US advisors failing clients on PE investment

The proportion of US financial advisors offering private equity investments to their clients has fallen from a third to a fifth over the past five years.

Just one in five financial advisors offer private equity investments to their clients, despite acknowledging that almost two-thirds of clients are interested in these investments, according to a survey by investment platform iCapital.

Of more than 400 US advisors questioned, 85 percent said the amount of time that money is locked into a fund was the biggest obstacle to providing private equity options to their clients. Other barriers were the required minimum investment (79 percent), and not having clients with the wealth and timeframe to invest in private equity (64 percent).

A lack of experience in the asset class was also an issue, with 43 percent saying they did not understand how to integrate private equity into client portfolios, while 42 percent said they had a lack of experience with private equity funds.

“Our research implies that most advisors are still relying on a traditional portfolio heavily weighted toward public equities and fixed income,” said Hannah Shaw Grove, managing director at iCapital Network.

“As more wealthy investors express a desire for private investment opportunities, advisors will need to focus on improving their understanding of and access to these types of offerings.”