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Tech Helps Firms Meet Clients' Demand For Private Market Access

Gareth Lewis

24 November 2021

This news service has noted how various businesses are trying – so they say – to widen access to previously difficult-to-enter asset classes such as private equity. We have reported on the activities of businesses such as CAIS and iCapital Network, for example (both are headquartered in the US). Taking a further look at the space is fintech firm Delio, a UK-based business with offices worldwide. The author is Gareth Lewis, who founded Delio in 2015, and is its chief executive. 

The editors are pleased to share these views and invite readers’ responses. The usual editorial disclaimers apply. To respond, email

Traditionally, Investing in private markets has been seen as the preserve of ultra-high net worth or institutional investors. However, the tide is turning. 

Over the last decade, client demand for private markets has accelerated rapidly. This has forced many financial institutions to modernise their traditional and long-standing approach to alternative assets. As a result, they have had to transform how they present unlisted investment opportunities to their clients - and technology has been central to this transformation.

Investors turn to private investments
Before focusing on how firms can broaden client access to private markets, it is important to note why alternative assets are thriving. The most obvious answer is that private markets have been generating impressive and consistent yields during recent periods of economic instability. Over the longer term, private equity has remained the highest-returning asset class since 2006.

As a result, alternative investment opportunities that were once seen as too high-risk have now become highly sought-after. Investors have adopted a longer-term approach to how their capital is deployed and have a greater risk appetite than they did a decade ago, which goes some way to explaining why in the UK alone, private equity investment rose to its highest level in five years, according to KPMG . 

The market itself is showing no sign of slowing down. PwC predicts that global private markets AUM will rise by up to $5.5 trillion between now and 2025. Depending on the rate of economic recovery post-COVID, this could see the total value of private markets AUM hit $15 trillion in the next three years.

These factors mean that investors have begun to view private markets as an important way of diversifying their portfolios. With their longer-term focus, alternative investments are perceived to be more resistant to external factors like COVID-19 and inflation when compared with public markets. While they are not immune to global, political and social instability, the consequences are generally far less severe due to investors’ longer-term commitment to them. Yet despite promising returns and growing demand, many financial firms have been slow to react in developing a client offering in this space.

Soaring demand prompts financial institutions to adapt
It is fair to say that private markets are soaring. Nonetheless, many financial firms have failed to modernise their traditional operating models, which has meant that they do not have the staffing and resources to meet the growing client demand for this type of investment. 

Historically, a firm’s private markets' offering was likely to be driven by personal relationships, paper-based processes and one-to-one meetings. Common operational challenges include implementing robust governance processes for deal distribution, accurately profiling investors, and overcoming antiquated document and data management systems which make it difficult to audit processes effectively. In fact, nearly two-thirds of firms highlighted regulatory compliance as one of the main obstacles for offering a private market proposition to clients.

It is vital that firms find a solution to these challenges, given that demand for private markets is only expected to rise further, and regulators are already responding to this shift. Last year, the US Securities and Exchange Commission widened the definition of an “accredited investor” to include investors who previously would not have qualified. Similarly, the FCA recently decided to take forward proposals of a new UK open-ended authorised investment fund which would enable sophisticated investors to have greater access to private equity assets.

As a result, firms need to look at digitising their private market offering. Not only does automating certain aspects of the investment process improve operational efficiency, but it also helps to create consistency and mitigate risk. When combined, these procedural gains will allow financial institutions to scale their private market offering beyond the ‘usual suspects’ - exclusive groups of ultra-high net worth investors. 

Digitisation is fundamental to scaling private markets
The push towards digitising the private investment sector shifted rapidly as a result of the pandemic, with nine out of 10 financial institutions reporting that they had accelerated their digitisation strategy as a result.

Additionally, globalisation has meant that wealthy clients are now rarely based in one specific location. As busy entrepreneurs and professionals, they are often on the move and increasingly require 24/7 access to their portfolios, which means that digital engagement is vital.

The increasing use of technology also frees up advisors and relationship managers to provide additional services that cannot be dealt with through automation. If deployed effectively, this can allow staff to add value for clients and conduct more fee-generating work, while the ‘administrative heavy lifting’ is dealt with in a more streamlined way. For both clients and businesses, this approach offers a more efficient, pragmatic and rational approach to the challenge of democratising private markets. 

While the improvements that digitisation offers from an operational perspective are apparent, better use of technology has the potential to provide game-changing advantages in enhancing advisor-client relations. Thanks to real-time analytics and more transparent data, previously inaccessible client insights can be generated which will create significant value from a commercial perspective. This can range from clients’ engagement with specific types of investments to identifying potential blockers that prevent clients from committing to an investment opportunity. In short, one true view of client data helps advisors to understand their investment preferences and behaviour at a level never seen before.

Now is the time to modernise
Given the increasing and consistent demand for private markets over the last decade, financial firms can no longer shy away from modernising their client offering. Regardless of whether their focus is to promote investment opportunities more effectively or to strengthen their regulatory processes, digital tools will be key to how firms improve access to alternative assets. 

While there has undoubtedly been an acceleration in the number of firms adopting technical solutions, a lot remains to be done. Some financial services, such as banking and insurance, have undergone a technological revolution in the last decade; however, the process of digitising private markets (and the wealth management sector more broadly) remains in its infancy. 

This evolution is already underway. Financial firms that aren’t modernising their approach risk losing ground to their competitors and alienating their clients. As private markets become more and more accessible, institutions need to embrace the role that technology is playing to ensure that they are able to cater for this demand. If they don’t, the chances are that clients will quickly begin to look elsewhere for the private markets opportunities that they crave. 

About the author
Gareth Lewis is the chief executive and co-founder of Delio, a rapidly scaling fintech operating in the private markets space. The firm works with more than 90 clients, including some of the world's leading financial institutions. Lewis is a Chartered Accountant and was recognised by ICAS as one of the UK's Top Young CAs in 2019. Prior to establishing Delio, he worked for EY, IBM and Convex Capital, a boutique M&A advisory firm. Delio has offices in Cardiff (its HQ) and London, Geneva, Singapore, Dubai and New York.