In summary, an allocation to illiquid investments has to be a consideration for advisors and their clients. Even at a 10-20% level, this leaves more than enough liquidity for unexpected events, emergencies etc. If an advisor is not making these allocations, they are not only leaving money on the table but are not delivering a high-level service to their clients. If a portfolio is 100% liquid, has the advisor really done their job properly in medium and long term planning and has understand the cash flow requirements for their client?
Richard Hillson is the founder of Hillson Consulting.
Ashlyn Burns, Spencer Mark and Nick Pratico contributed to this article.