Half Of Financial Advisors Will Soon Be Able To Offer Private Investments To Clients

May 3, 2022

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By Anna Peel. Originally published at ValueWalk.

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May 3, 2022 | Stamford, CT – More than half of financial advisors in the U.S. will soon have the ability to offer private investment opportunities to their clients. Just over 40% percent of financial advisors can invest client assets in private companies now, and another 12% say they will have that ability soon.

With demand building, advisors are considering the appropriateness of private investments for these different types of clients. Most advisors believe private investments are a good fit for the portfolios of high net-worth and ultra-high net-worth clients. Some advisors take a more expansive view. About 22% of advisors think private investments can play a constructive role in the portfolios of mass affluent clients, and 17% think the broader client and mass market segments can benefit from private investments.

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“The rise of private investments in retail portfolios is being driven by two powerful trends: the challenging macroeconomic environment and a rapidly developing technological ecosystem,” says Kevin McPartland, Head of Research at Coalition Greenwich Market Structure & Technology and co-author of Private Investments Are Accessible, But Not Always Suitable, for Retail Investors.

In terms of the macroeconomic environment, the search for yield and an abundance of fast-growing startups have left even mass-market investors clamoring for the opportunity to invest in private companies. Yields in traditional fixed-income investments remain near historic lows despite rising rates through the first few months of 2022. This is especially true when looking at real yields, which account for the currently high levels of inflation. Further, concern is mounting that U.S. equity markets are overvalued, making it harder to continue pouring money into the public market.

“These factors have turbocharged both supply and demand, creating new investment opportunities for regular investors that would have seemed out of reach only a few years ago,” says Shane Swanson, Research Director at Coalition Greenwich Market Structure & Technology and co-author of the report.

Private Investments Are Accessible, But Not Always Suitable, for Retail Investors presents the results of a study of 669 U.S. based financial advisors conducted in January 2022. The report lays out the size and scope of private markets, including a detailed analysis of the nuanced SEC rules that define the various types of private investments. It then analyzes current market dynamics and advisor strategies with regard to private assets.

About Coalition Greenwich

We are a leading provider of strategic benchmarking, analytics and insights to the financial services industry. We specialize in providing unique, high-value and actionable information to help our clients improve their business performance. Headquartered in London, we have 400+ professionals working in London, Paris, New York, Stamford CT, Mumbai, Singapore, and Tokyo.

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About CRISIL

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint. It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the U.S., the UK, Argentina, Poland, China, Hong Kong, and Singapore. It is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.