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Is Your Advisor Aware of Your Interest in Private Equity and Alternative Investments?

Having an open dialogue with your financial advisor is crucial to your financial success, and it is important that they are actively listening to your objectives and the rate you wish to achieve them. According to a study conducted by iCapital Network, nearly 70% of RIAs indicate that wealthy clients are interested in private equity and alternative investments.

Among the approximate 450 RIA firms who were surveyed, only one third of them provided private equity investments to their clients. Additionally, 70% of those firms who do not offer private equity investments acknowledge interest from their clients to participate. Despite the large demand for private investments, only 25% of the RIA firms surveyed said they proactively discussed private equity with their clients.

According to Lawrence Calcano, Managing Partner at iCapital Network, “The surge in private wealth creation has directly influenced a trend toward more transparent, objective financial advice.” As a result, typical offerings from RIAs focuses on delivering holistic wealth management solutions and they will continue to evolve based on their high net worth clients’ needs.

The survey serves as a benchmark to determine the independent wealth advisory community in terms of leveraging private equity investments, investment methodology, sourcing new opportunities, perspectives on client demands and obstacles. The criteria evaluated for the benchmark illustrated that the key topics for an RIA to address for private equity investments are: asset growth for their clients, prioritizing growing client base, the competition to acquire new clients, and having in-demand products for their clients.

As previously indicated, the majority of surveyed RIAs have received feedback from clients for private equity investments yet they are working towards overcoming the obstacles which include capital requirements and time horizon. Breaking down the RIA holistic methodology indicates that the high net worth investor has the capacity to meet the capital requirements as well as anticipate the equity time horizon as a buy and hold is a basic method to accumulate wealth. In correlation between iCapital and TD Ameritrade study on projected growth in the RIA industry, the remaining challenge for advisors is finding the products that are in-demand for their investors.