Reporting challenges hindering advisers’ private market allocation

While interest in private markets continues to grow, a panel of industry professionals have argued that data and reporting challenges in this sector are limiting accessibility for financial advisers.

Recent months have seen private markets garner strong mainstream attention, both positive and negative, which has ultimately driven greater demand for access to the asset class.

However, a VanEck adviser survey in September found that around 40 per cent of advisers have not made a private market allocation in their portfolios, while a further 27 per cent had only done so on an opportunistic basis, signally potential hesitance from advisers to engage with private assets.

Speaking on a DASH Technology webinar, Sentinel Wealth general manager Greg Hooper explained that accessing data on private assets has emerged as a key challenge, creating barriers for advisers who are bound by strict regulatory requirements.

“The data at the end of the day, while it's a boring topic, it's the most critical thing in all of this because data quality enables reporting. It enables advice and connectivity especially,” Hooper said.

Notably, DASH Private business development manager Derryck Lo explained that the growing interest in private markets, non-custody assets, and unlisted assets has seen advisers pushed off platform in order to access these assets, with some advisers managing up to 20 per cent of allocations off platform.

As a result, Lo said that practice administration teams are now forced to spend time combining client assets both on and off platform in order to provide whole of wealth reporting.

Drawing on his own experience, Hooper said that the administration side of using private market assets can be “extremely painful”, noting that it is a consideration when it comes to asset selection.

“Clients should have access to the best possible investments they can. There are regulatory constraints that do prohibit some investments. But the administration side and the data side, certainly, in a perfect world, should not impact the investable universe for clients,” he added.

“But by nature of the world we live in at the moment, it does, from our perspective, it's a secondary consideration to the regulatory side of things. But it absolutely does impact the type of service that we provide.”

While reporting continues to be a challenge, Hooper said that “we are seeing the industry evolve” at the moment. Looking to the future, he suggested that there will likely be further evolution in this regard as clients’ demand for private market access grows, driving advisers and technology providers in the industry to meet this need.

“I think we've been a bit lazy, and providers and everyone in this industry has been a bit comfortable and I think that will change or need to change pretty rapidly. There's a lot of low hanging fruit around technology, asset data management, type of advice, client experience and communication. I think there’s a lot of people who will drive that change in five years.”