Wealth managers make up a tiny portion of the secondary private equity markets, but they’re making their voices heard.
Financial advisors are increasingly helping wealthy families give investments as gifts, according to NYPPEX Private Markets, a New York-based private equity transfer administrator, and the movement is having an impact on private equity secondary markets.
In its 2017 Midyear Report, NYPPEX says that it observed more donors making non-cash gifts, and more non-profit organizations accepting such gifts and selling them via its platform.
“In the past five years, there’s been a trend where more gifts are being made in non-cash form, but now this is going a step further into the private equity markets,” says Laurence Allen, managing member, NYPPEX. “We’re seeing a lot of this behind the scenes.”
NYPPEX says the trend is being driven by the growth of holistic wealth management and by clients seeking tax benefits and flexibility in their philanthropic initiatives.
During the second half of 2017, NYPPEX is recommending that wealth managers who handle alternative investments take steps to facilitate gifts and transfers of private equity assets on behalf of their clients.
Whereas the private equity industry traditionally looked towards wealth managers as a potential sales force for limited partnership or direct offerings, today’s individual private equity buyers have an advantage when investing with an advisor, says Allen.
“Private wealth advisors, especially a multi-family office or RIA, are more proactive with the way they’re handling these investments,” says Allen.