For wealth managers and the vendors that support them, the growth and the democratization of the private capital markets make it imperative to act now. Opportunities to improve the limited partner workflow extend from onboarding and other front-office functions to reporting and process automation. To get there, advisors will need to leverage the tools to efficiently onboard clients and harvest the data needed to effectively manage those investments.
But make no mistake: Alternatives are moving into the mainstream. Javelin survey data indicates that the footprint of advisors holding between 5% and 10% of holdings in alternatives will nearly double in size over the next two years, while the share of advisors allocating between 10% and 15% of holdings to private capital will jump from 2% to 7%.
Key questions discussed in this report:
- How can advisors overcome hesitation to incorporate alternatives in their offerings?
- What is driving growth of private capital investments among registered investment advisors?
- What are the technological hurdles that must be scaled to drive adoption by advisors?
The data in this report was primarily collected from a Cogent Syndicated survey of 631 financial advisors fielded in April 2021. Respondents were selected based on channel, region, age, working tenure, gender, assets under management (AuM), and income criteria to achieve a representative sample of the advisor population in the United States. Of the respondents, approximately two-thirds indicated they were accessing alternative investments on behalf of their clients.
Although a minimum of $5 million in AuM was required for participation in the survey, roughly half of respondents indicated that they managed more than $100 million in AuM. From a channel perspective, the largest cohort of respondents (35%) identified themselves as independent broker-dealers, while advisors at national/wirehouse firms and registered investment firms participated at similar levels (21%). Advisors at banks and regional brokerages accounted for 9% and 14% of respondents, respectively.
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