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Robert Picard discusses key advisor challenges in adding private markets
Key Takeaways
- Helping clients understand the ways that private markets are different - fees, illiquidity, time horizons, and risks - before they invest helps set and manage expectations.
- In the not-too-distant future, tech innovation could greatly improve the accessibility and ease of investing in private markets.
- Communicating clearly and educating your clients about private markets can help counter unfairly negative media coverage
Transcript
My name is Robert Picard. I head up private market solutions at Hightower Advisors. Hightower is a community of 135 separate advisor businesses and wealth management firms spread across the United States in approximately 34 different states.
The challenges we deal with on a day-to-day basis are numerous, and this is very much a work in progress in the private markets. My first approach when dealing with both our wealth management teams and their clients is to be really clear. I never want them to have to spend 99% of their time talking about a 1% loss in their portfolio or why something underperformed.
What I really want to happen is for the private markets piece to be incorporated and understood by their clients, ensuring that it's generating the risk-adjusted returns they want. It's important to take the time to talk it through with your client and make sure they understand the time horizon. Another challenge is technology. It's not yet efficient. Today, in public equity and public fixed income, we can use our handheld devices and invest relatively quickly. Private markets are just not that efficient yet.
There have been improvements. Several platforms are now working diligently to provide solutions to firms like ours and smart wealth management firms to make it easier to subscribe, learn about, and analyze those funds, and most importantly, for reporting purposes. But these are still challenging times. I think in the next 2 to 3 years, we're going to see ongoing disruption and great enhancement, leading to a perfect integration with the democratization and miniaturization of these private markets. We'll get to the point where everything collides simultaneously, creating a next-generation solution where private markets will be as easy to access. My dream is for us to soon be able to buy, sell, and learn about private markets directly from our iPhone, Samsung, or whatever tool you use personally.
Lastly, there's a negative we occasionally have to counter, which is the media's concern with private markets. Whether it's the recent trial of Sam Bankman-Fried and FTX, Theranos with Elizabeth Holmes, or Bernie Madoff, the media still promotes private markets as very risky. On the contrary, we believe well-informed clients and their advisors can comfortably invest and achieve enhanced returns over a longer period compared to public equity and public fixed income.
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