Private markets governance remains a challenge, but new solutions bring opportunities

As private markets continue to gain momentum globally, the regulatory barriers that often prevent financial firms from stepping into this market aren’t going away anytime soon.

But, what if these barriers can be overcome? At Delio, we’re staunch advocates for how technology can help overcome blockers and enable more wealth managers to enter the alternative investments space. And with such rapidly accelerating demand from clients looking to access private markets, this is now an essential topic for relationship managers and advisers to tackle.

While many of us are aware of the general challenge of regulation across private markets, we wanted to take a deep dive into the governance issues that cause the biggest headaches for wealth managers and explore how these can be overcome; identifying ways in which regulatory processes can be turned into a commercial advantage. 

Growth in private markets brings greater regulatory scrutiny

Although traditional challenges such as cross-border promotion and investor profiling remain high on the regulatory agenda, the introduction of policies such as the Alternative Investment Fund Managers Directive (AIFMD) and Senior Managers and Certification Regime (SMCR) have added an extra dimension to the challenge facing wealth managers.

As the list of regulatory requirements continues to grow, this feeds directly into a new pain point: the cost of compliance. Amid this rapidly evolving landscape, firms have had little choice but to invest significant resources and time to demonstrate their compliance. So much so that 20% of senior financial executives named expenditure on regulatory governance the biggest issue facing their firm.

It’s time to change the conversation on regulation

However, avoiding private markets altogether due to regulatory compliance isn’t a solution. As demand for alternative investments rises, wealth managers have little choice but to offer their clients access to unlisted opportunities. Instead of shying away from the market, it’s time to face potential blockers and find ways of overcoming them. That’s why we’re launching our upcoming report later this month. 

We believe that creative, technology-based solutions can limit both traditional and new regulatory risks, save money – and most importantly – help financial firms to accelerate their presence across private markets. It’s time for financial institutions to view regulation as an opportunity for differentiation and, through technology, turn the need for compliance from a burden to a commercial advantage.

Find out all about wealth managers’ regulatory pain points, the changes yet to come, and the role technology plays in turning your regulatory frameworks into a success in our upcoming report. Get ready to break down your regulatory barriers.