The demand for liquidity among opportunity-driven mid-to-high net worth (MHNW) individual alternative asset investors is quickly growing, creating opportunities for financial intermediaries to provide advice and access to liquidity solutions. However, to better serve MHNW alternative asset investors, financial professionals like wealth advisors, broker-dealers, RIAs, general partners, and family offices must first understand the attitudes and motivations of their clients.
Our nationwide survey of MHNW investors – The Ben Liquidity Report™: Alternative Asset Investors, Their Behaviors and Wealth Attitudes – revealed that alternative asset investors have four distinct motivations for seeking liquidity. Using the results of the survey, we created in-depth profiles for each of the four segments that include their motivations and unmet needs, demographics, behaviors, and attitudes.
Alternative Investor Type 1: The Control Seeker
The first profile of MHNW alternative investors identified in The Ben Liquidity Report, Control Seekers, made up 24% of our survey respondents. Demographically, Control Seekers tend to be younger males from the Midwest and Texas and are either on the lower end or higher end of the affluence spectrum. Most are college graduates and while most are married, this group has the highest percentage of single or never-marrieds.
Control Seekers are driven by a desire for personal control over their finances. They have already accumulated a significant savings cushion and are now focusing on ensuring they are covered in case of unforeseen financial distress.
Control Seekers provide a huge opportunity for financial advisors and intermediaries, as they value the knowledge and advice of others and rely on their financial advisors’ expertise when making important decisions. The group values financial professionals who make the process simple and cost effective, provide transparency into liquidation options, and adhere to fiduciary standards.
As this group tends to wait to try new digital tools or technology until after a significant number of their peers have tried them, financial professionals can help Control Seekers go beyond their own investment strategies using tech-enabled solutions.
Alternative Investor Type 2: The Savvy Saver
25% of The Ben Liquidity Report survey respondents were Savvy Savers. This alternative asset investor group is made up of middle-aged married women of medium affluence with post-graduate education from coastal cities.
Like the Control Seekers, Savvy Savers already feel as though they are financially able to provide for themselves and their loved ones. Savvy Savers are also socially conscious and familiar with the business and investing landscape. While they are proud of the work they have done to achieve their wealth, they also acknowledge the role luck has played in their success.
Savvy Savers seek financial growth to protect against ongoing personal downside risk. They hope to use alternative investments to prepare for the future by ensuring a savings cushion, providing for future generations, and preparing for costly life events such as divorce.
Like the Control Seekers, Savvy Savers tend to wait for a significant number of their peers to adopt new digital technologies before trying them for themselves.
Savvy Savers are actively engaged with the market, new investment approaches, and the businesses they are investing in. They are self-sufficient, but financial advisors can empower their investing decisions by helping them avoid past challenges around early liquidity.
Alternative Investor Type 3: The Engaged Altruist
Engaged Altruists represented 23% of surveyed alternative investors. They are younger or middle-aged males dispersed throughout the United States. They tend to be of medium affluence, have a post-graduate education, and while most are married or co-habitating, a greater percentage are widowed or divorced than other investor types.
Engaged Altruists have worked hard to get where they are. They feel comfort knowing they have a substantial cushion in case of unexpected events or emergencies.
This group is now motivated to continue to rebalance their portfolio with alternative investments to continue to provide a legacy for future generations and to use their capital in a more globally impactful way.
Unlike the Control Seekers and Savvy Savers, this group has a DIY spirit. They quickly adopt new technology and prefer to do their own research rather than rely on financial professionals for advice.
Alternative Investor Type 4: The Community Entrepreneur
Finally, 27% of The Ben Liquidity Report respondents were Community Entrepreneurs.
This group is made up of younger or middle-aged women dispersed throughout the United States. They have medium affluence, a post-graduate level of education, and although most are married, this group of investors has a percentage of divorce similar to Engaged Altruists.
Though these alternative investors are also motivated to protect their savings and preserve their wealth, their driving motivator is their entrepreneurial ambitions. Community Entrepreneur’s primary motivation for seeking liquidity from alternative investments is to give back to their local communities and improve the world around them.
To maximize their impact, Community Entrepreneurs look to their financial advisors for guidance. As early adopters of new digital tools and technologies, many Community Entrepreneurs value financial professionals who allow them to conduct the entire process online. These alternative investors can provide financial professionals with many opportunities, as long as the advisors provide transparency, make the liquidity process simple, and embrace new technologies.
Implications for Financial Professionals
Though the segment’s defining unmet needs ranged from personally to societally motivated, our survey’s results indicate that all four MHNW groups of alternative investors are opportunity-driven and, as a result, place higher value on upside potential than on cash. 81% of survey respondents stated that they would prefer to work through their advisor to obtain liquidity, but many expressed frustrations with current options. By understanding the motivations alternative asset investors have for seeking liquidity and working with liquidity providers, financial professionals can meet the needs of this new emerging market and continue to better serve their clients.
At Ben, we have crafted a suite of reliable, ongoing liquidity solutions for investors in alternative assets. Our process seeks to give investors access to hard-earned investment capital, with liquidity provided from our own balance sheet. Contact us today to schedule a consultation with our expert team.
Download the full The Ben Liquidity Report to read more about the attitudes, behaviors and liquidity needs of mid-to-high net worth U.S. alternative asset investors. Contact us today to discuss what Ben’s secondary market liquidity solutions could mean for you.