IA report outlines how to broaden private markets access for the mass affluent

The Investment Association (IA) has published a report outlining how access to private markets can be widened responsibly at scale, without weakening investor protection in the advised mass-affluent market.

Its Private Markets Democratisation in the UK: Promise, Progress and Key Next Steps, found that the UK had made significant progress in enacting regulatory frameworks and investment structures to support the wider adoption of private markets.

While the IA acknowledged that institutional investors and high net worth investors remained the primary participants in private markets, individual investors were expected to play a greater role in the next phase of growth.

Following engagement with asset managers, wealth managers, platforms, and consumers, the report concluded that the principal barriers to further growth were now operational rather than regulatory.

Respondents highlighted platform infrastructure, operational readiness, reporting and data standards, investor suitability, and adviser confidence as the primary challenges that needed to be overcome.

The report also stated that wider participation should be supported by more education for advisers and their clients to facilitate informed decision making.

Five ‘priority actions’ for the industry, regulators, and policymakers were outlined in the report.

These were to build demand and adoption in the mass-affluent market; strengthen education; support greater flexibility; accelerate the build of distribution infrastructure; and the inclusion of self-invested personal pensions (SIPP).

“Private markets can help channel long-term capital into growing businesses across the UK economy and help investors access a broader range of opportunities to support their long-term financial goals,” commented IA head of private markets, Namita Kain.

“While significant progress has been made in developing products and regulation, our research shows that the focus must now shift to reforming distribution, infrastructure and investor understanding.

“Broadening access successfully will require collaboration across the investment chain, from advisors to platforms, to ensure private markets are available to investors where they are suitable, supported by clear information and strong protections.”

Aberdeen Investments head of private markets solutions, Nalaka De Silva, added: “The debate around private markets often focuses on access, but access alone is not enough.

"If we want private markets to genuinely work for more savers, we need to make distribution work better too.

“That means platforms, asset managers, advisers and policymakers working together to ensure investors can access these assets through the channels that best suit their needs, whether that's pensions, ISAs, or from a product perspective - investment trusts, hybrid solutions or newer fund structures such as LTAFs.

“At the same time, we need greater transparency, clearer performance reporting, better education and an honest conversation about risk and reward.

“Get those foundations right and private markets can help improve diversification, support better long-term retirement outcomes and unlock capital for the infrastructure, energy and housing projects that economies increasingly need.”

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