In this guide, you'll learn how to:
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Understand investor eligibility for private markets investing
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Simplify the conversation and debunk common myths
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Align private market strategies with specific client goals
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Deepen relationships with tailored, high-impact advice
The Knowledge Gap: A Path to Opportunity
Navigating private markets can seem daunting to individual investors, many of whom perceive alternative investments as complex, risky, and inaccessible. In fact, studies show that most individual investors have little to no understanding of alternative assets, particularly beyond familiar categories like real estate or commodities.
On the other hand, high-net-worth (HNW) investors who already invest in alternatives are eager for more. According to a recent survey1 of high-net-worth investors and financial advisors, 88% of HNW investors are open to increasing their exposure to alternatives, and 81% believe an alternatives allocation drives stronger long-term outcomes than a traditional portfolio. Among those who are not yet invested in alternatives, 72% said they would take the leap if they better understood their options, and 70% would invest if their financial advisor recommended it.
High-Net-Worth Investor Sentiment Toward Alternatives
Financial advisors thus have a compelling opportunity to bridge the knowledge gap, dispel misconceptions, and introduce clients to the potential benefits of private market alternatives, including enhancing portfolio diversification, smoothing volatility, and driving stronger returns. Advisors who build expertise in alternatives can not only elevate client conversations but also differentiate themselves as indispensable partners in achieving long-term financial success.
91%
Nearly 91% of advisors in the aforementioned survey affirmed the value of mastering this growing asset class.
1 Survey of high-net-worth investors and financial advisors. Conducted by independent research organization CoreData, “The Alts Institute” Alternative Investing Survey surveyed high-net-worth (HNW) investors in the U.S. and Canada with at least US $2.5 million in household investable assets and financial advisors with an average of US $633 million in practice assets under management.
Finding Your Private Market Trailblazers
To effectively integrate private markets into client portfolios, advisors must first identify the clients who are best positioned to embrace these opportunities. The process begins with a thorough review of existing client portfolios to assess which clients already have exposure to alternative investments. From there, advisors should evaluate how portfolios that do not contain alternative investments are performing and whether differentiated exposure could add value. For example, are these portfolios overly concentrated in public equities and fixed income? Are they underperforming or overly correlated to traditional market benchmarks? Identifying gaps where private markets could enhance diversification or generate improved risk-adjusted returns is a critical first step.
Advisors should also consider the financial profiles and investment objectives of their clients. High-net-worth individuals, accredited investors, and clients with longer time horizons are often better suited for private market exposure. These clients may be seeking enhanced performance, reduced volatility, or access to investment opportunities that are unavailable in public markets. By segmenting their client base and focusing on those most likely to benefit from private markets, advisors can prioritize their outreach and education efforts.
Leverage our four-step framework to get started
Unlocking Clients' Confidence by Addressing Key Misconceptions
Once advisors identify potential clients, they can begin meaningful conversations about the benefits of private markets and address concerns clients may have. Below are three key misconceptions that advisors can discuss with clients to help them invest more confidently in private markets.
Integrating Private Markets Into Client Portfolios
Once a client is on board with adding private markets to their portfolio, the next step is determining how to effectively integrate these investments.
Start by considering the client's overall investment objectives. Tailored portfolio modeling can help illustrate how private markets might complement existing investments and improve long-term outcomes. Leveraging new private market structures with lower minimums and semi-liquid features can make these opportunities more accessible, reducing barriers for clients who may be hesitant to explore them. In unlocking new opportunities for their clients, financial advisors can position themselves as proactive, forward-thinking partners in their financial journeys.
Explore our model portfolios to help clients achieve specific objectives, such as generating income, preserving capital, or boosting returns.
Conclusion
Private markets present an opportunity for both clients and advisors, offering diversification, enhanced returns, and portfolio resilience in a rapidly evolving investment landscape. By identifying the right clients, addressing common misconceptions, and leveraging education and tailored portfolio strategies, advisors can effectively integrate private markets into their practices. Doing so not only empowers clients to achieve their long-term financial objectives but may help position advisors as indispensable partners, fostering trust and loyalty. With a proactive and client-centric approach, advisors can differentiate their practice, unlock new growth opportunities, and remain at the forefront of modern portfolio management.
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