Over the years, technology has become an essential part of that conversation, arming advisors with analytic tools that allow them to appreciate how various investment types could perform under different scenarios (such as the ongoing Fed tightening cycle). For clients, this means, among other things, that they can better understand which assets are contributing the most risk to their portfolios and which ones are responsible for producing the most return.
These analytics and scenario analysis capabilities, therefore, let advisors and clients make more informed risk-reward decisions. But as you can imagine, if an advisor's tech cannot make private equity part of the equation, it isn't a matter of the exercise being complex so much as it is rendering it almost useless. After all, reducing risk—or searching for uncorrelated investment returns—is why many investors seek out private equity in the first place.
As an advisor, you may have a tech platform that is private equity specific. You may also have one that can handle all your clients' other wealth management-related needs. But you likely don't have one that can do both—and in an environment where more and more investors are showing an interest in private equity, that's likely to create problems.
Andy Aziz is the chief strategy officer at d1g1t.