Firms build tech to bring private markets to advisers

Fintechs and asset managers are rolling out platforms to let financial advisers offer clients access to private and semiliquid alternative investments in response to rising demand and some regulatory changes.

A recent survey of asset managers found 57% now prioritize delivering access to semiliquid or illiquid alternatives, a 17 percentage point increase year over year. Research firm Cerulli projects advisers will add roughly $2 trillion to private markets allocations over the next five years.

Firms are focusing on replacing fragmented, document-heavy processes with integrated systems that handle discovery, subscription, portfolio management and reporting for private equity, private credit and other alternatives.

Logan Henderson, chief executive of Gridline, argued the main barrier is technological rather than regulatory and commented: “We’re somewhere between $13 trillion and $15 trillion in alternatives and privates today. If that is ever going to mirror the public equities and be north of $100 trillion, you need an entirely different infrastructure that supports every element of the transaction life cycle.”

Large wealth managers and fintechs have introduced products aimed at advisers. Raymond James opened portfolios that combine private and public investments for wealthy clients. AssetMark added two interval funds to broaden access to private credit, real estate, infrastructure and private equity. InvestCloud committed $50 million to expand its alternative-investment offerings. Tim Buchner, Atlic’s chief operating officer, described platform work as building “a rules-governed investing system offering protections similar to those advisers and clients enjoy when putting money into stocks, bonds and similar investments,” and said many private-market processes remain paper-heavy and require phone calls.

Regulatory shifts are also changing the landscape. The Securities and Exchange Commission has proposed revisions that could allow advisers to charge performance fees to a wider set of clients and has ended a long-standing policy limiting closed-end funds to holding no more than 15% in private investments. Those changes have increased the use of interval funds and other semiliquid vehicles that allow redemptions on set schedules.

A survey of 195 advisers found 65% had recommended at least one alternative investment. Among advisers managing $250 million or more, 83% reported recommending alternatives, compared with 49% of advisers managing less than $50 million.

Advisers reported prioritizing clients’ risk tolerance, investment goals, net worth and liquidity needs when screening for suitability. Accredited investor status was listed as a top screening item by 64% of respondents.

Platform providers say they must solve technical challenges including onboarding investors, verifying eligibility, executing subscriptions, tracking performance and handling infrequent liquidity windows. Firms say standardized data formats, automated workflows and integrated compliance controls are needed to streamline the investment lifecycle.

Advisers remain responsible for ensuring investments fit clients’ objectives. Platform firms aim to present standard information so advisers can compare risk, liquidity and return characteristics across private funds. Henderson warned that funds lacking basic reporting standards are red flags for large-scale capital deployment.