LendingClub Chooses Alto as Their New IRA Provider

Eric Satz soon realized there was a problem. The year was 2014 and he was trying to use his IRA money to make an equity investment in a private company. He discovered it was legal, but his current custodian couldn’t help him. He went looking for someone who could.

After weeks of research, he found a couple of companies that said they could do it. He chose one. The process was clunky and slow and aggravating. He managed to make the investment, but it took eight weeks, dozens of pages of faxed documents and a lot of expletives. Eric did most of the work himself, but the custodian still ended up with their same asset “management” fees and, for an administrator, they were not that helpful. So, the idea for Alto was born.

I caught up with Eric and his team last week in advance of the big announcement they are making today.

Alto calls itself a next-generation self-directed IRA platform and its focus is on making it quicker and easier for individuals to invest in alternative assets through their IRA. I opened up my own Alto account earlier this year (before I knew they were working with LendingClub) when I decided to make investments in Masterworks and FarmTogether.

I can attest that the process was simple (or as simple as a self-directed IRA can be) and I appreciated the fact that I could do everything online. There was no need for sending PDF documents back and forth, no need for phone conversations, it was an online experience that was the best I have encountered in the self-directed IRA space.

LendingClub’s IRA Investors Can Move to Alto Now

Which brings us to LendingClub. With the investment platform shutting down the company was looking for ways to help their investors move their IRA money into other alternative investments. Alto was part of this search and won the business for the 13,000 LendingClub IRA accounts.

LendingClub has used three different custodians for their IRA investors: ForgeTrust, CAMA and Strata. For ForgeTrust and CAMA customers IRA accounts should have already been moved to Alto automatically. For Strata customers you need to take action this month if you want to move to Alto and pay no fees. It just so happens that I have both a CAMA IRA (for my wife’s account) and a Strata IRA (for myself). I did the CAMA conversion a few days ago, it was very smooth and took less than five minutes.

All LendingClub IRA investors with Strata should have received an email from LendingClub in the last few days alerting them that they can now move their account to Alto. Here is an excerpt from that email:

Take another step forward towards realizing your retirement goals with Alto, LendingClub’s new preferred IRA custodian. Your first year with Alto is free (a $100 value) and LendingClub will cover the termination fee with your current custodian (a $250 value). Your deadline to take action is May 31, 2021.

So Alto and LendingClub will pay any fees associated with the conversion as long as you take action by May 31. By clicking on the “Reserve Your Account” button on the email you can get things started with Alto. You can’t actually move things over from Strata to Alto just yet, you can only reserve your account, which I just did yesterday (even though I already have an Alto account)=

Alto Has a Large Selection of Alternative Investments

I discovered Alto when I was doing research on alternative investments for LendingClub investors in January. I had some money in cash from another IRA investment that had been liquidated so I was looking to start a new investment right away. And I knew I would be looking for alternatives as my LendingClub cash built up across my IRA accounts there.

Masterworks was the first investment I did with Alto – I have invested in five pieces of art so far. I know very little about art but I like the diversification that a platform like Masterworks provides. I have also invested in farming property via FarmTogether and will likely add to this for more diversification.

You pay $100/year for your Alto IRA but they are waiving the first year for LendingClub investors. You also pay a one-time fee of $10 or $25 for each new investment you make. They have options for both accredited and non-accredited investors.

Alto is very strong with equity investing as that was the pain point that led to the founding of the company. AngelList was their first platform and you can still invest today. They also have Republic, EquityZen, Wefunder, Silicon Prairie and InvestX (to name just a few) for equity investing. For real estate they offer DiversyFund, Jamestown Invest, Equity Multiple, Arrived and Caliber. They have several crypto fund offerings including Grayscale, Skybridge, Bitwise and NYDIG. And they have other alternative investments like Percent (formerly Cadence), AcreTrader (farmland) and Royalty Exchange (music royalties). They also have a separate CryptoIRA offering where you can trade crypto on Coinbase through an Alto IRA.

My Take

I am pleased that LendingClub has made the decision to go with Alto as their preferred custodian. With cash building up in every active LendingClub account IRA investors are looking to deploy that cash. While I think it would have been better if they made this announcement several months ago, there are probably thousands of IRA investors, like myself, that have been watching the cash build up and wondering how they can easily deploy it elsewhere.

Alto is the easiest and slickest IRA platform I have come across and has the largest selection of alternative investment offerings as well. I have been told by the Alto team that they are regularly adding new platforms as they look to become the one-stop shop for alternative investments via an IRA.

  • Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.