www.KBSDirect.com for more information on KBS, the KBS Growth & Income REIT and the underlying office building assets in the REIT. Investors can gain direct access to these institutional quality assets via KBSDirect.com.


About KBS Direct
KBSDirect.com is an online portal that empowers accredited investors to invest directly in professionally managed, institutional-quality real estate portfolios, offering access similar to that available to KBS’s institutional investors and partners. KBSDirect.com’s first direct share offering is KBS Growth & Income REIT, a $1.0 billion offering conducted under Rule 506(c) of Regulation D. Investors pay no up-front sales commissions and investors’ funds go directly into the REIT. KBS Growth & Income REIT is sponsored by KBS, which was ranked by National Real Estate Investor as the 8th largest commercial real estate company in the United States. (**The ranking by National Real Estate Investor is based on volume of office space owned globally, as of December 31, 2017. The results were generated from a survey conducted by National Real Estate Investor based on a combination of advertising and website promotion of the survey, direct solicitation of responses from participants, direct email to National Real Estate Investor subscribers and other identified office owners and daily newsletter promotion of the survey, all supplemented with a review of public company SEC filings.)




KBS Growth & Income REIT may fund distributions from any source including, without limitation, from offering proceeds or borrowings. Distributions paid to date have been funded in part with cash flow from operating activities, debt financing, including advances from KBS Growth & Income REIT’s advisor and cash available as a result of the deferral of the asset management fee by KBS Growth & Income REIT’s advisor. There are no guarantees that KBS Growth & Income REIT will continue to pay distributions.

KBS Holdings LLC intends to sponsor a public offering pursuant to Regulation A under the Securities Act of 1933, as amended. No money or other consideration is being solicited at this time with respect to such offering, and if sent in response to these materials for such an offering, it will not be accepted. No offer to buy securities can be accepted and no part of the purchase price can be received for an offering under Regulation A until an offering statement is qualified by the U. S. Securities and Exchange Commission, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. An indication of interest made by a prospective investor in a Regulation A offering is non-binding and involves no obligation or commitment of any kind. Securities Offered Through North Capital Private Securities, Member FINRA/SIPC.

captrust E-east

Did you know that you can invest in real estate of your choice using your IRA account?

There are many investors who are unaware that they can invest into alternative investments, of their choice, using their Individual Retirement Account (IRA) investment dollars.  

Numerous sophisticated investors want to invest into alternative investments (such as individual real estate assets, REITs, private equity, etc.) in their IRA accounts but are limited from doing so because these investments are not available or offered on their financial advisors’ platforms. For investors who want to deploy their IRA capital into real estate and real estate alternative investments of their choosing and selection, an option for them is to open a Self-Directed IRA Account, outside of their traditional brokerage advisory account. 

What is a Self-Directed IRA Account?

A self-directed IRA account (SDIRA) is an account that allows the investor/account holder to invest into many types of assets and funds, including alternative investments selected (SELF-DIRECTED) by the investor.  SDIRA accounts are provided by Trust Companies who act as custodians for IRA accounts, the same way traditional brokerage firms custody their IRA accounts.    The account owner chooses the investments that they are interested in funding, and then the Trust Company processes the investment as custodian.  The benefits of using a SDIRA to make investments into real estate and real estate alternative investments is that in most cases, private real estate investments and REITs, are not available to investors via traditional brokerage firms and advisors because those firms do not want to deal with the processing of alternative investments, private funds, nor specific assets like a single office building.

Benefits of investing into Real Estate using an SDIRA

The concept of investing in real estate and using alternative investments, selected by the investor/account holder, in your Self-Directed IRA could be a new idea to many. The benefits of using a traditional IRA held at brokerage firm, and a SDIRA, are the same from a tax perspective. The big difference being the ability of the account holder to select investments that are typically not offered, nor serviced, at traditional brokerage firms. There are a number of benefits to investing into real estate via an IRA:

  • Real estate investments may be used as an ‘alternative’ to traditional investments that are typically listed and traded on an exchange.
  • Real estate alternative investments are not traded on exchanges, and thus the volatility of the capital markets typically does not play a short-term role in the valuation of a real estate asset or real estate alternative investment. 
  • Real estate income in Traditional IRAs is not taxed until the assets are withdrawn. 
  • Real estate assets are typically held for many years to attempt to achieve both income from the real estate assets and potential for gains from asset appreciation. The income and potential gains are not taxed until the assets are withdrawn from the IRA, thus allowing the cash flow to accumulate or compound over the long run in a tax advantaged manner.  (This is similar to a traditional IRA held at a brokerage firm, the difference being that the investment that the investors has selected, cannot be purchased in a traditional IRA held a traditional brokerage or advisory firm.

Investing in Real Estate for yield and growth using a Self-Directed IRA

Everyone has different investment goals and strategies for their risk/return profile.  Many investors and allocators have two buckets for investment allocations to real estate.

  1. Yield and income:  target yield and return: 7%-10%
  2. Growth, Value-Add, Development: target IRR +15%

Yield bucket:

For a yield alternative to publicly traded fixed income instruments (bonds, preferred stocks, MLPs, mortgages, etc.) where rates and yields are relatively low, some sophisticated investors make investment allocations for their SDIRA into high-quality, stabilized real estate where the cash flow from the buildings, meets their investment targets and goals for current income.  Real Estate Sponsor choice is just as important as choosing the region and specific asset.  You may make a well thought out investment into a type of commercial real estate (Office, Multi-Family, Retail, etc.), in a good region, but the sponsor/asset manager should be a firm with an extensive track record of performance.

The two types of alternative investments that investors typically consider for the ‘Yield Bucket’ are:

  1. Private REITs with institutional quality buildings with existing cash flow, managed by an institutional quality sponsor. 
  2. Credit funds that lend to specific office and multi-family properties. These properties tend to be of lesser quality than the institutional quality office properties in several institutional-quality REITs, and carry higher yields, as expected given the higher risk profile.

The ‘higher return target Growth bucket’:

  1. Direct investment into a specific CRE project that does not have current cash flow but the expectation of a higher return when the project is developed and comes online.
    1. Development projects
    2. Significant value-add projects
  2. Direct investment into a specific loan on a property that does not have current cash flow but will hopefully reach the goals of the sponsor to pay off the loan and pay the interest on that loan.

So, what is a Do-It-Yourself investor to do?


The business of Self-Directed IRA custody and administration is a relatively large industry, although not well known compared to traditional brokerage firms and their custody services.   The reason for this is:

  • Financial advisors and brokerage firms, in most cases, are limited in what products they can offer to clients and only offer products available and approved on the firm’s platform.
  • Often these products are marketed and sold with a commission and / or fee built into the transaction to compensate the advisor and firm for the advice, recommendation, and execution of the transaction.



Educational resource for how to use a SD-IRA for investments into Real Estate:

There are significant participants in the SDIRA industry providing the service of custodian for a large number of alternative investments. Many of these SDIRA firms have extensive educational information available to investors to learn how to use their IRA dollars for investments into real estate and real estate alternative investment products.  The article link below provides additional info on Self-Directed IRAs.

Self-Directed IRA’s:Just the Facts…



KBS Direct makes no representations as to the appropriateness of an investment in KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with their own advisors and counsel before making an investment in the REIT’s shares.  This is not an offer to sell securities. Offers to sell, or the solicitations of offers to buy, any security can only be made through a private placement memorandum and other official offering documents that contain important information about risks, fees and expenses.


Self-Directed IRAs: Just the Facts

Real estate alternative investments are an increasingly popular element of diverse retirement portfolios. For some investors, it can make sense to include real estate in a retirement portfolio by holding the property in a self-directed IRA.

While the rules governing real estate held in IRAs can be strict, there are a number of benefits to keeping real estate in an IRA:

  • Real estate can be used to generate rental income, and rents can be raised over time to keep pace with the market. Likewise, rising prices can increase the resale value of real estate. That real estate income has tax-advantaged growth potential of its own when held in an IRA.
  • Real estate income in Traditional IRAs is not taxed until the assets are withdrawn. Assets withdrawn from Roth IRAs are tax-free.
  • Real estate investments are typically not correlated with fixed-income or equity investments, and can provide a hedge against inflation.

Here’s what you need to know about using real estate as an IRA investment and the rules for investing.

What types of real estate can investors buy in a self-directed IRA?

Self-directed IRAs can be used to hold a wide range of real estate investments, including raw land, single- and multi-family rental properties, commercial properties, private funds and real estate development companies.

What are the rules for investing?

The idea with any asset in a self-directed IRA is that the account is earmarked for your retirement. As such, there are rules to keep you from accessing any current benefit from the real estate asset.

To ensure that a real estate IRA remains qualified and its assets stay tax-deferred, IRS rules restrict certain transactions:

  • No personal use or use by certain relatives. Although the IRA is in your name, and the property within the account is for your ultimate retirement benefit, you can’t receive any current direct or indirect benefit from any asset held in your IRA. In terms of the property, you can’t live in it, vacation in it, use it or get any indirect benefits from it, like payment for managing it—and neither can any “disqualified person” as defined by the IRS.
  • Investors can’t work on the property. You must pay an independent person to maintain and repair it.
  • Investors can’t use a mortgage to purchase the property. Non-recourse loans (in which a lender’s only recourse for non-payment is recovery of the collateralized asset used to secure the loan), however, are allowed.
  • The IRA must pay all expenses related to the property. Investors must be sure there are enough funds held in the IRA to cover potential major capital expenditures as well as ordinary maintenance costs and property taxes. Don’t pay expenses with your personal funds.
  • If the property operates at a loss, investors cannot claim the losses on their tax return, nor can they claim any depreciation.
  • Investors who hold real estate in traditional IRAs must take required minimum distributions (RMDs) beginning at age 70½ and should make sure the IRA holds sufficient liquid assets, beyond the value of any real estate held within it, to cover those withdrawals.

How does the investment process work?

Work with experienced professionals to help you choose the right property:

  • Realtors can help identify investment properties.
  • Lenders can help with non-recourse loans.
  • Financial advisors and accountants can prepare a cash flow analysis to help predict the potential return on investment.

Select a knowledgeable service provider:

  • Investors should use a custodian that specializes in the custody and administration of non-publicly traded investments, such as real estate, to handle real estate transactions within an IRA.
  • The custodian can help set up the right accounts when you’re ready and will also report deposits, withdrawals and balances to the IRS.

An experienced custodian can help streamline the process of investing in real estate in a self-directed IRA as investors work to build a diversified multi-asset portfolio to help achieve financial goals.

For additional information, see IRC Section 4975 and Millennium’s Guide to Holding Real Estate in Your Retirement Account.

A special thank you to Millennium Alternative Investment Network® (MAIN)® for providing this insightful article.  Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.


Striving to Achieve REIT Investment Performance Through Refinement

October 7, 2018

Striving to Achieve REIT Investment Performance Through Refinement

Developing and executing a real estate investment strategy requires a delicate balance of skill, experience and timing. Newport Beach, CA-based KBS is a real estate investment company that has enjoyed its share of accomplishment over the decades through a process of refining its strategy to align with sound real estate market and management fundamentals. That strategy has sometimes required adjusting the class of real estate acquired for a portfolio, focusing on specific markets or submarkets, as well as the characteristics of a property in relation to its location. But, the efforts of KBS’s disciplined approach and attention to detail has, we believe, resulted in an enviable institutional-grade investment platform that performs to high industry standards.

While all risk can’t be removed entirely from investing in real estate, it can be lessened by turning to a multi-cycle seasoned commercial real estate investment and operating company possessing a strong track record. KBS is a long-time commercial real estate investment firm, founded by Peter Bren and Charles J. Schreiber Jr.

Since 1992, KBS and its affiliated companies have invested or managed $38 billion in real estate assets, totaling more than 157 million square feet across the U.S. on behalf of institutional clients, such as pension plans, endowments, sovereign wealth funds and seven non-traded REITs. The company launched two investment vehicles, called KBS REIT II and KBS REIT III in 2008 and 2010, respectively. The creation of those funds was the result of an investment strategy that refined its approach over time. KBS’s focus for REIT II and REIT III was on acquiring properties and assets with high levels of quality, as well as Class A Central Business District offices featuring a walkable component.

KBS REIT II was initially marketed in April 2008, and eventually held more than 30 assets. KBS REIT II closed its initial public offering offering in March 2011, after raising $1.8 billion in investor equity at the share price of $10.00. Roughly half of the portfolio was liquidated in late 2015, and KBS made an aggregate special dividend of $4.50 per share. Currently, the portfolio holds nine assets, which are in the process of being stabilized.

KBS REIT III was launched in October 2010, and currently holds 29 assets. KBS REIT III closed its initial public offering on May 29, 2015, and terminated the offering on July 28, 2015, having raised $1.7 billion. KBS REIT III’s objective was income, growth and capital preservation. The REIT employed a core strategy and focused on investing in a portfolio of core office properties. KBS is analyzing strategies for the benefit of investors, including a possible liquidation of the portfolio.

Schreiber says the way these two investment vehicles differed from previous KBS funds in that “they focused on buying CBD office assets in markets where people want to live and work.” He also notes, KBS has steered away from making debt investments, because the firm believes debt is not the best investor strategy, given the levels of return for the risk. Schreiber also says KBS’ investment strategies for KBS REIT II and KBS REIT III are less capital-intensive as compared to opportunistic funds.

One key strategy is a refined geographic focus. The markets KBS has honed in on for KBS REIT II and KBS REIT III included key gateway or employment growth areas. These range from New York’s Manhattan, Los Angeles, and the San Francisco Bay Area, to Phoenix, New Orleans, Atlanta, Chicago, Dallas, and the Washington, D.C. area.

Another way KBS attempts to enhance performance is through acquisition. An example of KBS’ investment strategy for KBS REIT II and KBS REIT III is the characteristics of the assets. That means pursuing what it believes are the highest-quality properties.



This is not an offer to sell securities. Offers to sell, or the solicitations of offers to buy, any security can only be made through a private placement memorandum and other official offering documents that contain important information about risks, fees and expenses.

A Preliminary Offering Circular has been filed with the Securities and Exchange Commission (SEC) and can be obtained by clicking on or entering [insert link] into your internet browser. The Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted and no part of the purchase price can be received before the offering statement filed with the SEC is qualified, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. This [presentation][article] shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state.

Marc Deluca and Rodney Richardson

Talking Shop with KBS Regional Presidents

KBS Regional Presidents Rodney Richerson and Marc DeLuca are a driving force on the KBS leadership team implementing strategic vision for KBS. Join us as we chat about leadership, real estate and exciting new developments in the CRE industry.

Q: What has it been like working for Chuck Schreiber all these years? 

A: Rodney Richerson: Chuck has been a great mentor even before I started working for him. I was an analyst at The Koll Company in a cubicle near his office. He was always one of the first people in the office. His business philosophy has been very simple — always do the right thing. When you do the right thing, it ends up helping the investor and our clients, the tenant.


Q: You’ve helped KBS hone in on some interesting non-commodity deals. How do you uncover these gems? 

A: Richerson: One of the benefits of working at KBS is the headspace we are provided. We don’t have workloads that create reactionary environments. We travel to the properties often, meet with all kinds of real estate professionals and have a very collaborative work environment that allows us to maximize value across the portfolio. The Salt Lake Hardware Building at first glance seemed like a relic. But today it is a high-demand property for tech and creative tenants who love the unique architecture of the building and open floor plans. We were also able to develop excess land and a parking lot on the site to build Hardware Village, which looks to be the most heavily amenitized apartment project in Salt Lake City, including the coolest rooftop infinity pool with great city views and in the best location available in the city. 


Q: Like Rodney, you also have a keen ability to find opportunity in niche markets. How did you do it? 

A: Marc DeLuca: Over my 20 years of institutional experience, I look at various drivers in a market to see what the long-term growth prospects might look like. After coming to a conclusion on that, it is then important to understand a client’s needs, i.e., cash flow, long-term hold, merchant build, etc., and see if there is a match. Raleigh was a match for two of our clients who had two different investment strategies, which was one key to making it work for us. Another key was a relationship in the marketplace with a developer.


Q: What do you like to do with properties you acquire to make them perform above the levels of a commodity asset? 

A: Robertson: We always try to bring something unique to the market. This is just good business because selling or leasing space in a competitive environment, like real estate, has a lot to do with differentiation and being in touch with what your customer values most. KBS is a custom shop. There is no national rule book or set formula for what we bring to market as far as property positioning goes. We aim to approach each project with fresh eyes. We start with great locations and then go from there. Figuring out a property’s unique potential, appeal to the marketplace, and then crafting a plan and story is a big part of the roll-out. At the end of the day, we are in the business of helping our customers’ businesses thrive — so if we can stay focused on this goal, we are heading in the right direction.


Q: KBS recently closed on the largest loan transaction in company history, a $1.1 billion loan collateralizing eight properties in the $3.5 billion KBS REIT III portfolio. The terms of the deal were very attractive. How do great lender relationships help KBS to perform better not only for investors, but also for tenants? 

A: Robertson: There is recognition in the industry that KBS builds great internal teams, buys great real estate and that the overall platform provides a lot of institutional support. It’s said that real estate is a people business — which is true. The benefit for our investors is that because of our organizational quality, the best people in the business want to work with KBS. On the lending side, this means that we benefit from the exceptional lenders, loan terms and pricing. On the service side, this means that we have exceptional sales, leasing and management teams in the business supporting our investment activities. The net result is that our properties can perform better for both our tenants and investors.


Q: What is one way KBS has been able to stay fully in the game by providing space that is perfectly suited for employers working in highly competitive sectors and needing to hire the best and brightest talent? 

A: Richerson: We have seen many great examples of best-in-class tenant build-outs. On a smaller scale, we always have top-tier, rent-ready suites that are attractive to all tenants today. We don’t believe the creative build-outs are only for tech or creative companies, I prefer to call it “current space.” Every type of tenant is looking for a major refresh — open work spaces, collaborative space, community space — even KBS has a ping pong table. We also like to provide lots of glass and natural lighting and high-end kitchen/dining space. One of the major improvements we try to implement in our buildings are high-end lounges where employees of our tenants can go and get some personal space, have lunch away from the office or just get away with some co-workers and play ping pong, billiards or some other game to get away from the fast lifestyle we all seem to live.


Q: What can tenants expect in a KBS-owned building? 

A: Robertson: Where your people come to work each day says a lot to your employees and customers about your company. If you’re in a KBS building, it’s going to be a very positive message you are sending and you will be among many like-minded companies. Are your employees excited about coming to work each day; are they fully engaged? A KBS building provides the tool you need to build the type of company culture your employees are passionate about being a part of. In this way we partner with our tenants to help them drive productivity for their businesses. Also, the peace of mind you get from being with a financially strong landlord with a great track record can’t be understated. A lease is a long-term commitment, often lasting five, ten or more years. You don’t just go into a partnership like that without thinking long-term about reputation of the parties involved. We are a partner our customers can trust — which is a huge factor in picking a KBS building. The fact that we own awesome buildings in fantastic locations helps too.

The Investment Industry in 2018 – Why Change is Good

There is no denying that it is an exciting time to be in the investment industry. Technological and regulatory changes, combined with the evolving preferences of key demographic groups are pushing RIAs and other financial professionals to blaze new trails.

While this makes many in the industry uncomfortable, adaptation to the new investment landscape will be crucial, and ultimately, it will come down to a ‘survival of the fittest’ scenario. Those who don’t leverage technology, and continuously seek information that can change their business model are going to be at a huge disadvantage—one that could eventually put them out of business. Emphasizing certain key concepts to your clientele can be one way to ease everyone’s mind during this tumultuous era.

Emphasize Long-term Planning vs. Short-term Goals

The market is currently at an unprecedented high, and while predictions tend to be favorable over the next few years, there is still a lot of risk with any investment. Periods of dramatic market fluctuation tend to make investors nervous. Stressing the difference between long-term planning and short-term performance will help to convey the true value of an advisor, including the knowledge and experience they have, allowing them to better navigate periods of economic uncertainty.

Embrace the Role of Advisor and Educator

One compelling industry prediction is that over the next decade, advising will undergo a shift from asset management functions to providing more strategic planning and continuous coaching to clients. Some firms have already gone through mergers or acquisitions in order to provide this scope of services to their clientele. Mergers and acquisitions can also serve to leverage collaboration, save time, acquire talent and reduce the learning curve —all of which will serve as a competitive advantage over those that do not evolve in step with the industry.

Communicate Clearly

In order to adequately prepare a client for their investment future and their relationship to you, the advisor, you must clearly communicate the value in your personalized services and industry knowledge, and why it is an asset. Typically, clients have a fundamental understanding of this, but providing this information in a way that allows them to see the relationship between compensation and all services provided, rather than just portfolio performance, helps them to understand exactly what they are paying for. It is also imperative to clearly explain the risk levels of all investments, as well as conveying an understanding that unforeseen events can always have a huge impact on their investments, something no professional can anticipate.  

Welcome Transparency

On March 15th the U.S. Court of Appeals for the Fifth Circuit ruled in Chamber of Commerce v. U.S. Department of Labor that the Department of Labor had exceeded its boundaries in adopting the Fiduciary Rule, very likely resulting in its dissolution as early as May of this year. But there remains a great deal of uncertainty over what will happen next. Jay Clayton, Chairman of the Securities and Exchange Commission, is currently leading the charge on implementing a fiduciary standard for brokers and advisors, so the concept of a uniform rule isn’t going away. The call for greater transparency in the industry could get stronger—and could be good for business. When advisors engage in discussions about compensation, fees, and investments with or without a load, they demonstrate the ability to be candid and trustworthy, a trait that every investor looks for in an advisor.

Ditch Expectations

If you had asked an advisor in the 1990s what they thought the industry would look like today, I can assure you their answer would be nowhere close to where we are. Technology has revolutionized many industries and processes. Furthermore, unanticipated regulations, consumer preferences, and the speed in which information and transactions occur have all had substantial impacts in the progression of the industry. Just as no one could foresee the rapid onslaught of changes in the past couple decades, we are equally ignorant of what the future holds. Remaining nimble and ready for change, in any form, will be the best way to thrive and grow your advising firm.

The future is a scary place, and humans tend to resist change if they can. But within the investing industry, these changes don’t necessarily have to have a negative connotation. In fact, RIAs who innovate and welcome change by positively incorporating it into their business model and culture, can come out as big winners moving forward.

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

Navigating Change as an RIA – Tips for Prosperity in a Transparent Environment

The investment industry is a client-driven market, which relies heavily on customer satisfaction. Unfortunately, their level of satisfaction is often tied to portfolio performance, much of which depends upon market conditions beyond anyone’s control.

Even though the Department of Labor’s (DOL) Fiduciary Rule was struck down on March 15th, it may “live on” until the outcome of the appeals process is fully known. This means the advisor-client relationship will likely continue to undergo additional transformation when it comes to greater transparency surrounding fee schedules, conflicts of interest, and any upfront fees or commissions, known as a “front-end load.” Despite the uncertainty of what will happen, there are several reasons for why rule-inspired changes can have a very positive effect for Registered Investment Advisors (RIAs), in particular.

RIAs are Ahead of the Crowd

The fiduciary duty required by the Rule impacts the entire spectrum of financial professionals with clients, but acting as a fiduciary is old-hat for most RIAs. It’s simply a part of the way they do business as usual. Their experience provides them with a better understanding on how to approach transparency and clarity with clients, as it relates to fees. While other professionals may struggle with this concept, the change may have little to no impact on most advisors—giving them an immediate head start.

Embrace the No-Load Investment Options

The complexity of the different types of loads attached to different investments is part of what led to the Fiduciary Rule. Historically, many investors have remained oblivious to whether or not their investments carried a load. With the increase in transparency that is occurring, it is not difficult to foresee a corresponding increase in their popularity, especially with those investors that take an active role in educating themselves on all of their options. By embracing this change in consumer preference, RIAs may be in a better position to maintain high customer satisfaction levels. This is a key strategy for offsetting any lost income from a decrease in loaded investments.    

Focus on Referrals

When RIAs approach their business model by prioritizing customer satisfaction, it naturally leads to a very satisfied clientele base. While their repeat business is quite important, satisfied customers also usually provide another huge benefit. They become a source for referrals, which is the most effective way to attract new clients, especially ones with greater affluence.

Assign Value to Knowledge and Experience

The increase in popularity of no-load investment options will likely induce a reduction in income for some RIAs, which will need to be mitigated. The best way to do this is to help investors tie compensation rates to the value of advice, rather than on transactions. The emphasis has historically been on portfolio performance, and this is still a very important component, but clients need to understand that they are paying for insight and experience—the same way most other professional services are compensated.

Overall, RIAs are in a better position for achieving transparency while maintaining, or increasing, customer satisfaction. For many, accepting this change may be the hardest part, but once that happens, the rest can fall into place, and many will realize this is a better long-term business model.



Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.

Investors Demand More Transparency: Are You Ready To Deliver?

Today, many investors tend to rank transparency equally with trust when considering an adviser or investment deal. That’s why it’s important for financial firms to deploy solutions that will drive deeper levels of transparency throughout their entire organization as well as how they present and communicate investment deals—especially if they want to keep their current clients loyal while bringing new ones onboard.

In fact, some experts feel that investor concerns are quite legitimate given the turbulent climates they’ve had to endure. Consider the fact that the financial crisis of 2008 is still fresh in the minds of many, and that heightened media scrutiny against the financial industry now has investors more skittish, and investors’ confidence is lower than ever before. It’s no wonder that being upfront and more transparent is a dire need for both seasoned investors, as well as those who are new to the game. And because the JOBS Act has made it possible for retail investors to participate in offerings once reserved for accredited investors, there will be many new players.

Adding to marketplace fears are advances in fintech and online investing technologies that are also fueling a greater demand for transparency. Les Andrews, CEO of Aitken Asset Management, states in a recent MorningStar.com article, “I think you’re going to see more and more demand from investors for details around underlying assets held in portfolios.  Both tech and fintech are shifting rapidly, contributing to the rise of savvier, more discerning investors.”

By transparency, investors mean clear, honest and direct communications that are provided on a consistent basis. They also want regular information about fees and/or other transactions related to their investment deals. And finally, they want easy to understand investment reports that provide them with clear insights on their financial performance.  

From the inclusion of an onsite glossary, to a detailed FAQ, below are four crucial steps to take in increasing financial transparency for your investors.

    1. Draft A Very Clear Fee Schedule

A full 35% of investors in a new study express concern over the dependability of the information they receive from their advisers. This extends beyond actual performance into the realm of fees and commissions charged.  Investors also frequently express concern over full transparency around alterations in fees and similar changes.

If you sense a potential opportunity to set yourself apart, you’re right on track.  By drafting a clear fee schedule and reviewing it with all new clients, you give yourself the opportunity to stand apart from the crowd, in terms of professional competence and transparency.  Ideally, you should do everything you can to communicate solidarity with your clients’ financial well-being. Transparency can play a considerable role in that.

When laying out your fee schedule, remember to keep it as immediately comprehensible as possible. The financial sector tends to be associated with long, mandatory slogs through miles of fine print. This is another opportunity to stand apart from the crowd and will likely make you seem much more upfront about transparency.

  2. Create a Detailed FAQ Page

Putting a detailed FAQ page on your site regarding your investment philosophy, fund history, the properties in your fund, and other frequent inquiries could simultaneously serve your aims in multiple ways.

For one thing, it would likely offer a large boost to your “transparency factor”, which alongside trust can be another criterion in an investor’s selection process. Creating a detailed FAQ page can powerfully (and conveniently) communicate to your investor base that their full comprehension of what’s being done with their money is a priority to you.

It’s a simple but powerful truism: people work hard for their money, and they tend to have plenty of questions in store for anyone who comes to them with an investment deal. If you can immediately refer them to a comprehensive FAQ page, it usually communicates a large degree of empathy for their position. You present yourself as having thought in advance (and in depth) about the core concerns of the investor, their primary inquiries, and the best ways to provide clear answers and transparency.

Common inquiries for your FAQ could center on financial barriers to entry, different deal tiers you have available to investors, financing options, and more.

    3. Have All Relevant Paperwork Readily Available

Similar to creating an FAQ, when you have all relevant paperwork easily available, a sense of transparency can be conveyed to the clients. You’re likely to appear professional and organized, but also eager to give your clients the info they need.

This has great potential to give your “transparency factor” a healthy lift. It can also provide an overall boost in your own efficiency and peace of mind, since the clients know offhand where to find all relevant documentation. Whether you’re dealing with the many and varied forms, which need signing in the course of investing and deal-making, a recent report you want to review with a client, or anything else of importance, you should have ready access to it once you’ve established its significance.

If you make a habit of this, you have the potential to make your day-to-day operation far smoother, and convey transparency to your clients, as well as an eagerness to quickly get them the info they need.

     4. Host An Onsite Glossary

The world of investing (and finance generally) can be full of jargon and convoluted language. Even for accredited investors, keeping up with new developments in the markets (not to mention fintech) can be daunting.

By hosting a glossary of finance and investment terms on your site, you present yourself as being a “one step ahead” kind of thinker.  However, in order to take full advantage of this transparency tactic, you should approach your glossary with a few guidelines in mind.

The primary litmus test for each glossary term should be, “How relevant is this to my investors’ concerns and needs?” The aim of your glossary is to clear up your clients’ questions and uncertainties and to increase your transparency in the process. However, this can only be accomplished if the terms you select reflect common misunderstandings or concerns among your investors. Be selective in your choice of terms. And of course, keep abreast of new terminology that investors are likely to be inquiring about.

A good rule of thumb to follow here is to keep track of how frequently certain words and terms come up as points of confusion. You could, for instance, have a threshold of five in place: “If five separate investors express confusion about the same term, I’ll add it to my glossary.”

If approached intelligently, an onsite glossary has the potential to greatly increase your clients’ sense of your professional transparency.

Summing Up

Along with trust, transparency can be a primary deciding factor for many investors when searching for advisers or investment opportunities. This will likely grow to be even more the case as fintech (and technology overall) makes information more quickly and easily accessible to investors.

The good news is that you have the opportunity to be proactive and to align yourself with this trend by reassessing and fine-tuning your own transparency level. You could do this with an on-site glossary of commonly misunderstood terms, by limiting or doing away with “valueless costs” such as commissions and upfront loads, and more.

The main thing is that you keep transparency in your mind as a primary ethic of professional care. By doing so, you can potentially stand out from your competitors and keep your clients satisfied and loyal to your organization for the long haul.

Do you have any questions? Speak with an Investor Relations Representative.

Articles or information from third-party sources outside of this domain may discuss KBS Direct or relate to information contained herein, but KBS Direct does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party content, do not constitute an approval or endorsement by KBS Direct or NCPS of the linked or reproduced content. KBS Direct makes no representations as to the appropriateness of an investment in the KBS Growth & Income Real Estate Investment Trust REIT for ERISA plan fiduciaries and IRA owners and no investment advice is being provided.  ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in the REIT’s shares. The Growth & Income Real Estate Investment Trust is offered through North Capital Private Securities, member FINRA/SIPC.