Only one-third of registered investment advisers (RIAs) have provided private equity investments to their wealthy clients within the last five years, according to a new study by iCapitak Network.
The study also found that nearly 70 percent of those who do not currently offer private equity acknowledge interest from their clients in the area. Despite the appetite, just one-quarter of those practitioners say they have proactively raised the subject of private equity with clients.
“The surge in private wealth creation has directly influenced a trend toward more transparent, objective financial advice,” says Lawrence Calcano, Managing Partner, iCapital Network. “As a result, the typical offering from RIAs is geared toward delivering holistic wealth management solutions to affluent investors and will continue to evolve based on the needs of the high-net-worth market.”
The report, which was established to benchmark how the independent wealth advisory community is leveraging private equity investments, analysed preferred methods of investing, ways of sourcing new opportunities, client assets invested, perspectives on client demand and perceived obstacles. The data was collected from 443 RIAs and of those surveyed, more than 85 per cent manage more than USD250 million in client assets and more than half focus their practice on fewer than 100 high-net-worth clients.
Nearly 90 per cent of the RIAs offering private equity said their clients invested between USD1 million and USD10 million in funds, or an average of approximately USD5.2 million per high-net-worth client. In almost all cases, the number of clients investing in private equity funds represents less than 10 percent of each advisor’s client base.
“In our experience, RIAs with the most affluent investor bases tend to have the highest level of comfort and familiarity working within the alternative investing landscape,” says Nick Veronis, Co-Founder and Managing Partner, iCapital Network. “That’s because this asset class – private equity – is on point for qualified clients, those individuals with investable assets of USD5 million or more.”