Wealthy clients should invest more in private equity, study says. Good idea? – Financial Planning

Some wealth managers, especially independent ones, tend to think of private equity only in the context of Wall Street acquirers of registered independent advisory firms. But private equity is also an asset class for individual investors — and it’s lacking in many affluent clients’ portfolios, according to a new study by Boston Consulting Group and iCapital.

Wall Street’s professional investment machines have been a honey pot for institutional dollars, from endowments to pension funds, for decades. While that money accounts for just over 90% of the dollars in private equity funds, retail investors are increasingly betting on the traditionally exclusive asset class.

BCG and iCapital, a New York-based technology and fund management firm that assists financial advisors, hedge funds and other sophisticated investors with private equity investments, lay out the obstacles, what surmounting them can do for an advisor’s practice and why not getting on board is mistake that can cost clients come retirement.

Here are key takeaways from their March 2022 report, “The Future is Private: Unlocking the Art of Private Equity in Wealth Management.” Financial Planning also looked at recent data and academic research showing that the long-standing “beat the market” reputation of private equity funds may not be all it’s cracked up to be.