Most advisors plan to dial up private markets exposures

Survey reveals a bulk of advisors worldwide believe in the asset class – but is client ignorance holding them back?

A new survey from Hamilton Lane highlights a strong and growing interest in private markets among global financial advisors, with 70 percent planning to increase their clients’ allocation to this asset class in 2024.

The survey by the global private market investment manager found that more than 90 percent of respondents currently allocate client capital to private markets, with a virtually unanimous 99% planning to continue doing so this year.

Just over half of the advisors in the poll (52 percent) intend to allocate more than 10 percent of their clients’ portfolios to private markets, reflecting robust demand for alternative investments. When asked what’s driving their interest, advisors pointed to the potential performance and diversification benefits of allocating to the non-traditional investing sector.

Despite advisors’ confidence in non-public markets, with 97 percent reporting advanced (55 percent) or intermediate (42 percent) knowledge, many clients are not as well-versed. When asked to rate their clients’ private markets knowledge, half of the advisors saw their clients either as beginners or having little to no understanding.

“The punchline from this survey was an affirmation that as interest in private markets grows, there is a clear need for more education,” Steve Brennan, head of private wealth solutions at Hamilton Lane said in a statement.

“We’ve found that a foundational understanding of the asset class affirms initial interest from new investors and contributes to a sustained investing appetite for those who are already allocated,” Brennan said.

Advisors identified education, thought leadership, and events as the top tools that could enhance their clients’ understanding of private markets. Underscoring the education gap, a meager 4 percent of advisors in the survey consider their clients’ knowledge to be advanced.

“Our survey shows that giving private wealth clients more opportunities to learn about private markets investing can help both advisors and clients achieve their goals,” Brennan added.