"There are challenges associated with this style of investing, but when done effectively, direct/co-investments can deepen the relationship between HNW practices and investor," the authors wrote.
These were among the other findings in the report:
• Fifty-eight percent of HNW practices use environmental, social and governance (ESG) strategies and expect to get more involved in the sector over the next year. Twenty percent do not use the strategy and have no plans to do so.
• When advisors were asked why they don't use ESG strategies, the most common answers were that they do not fit into clients’ investment policy statements (55%), high cost (40%) and difficulty measuring impact (40%).
• Wealth managers controlled almost $10 trillion in HNW and UHNW client assets last year, which is just 0.5% more than the year before. Cerulli is projecting those assets will increase to $14 trillion by 2023.
• Nearly $70 trillion in wealth will be transferred from baby boomers to Generation X and millennial households during the next 25 years, Cerulli projected.
• Twenty-nine percent of practices have increased their fees over the past three years; only 15% of HNW practices decreased their fees.