The Investment Association (IA) has today published a report setting out how access to private markets can be broadened responsibly, at scale and without weakening investor protection within the advised mass-affluent market.
The report, Private markets democratisation in the UK: Promise, progress and key next steps, concludes that the UK has made significant progress in establishing the regulatory frameworks and investment structures needed to support wider participation in private markets.
While adoption remains strongest among institutional investors, defined contribution (DC) pension schemes and higher-net-worth investors, individual investors are expected to play a greater role in the next stage of growth, the IA’s research found.
IA researchers drew on responses from more than 20 asset managers, wealth managers and platforms, alongside its own consumer research, to conclude that the principal barriers to further growth “are now operational rather than regulatory”.
“Stakeholders identified platform infrastructure, operational readiness, reporting and data standards, investor suitability and adviser confidence as the key challenges to overcome,” the report said.
The report also stresses that wider participation should be supported by greater education for advisers and their clients to ensure informed decision-making.
It sets out five priority actions for industry, regulators and policymakers. These include building demand and adoption in the mass-affluent market by developing a stronger evidence base on what investors need, how advisers behave and the role private markets can appropriately play within the portfolios of the mass-affluent market.
The IA is also a big proponent of strengthening education. It calls on investors, advisers and intermediaries to provide clear information about liquidity, valuation, costs and risk, measuring success based on understanding rather than uptake alone. This is because IA consumer research found that awareness remains a barrier, with only 5% of investors saying they know exactly what a Long-Term Asset Fund (LTAF) is. However, once provided with a full explanation, 49% said they would consider investing in an LTAF in 2026, the IA found.
The IA also wants to see greater flexibility, with work to be done on how the LTAF and non-UCITS retail schemes frameworks can accommodate a wider range of long-term and hybrid investment strategies.
Then there is the IA’s call for an acceleration in the building of distribution infrastructure.
The IA said: “[There is a need to] adapt retail and wealth platforms as they were built around daily-dealt funds and are not currently designed to accommodate key private markets features such as notice periods, non-daily dealing, variable settlement, redemption deferrals and other liquidity management tools.”
Finally, the IA is calling for LTAFs to be included in Self Invested Personal Pensions (SIPPs) as part of a plan to work towards more consistent formats for liquidity disclosures, valuation information, redemption processes, operational reporting and onboarding documentation.
Namita Kain, head of private markets at the IA, said: “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. 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.”
