Growth in private markets an opportunity for advisers

New research by Praemium has revealed that an additional 32,000 high-net-worth (HNW) investors are expected to invest in private markets over the next year, highlighting an opportunity for advisers to provide “education and guidance”.

Clients looking to invest in private markets reported coming across a number of challenges, including a lack of liquidity (40 per cent), difficulty in assessing risk of an investment (28 per cent), lock-up periods (23 per cent), and limited knowledge on private markets (22 per cent).

Advisers are well-positioned to help clients navigate these complexities of the market, Praemium said, giving them a golden opportunity to highlight their value to clients.

According to the findings, the primary driver for clients wanting to invest in private markets was the expected returns, as indicated by almost three-quarters (73 per cent) of investors, followed by risk profile (55 per cent) and diversification (51 per cent).

Praemium said the appeal of these markets “lies in their ability to offer unique opportunities that are not typically available in public markets”.

The report also found that just under a third of private market investors are accessing these opportunities through an adviser, while more than half (52 per cent) are investing directly with the company, issuer or asset manager.

Further highlighting the role of advisers in educating clients in this space, the findings showed that 62 per cent of investors and 49 per cent of non-investors were actively researching private markets.

Praemium chief strategy officer Denis Orrock explained that interest in this area is only expected to grow, giving advisers ample opportunity to capitalise on this market of investors.

“As more companies stay private for longer, the investment opportunity in private markets continues to expand. The need for robust platforms that facilitate access and trading support is becoming increasingly important,” Orrock said.

“These platforms play a crucial role in connecting investors with exclusive opportunities and providing comprehensive investment administration and reporting.

“Additionally, it offers advisers the opportunity to provide education and access to a growing market and help their clients navigate the private markets with confidence.”