Majority of high-net-worth advisers plan more direct investments, Cerulli says

Just 22% say they plan to expand use of outside private-equity funds
FEB 08, 2018

More than two-thirds (67%) of high-net-worth advisory practices expect to increase their allocations to direct investments or co-investments over the next two years, according to a new report from Cerulli Associates. Only 22% of HNW firms indicated their plans to increase their use of third-party-managed private equity funds, the Boston-based research firm said. Leading the trend to direct deals, Cerulli said, are multifamily offices, many of which were founded by successful executives and entrepreneurs who are comfortable making strategic investments in private companies given the source of their own wealth. "Many family offices have moved away from traditional private-equity funds in recent years, due to a combination of poor performance and high fees," said Asher Cheses, an analyst at Cerulli. Direct investing allows family offices to retain nearly complete control throughout the investment process and offers greater flexibility in negotiating terms with the underlying company, often leading to lower fees and better investment terms, Cerulli said. (More: Alt investments on the rise among RIAs) "Another main factor gaining interest among next-gen clients is environmental, social, governance/socially responsible investing (ESG/SRI). As a result, family offices are beginning to make a more concentrated effort to introduce investments that are aligned with younger inheritors' values, including clean energy, gender equality, and human rights," Mr. Cheses said. (More: Wealthy families are winning deals away from private equity)

Latest News

Arch pushes AI portfolio monitoring into pre-investment due diligence
Arch pushes AI portfolio monitoring into pre-investment due diligence

New tool gives RIAs and family offices AI help vetting private market deals, with some users reportedly halving review time.

$4.5M raised on trust alone: SEC alleges affinity fraud in merchant lending
$4.5M raised on trust alone: SEC alleges affinity fraud in merchant lending

Investors got projected returns dressed up as real ones, SEC says

Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children
Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children

Parents must still act to get the $1,000 federal seed and employer contributions, giving financial advisors a role in the rollout.

FINRA bars former LPL broker for stealing $1.7 million from customers
FINRA bars former LPL broker for stealing $1.7 million from customers

FINRA booted Rudy Anguiano from the industry for “conversion - the intentional and unauthorized taking of another person’s property.”

IRS targets 351 ETF conversions in new guidance on tax strategies
IRS targets 351 ETF conversions in new guidance on tax strategies

Notice 2026-62 also flags box spread ETFs and tax-aware fund trades as Treasury opens month-long consultation period.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains