Private markets in
wealth management

As increasing client demand for alternative assets reaches new highs, are wealth managers in danger of being left behind?

Delio’s first ever research report, Private Markets in Wealth Management, was published in the autumn of 2019. Huge political, economic and societal changes have taken place since. So, we've revisited our research to explore how changing global dynamics have impacted the wealth management sector.

This report covers:

- The view from the industry
- Satisfying customer demand
- The challenges facing wealth managers
- Digitisation of private markets

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Key themes

94%

of firms offer, or are working towards offering, their clients access to private markets.
65%

of firms report transacting more than five private markets deals in the last 12 months.
53%

of wealth managers said operational challenges are the biggest risk to scaling their proposition.
82%

of wealth managers said technology is playing an increasingly significant role in their operations.

Private markets in wealth management report 2022

The view from the industry

The economic turbulence of the last few years has meant that many wealth management clients have sought new ways of diversifying their portfolios. Wealth managers have had little choice but to adapt their offerings so that they can cater to this demand.

Delio’s research highlights this trend, with 94% of wealth managers stating that they currently offer or are working towards offering private market investments to their clients. There has been a significant increase in firms transacting more than 20 deals a year – up from 6% in 2019 to 35% three years later.

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Satisfying client demand for private markets

It’s no secret that investor demand has accelerated consistently over the last decade. Turbulence in public markets and the consistent returns offered by alternative assets have had a profound impact on how private markets are perceived.

In 2019, of those firms active in private markets, more than half reported offering their clients access to funds, direct investments and real estate. Three years on, and the diversity of investment opportunities available to wealth management clients appears to have increased.

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The challenge for wealth managers: Scale, efficiency and risk

The operational logistics of connecting your clients with unlisted investment opportunities is anything but simple. In the past, private markets would have been made accessible to only a small number of ultra wealthy individuals or highly sophisticated investors.

Today, the challenge is an altogether different one. Scaling your offering to hundreds or potentially thousands of clients, rather than a couple of dozen, creates operational, regulatory and efficiency challenges that simply cannot be solved by creating bigger teams with more resource.

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The digitisation of private markets in wealth management

It’s no secret that one way of overcoming the operational challenges associated with private markets is through the use of technology. The use of digital tools to automate repetitive administrative tasks, simplify operational workflows, and provide an extra level of protection against regulatory breaches has been widely discussed for several years.

Wealth managers clearly understand the importance that digital tools will play in scaling their private markets offerings; 82% said that technology is playing an increasingly significant role in how they offer their clients access.

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Private markets inwealth management