Poor sales tactics deterring wealth managers from private markets
‘Ineffective sales methods’ have been cited as the greatest barrier to private market investment by APAC wealth managers, according to MSCI, greater than the products’ illiquidity or lack of transparency.
The MSCI report, Emerging Trends in Wealth Management, surveyed 220 wealth management professionals globally on the state and future direction of the industry.
Investors in APAC indicated a greater interest in expanding their allocations to private markets over the next three years, it said, at 92 per cent compared to 84 per cent in EMEA and 76 per cent in the US.
Across all regions, 81 per cent said they wanted to increase their allocations ‘moderately’ or ‘significantly’ across the next three years.
While they may be keen to increase allocations, there still remain numerous barriers that are preventing them from enacting this including the illiquid nature of investment, limited understanding, and inconsistent measurements.
Interestingly, the greatest barrier for APAC respondents was 50 per cent who said the products had “ineffective sales enablement”. This was significantly higher than other barriers such as their illiquidity (37 per cent) or lack of transparency (35 per cent).
It was also higher than for respondents in other regions where sales methods only bothered 32 per cent of respondents in EMEA and 41 per cent in the US.
A recent report from EY said many alternative asset managers would need to “significantly” step up their education and engagement efforts with advisers if they wish their funds to be included in client portfolios. This could include offering client information hubs or partnering with external firms to strengthen investor awareness.
Money Management has previously covered the importance of business development managers (BDMs) to the promotion of private market products for financial advisers.
The complexities of the products mean they have been described as “impossible” for fund managers to promote without the help of BDMs.
Andrew Saikal-Skea, adviser at Saikal-Skea Independent Financial Advice, said: “From public offer documents and whatnot, it’s really difficult to try and understand the fund. So you almost need the BDMs to help with your questions as you try and work through them.
“Where there are good BDMs, you can then gain a better understanding of what’s actually happening in the fund and the reasoning for it. Whereas with funds that don’t have BDM access, it’s very difficult to work out what’s going on and why, and then be able to help us and our clients make an informed decision about what to do.”
AUTHOR
Laura Dew
Recommended for you
An increased number of products rated following the boom in private markets funds have seen revenue at Lonsec Research & Ratings rise to $21.4 million.
Clime Investment Management has reported a return to operating profit after a $1.6 million loss a year ago thanks to an aggressive turnaround program.
Fund manager BML Funds, which has $1 billion in assets under management, is to be wound up as its chief investment officer Ted Alexander moves to Platinum.
Australian Ethical has become the latest fund manager to flag an expansion of its private markets range while reporting a 50 per cent rise in statutory net profit after tax in the first half of FY25.
