[There are a number of forces at work that are drastically altering the private investment markets landscape.

First, there is a growing mindset change and new rallying cry for startup firm leaders to stay private longer (SPL) versus rushing to obtain funding and growth through the traditional initial public offering (IPO) route. Case in point, between 1980-2000 there were 6,500 IPO’s but that has fallen to less than 3,000 from 2001-2022. The median age of a company going public in 1980 was six years but has nearly doubled to eleven years in 2021. A quick review of Uber highlights some of the issues at play where early private investors captured the firm’s meteoric growth and realized substantial returns versus public investors through Uber’s IPO. These trends clearly point to SPL becoming the new IPO. This is leading to growing supply and commitment to the private markets funding vehicle and asset class.

Second, at the recent May 2022 Morningstar conference, a survey of advisors was conducted reporting that 80% believe that retail investors should have more access to alternative investments and that 76% feel the traditional 60/40 portfolio is ineffective or less effective in today’s economic climate. This comes from the realization that many private investments are uncorrelated to the public markets and are a good source of further diversification. This is feeding the growing demand of the asset class.

Third, acting as a catalyst for these changes, advisors today have newly expanded access to private market investments through digital, online investment platforms with superior research capabilities plus lower fees and minimums than could be found previously. These platforms offer advisors quick and easy ways to make a direct subscription to private funds for their clients, reducing a huge point of friction in the marketplace through technology.

To dig deeper and better understand the changes happening in the private markets arena, we reached out to Institute Member Anshuman Mehta, chief product officer (Private Markets) of TIFIN Wealth — an AI-powered fintech company that leverages data science, investment intelligence, and technology to help deliver engaging and personalized investor experiences. The time seems to be now where democratizing access and the reduction of friction points in the private markets can transform private investments.]

Bill Hortz: What industry challenges within private markets does TIFIN seek to address?
Anshuman Mehta:
Across all the solutions at TIFIN, our mission is to make investing a more powerful driver of financial wellbeing. We deliver engaging experiences through powerful investment-intelligence driven personalization, making the advisor the center of conversations across an investor’s financial profile.

Entering the private markets made sense as it’s an area where 81% of ultra-high-net-worth investors are already invested. With total alternative investment AUM projected to reach $17.2 trillion in 2025, it didn’t make sense that a broader swath of investors could not access these investments. We sought to increase adoption of this asset class in client portfolios by providing an advisor with the tools necessary to analyze their client portfolios and generate intelligent recommendations, including what styles and private funds make sense for each investor. We believed adoption of private market investments in client portfolios will further increase, as advisors use our tools to personalize investment recommendations at scale. 

Hortz: You say increase adoption, what does that mean?
Mehta:
For too long, private market investments were only accessible to institutional investors with large analyst teams. Contrast that to the wealth channel that has traditionally under-invested in private market investments. Our goal is to make in-depth research and recommendation engines accessible to advisors so that they can have the confidence and information they require when providing their high-net-worth clients access to this key asset class.

Together with adoption, we are also solving the problem of access. We enable clients to place investments with lower minimums and reduced fees, driven by direct access to the underlying funds. Advisors are not paying access fees since we work directly with fund managers, so zero broker costs are passed on to the advisor.

Hortz: What are some of the key elements of your private markets solution?
Mehta: Intermediaries who use the cloud-based platform may discover and select from a variety of carefully screened funds powered by AI-driven analytics. They can generate recommendations for how much of a client’s portfolio should be allocated to private market investments by reading in client data from their CRM tools and custodians. They can align a client’s private market investment styles with their traditional portfolio and evaluate specific investments in context of the client’s portfolio. Our end-to-end workflow solution also assists with onboarding, investment and operational due-diligence, ongoing performance reporting, and more.

First « 1 2 » Next