How reusable digital identities are transforming alternative investing

The hidden friction slowing private market growth

For years, alternative investments have promised diversification and long-term opportunity for private clients – yet the onboarding experience has remained fragmented, repetitive, and frustrating. Even for repeat investors, any financial transaction kicks off a fresh round of onerous identity checks, financial verifications, personal certifications, and more.

The challenge is particularly acute for large RIAs serving ultra-high-net-worth families with complex ownership structures.

“Once you move beyond a single individual investor, the document burden explodes,” said Charles Keates, general counsel at Pathstone. “Ensuring that you have all of the right authorized signatories and the correct client identifiers is a Herculean process.”

“You’re coordinating trust instruments, amendments, and operating agreements – often across outside legal and tax advisors. Tracking, validating, and re-validating all of that manually is a huge operational drain.”

The result? A burdensome cycle of forms, document uploads, compliance reviews and endless back-and-forth – not just for investors, but for advisors and operations teams as well. The simple truth is that investors are treated like strangers at the door because the technological infrastructure is not in place to connect the dots across platforms and investments.

The case for reusable digital identities

The solution isn’t incremental. It’s a shift in mindset: from one-time verification to reusable identity. Imagine a world where an investor proves their credentials once and moves seamlessly across funds and platforms – without reintroducing themselves at every turn. That’s not a convenience; it’s a prerequisite for scale.

Reusable identity transforms onboarding from a bottleneck into a competitive advantage. It reduces friction, accelerates access, and builds trust – while embedding compliance into the process rather than bolting it on.

Turning verification into instant access

One approach gaining traction is the creation of portable identity credentials that can be leveraged across an integrated ecosystem. iCapital’s Identity Solutions team, built from the people and technology from its recent acquisition of Parallel Markets, aims to replace repetitive onboarding with a single, reusable digital identity – delivered through a product it calls the Investor Passport.

“With the iCapital Investor Passport, once you’re verified, you don’t have to reintroduce yourself over and over again,” said Nick Goss, former co-founder and chief operating officer of Parallel Markets and now head of Identity Solutions at iCapital. “You can move seamlessly across funds and platforms while still keeping full control of your information.”

With the Investor Passport, verified identity credentials are portable across any issuer, product, or platform within the iCapital network – enabling what Goss calls ‘single-click investing’ in alternatives.

“Onboarding can drag on for months – 30, 60, or even 90 days. We’re reducing that down to a single click, turning a process that used to be full of friction into something that takes seconds.”

The differentiator for iCapital lies in how deeply it integrates compliance into the platform itself. Rather than simply storing, transmitting, or presenting investor data, iCapital’s model allows its own compliance team to conduct reviews directly and issue reliance letters to third parties attesting to the work done.

This simultaneously allows firms to meet their regulatory obligations, investors to have a more delightful onboarding experience, and most importantly, iCapital’s ability to re-use the data and associated verification across partner firms means future investments and onboarding can be reduced to a single click.

“That’s a key distinction,” said Goss. “We’re not just providing data to the fund manager; we’re validating it, we’re structuring it, and we’re enabling investors to leverage our system to confirm their identity on an ongoing basis. That level of trust accelerates investment readiness and removes one of the biggest barriers to scale.”

Powering systems that scale

Behind the scenes, the process is powered by complex relational graphs and an automated know-your-business engine that dynamically maps entity ownership structures – a task that has traditionally required hours of manual work.

For growing RIA firms now managing tens of billions in client assets, this kind of automation is no longer a nice-to-have.

As Binoy Talati, managing director of Enterprise Solutions at iCapital, said: “As RIAs get bigger, there’s an institutionalizing of the independent wealth space. They’re serving more sophisticated clients and facing institutional-level expectations around compliance and transparency. They need systems that scale.”

The timing also matters. New customer due diligence (CDD) rules coming into effect by 2028 will require wealth managers to maintain even more precise ownership data – pushing firms to modernize their processes sooner rather than later.

The importance of scalable solutions is not lost on Pathstone. The firm, which has 800 employees across 22 offices, manages $170B+ in aggregate assets under management and has set its sights on becoming the first RIA to manage $1 trillion in assets.

For Keates, the shift toward reusable digital identity is becoming increasingly urgent as regulatory expectations rise.

“From January 1, 2028, it will no longer be enough to rely on third parties to run these checks on a one-off basis,” he said. “Firms like ours will have an affirmative obligation to validate, risk-score and monitor investors on an ongoing basis. Having that process centralized with a specialist partner is a game changer.”

Crucially, he added, this approach supports – rather than constrains – the highly customized nature of ultra-high-net-worth investing.

“Our clients expect choice – different fund managers, administrators, and structures. Customization means dealing with multiple counterparties, not forcing everything into a single mold. A reusable identity layer allows you to preserve that flexibility without recreating the same documentation process every time. For a large RIA, that’s huge.”

Solutions for the entire journey

Identity Solutions is part of iCapital’s broader effort to build a fully connected operating system for the entire lifecycle of alternative investing, from advisor education and due diligence through to subscription processing, reporting, and secondary trading.

“A lot of firms focus on one piece of the process and then expect the wealth manager or client to stitch everything together into a so-called best-of-breed tech stack,” said Talati.

“What we’re saying is, you don’t have to. We’ve brought those best-of-breed solutions into one integrated, end-to-end solution.”

The platform now powers access to alternatives for many of the world’s largest wealth managers, along with more than 3,000 advisory firms globally.

Talati describes it as a modular ecosystem that supports advisors through every stage of the investment journey. On the front end, iCapital provides education and compliance tools, alongside an in-house research and due diligence team. Around 100 product and distribution specialists then support firms in expanding client access to alternatives.

Further along the lifecycle, portfolio construction tool Architect empowers advisors to design portfolios with alternative and structured investments, while the acquisitions of Mirador and AltExchange bring advanced reporting and data aggregation onto the platform.

“It all connects,” Talati added. “Each module can stand alone, but together they cover the full lifecycle: pre-sale, point of sale, and post-sale. And Identity Solutions sits at the center of that ecosystem, making every transaction seamless and secure.”

Building trust through identity

Reusable digital identities may sound like a niche innovation, but their implications are broad. As private markets open to more investors, scalable verification becomes a prerequisite, not an afterthought.

“Ultimately, this is about trust,” said Goss. “The iCapital Investor Passport turns every investor from a stranger at the door into a trusted participant. It reduces friction, accelerates access, and ensures advisors can deliver alternatives with confidence.”

By embedding compliance and identity verification into iCapital’s platform, the Identity Solutions team transforms onboarding into a smooth, single-click experience – a foundational piece of the ecosystem that supports every stage of the investment lifecycle.

1Pathstone Family Office LLC ($116B) plus affiliate firms ($55B). As of June 30, 2025. Includes regulatory assets under management, assets under advisory, and assets under administration. Please see Pathstone’s ADV on adviserinfo.sec.gov for more information.