Advisors can gain from helping clients access private markets

Despite strong participation of Canada's institutional investors, most consumers are unfamiliar with this alternative to public markets

Advisors can gain from helping clients access private markets
Steve Randall

Ask most Canadians about investing opportunities and they will probably refer to public markets such as the TSX or NYSE.

But among institutional investors there’s greater likelihood that private investing options will be mentioned, such as private lending, private equity, and private real estate.

A new survey from Harbourfront Wealth Management reveals that 60% of consumers are unfamiliar with private investments, even though their pension fund and other financial institution (FIs) may have exposure to these assets.

It also shows that wealth managers and FIs may be missing an opportunity to help clients access private markets.

“Most Canadians aren’t very familiar with private investments, which have been a major component of the pension fund toolkit for years,” said Christine Tessier, chief investment officer at Harbourfront. “Corporate-defined benefit plan availability is decreasing. Canadians need a broader toolkit, that includes private investments, to plan for their futures.

The study, conducted by IPSOS found that a quarter of respondents feel their FI doesn’t give them access to all types of investment products and a similar share don’t offer the investment products they want.

More than four in ten investors would consider changing FI or advisor to one that offers a broader range of investments.

“New technologies, combined with increased oversight, are changing the face of this industry,” Tessier said.

The findings of the Harbourfront study echo the recent comments made to Wealth Professional by Allan Seychuck, VP and senior investment director of Alternatives at Mackenzie Investments, who said that too many people are unaware of alternatives to a standard 60/40 portfolio.

Pension plan portfolios

While retail investors have low awareness of private investments, Canada’s largest investors know well how these assets can perform.

Ontario Teacher’s Pension Plan’s portfolio, as well as the Canada Pension Plan Investment Board and Public Sector Pension noted increased holdings of private investments in their portfolios in 2022.

“It’s important for Canadians to gain a better understanding of private securities and how the addition of pension-style investing can help diversify their portfolios, especially during volatile markets,” concluded Tessier.

In 2018, Harbourfront built and launched Canada’s first accessible multi-manager private securities (AMMPS), to make private securities ‘retail friendly and has since received private equity investment to help further its range of structured pools to provide Canadian accredited investors with access to diversified, multi-manager solutions with a variety of private securities product offerings.