NEW YORK (Reuters) - High net worth investors are increasingly eager to move piles of cash into higher-yielding assets, but recent volatility in stock and bond markets has made that task more complicated, the chief executive of data startup Addepar told Reuters on Thursday.
Addepar allows financial advisers to plug information about customer assets from various accounts into one central system, with the goal of making better investment decisions. As interest rates have risen, its customers have been trying to figure out where to shift cash for better returns, while also managing concentrated positions affected by market swings, CEO Eric Poirier said at the Reuters Global Investment 2019 Outlook Summit in New York.
“Naturally with this volatility, the advisers want to look at what are the biggest movers, what is their concentration risk,” Poirier said.
At the same time, they are aware “clients are really not earning much money on their cash,” he added.
Global markets have been rocked lately by inflation concerns, the simmering trade war between the United States and China, and worries that Britain will leave the EU on March 29 without a trade deal. Sterling tumbled on Thursday, while U.S. technology and bank stocks took a hit earlier in the week.
With $1.3 trillion of assets from financial advisers of primarily ultra-high net worth individuals, Addepar has a particular lens into how investors are reacting.
Roughly 20-30 percent of assets on the platform are illiquid holdings like alternatives and private shares, Poirier said. Even so, advisers who sign up for Addepar often use the information it provides to calm nerves when turbulent markets hit blue-chip stocks, or to talk customers out of overly risky investment ideas.
“Being able to have that conversation in the moment - you don’t have to wait two weeks to have that conversation - that’s where we’re able to make a dent,” he said.
Addepar launched in 2009 and last year raised $140 million in a round of funding led by Valor Equity Partners, 8VC and investment manager Harald McPike.
The company expects to grow revenue by about 50 percent annually for the next few years as it ramps up outreach to big banks and independent advisers, said Poirier, who joined from Palantir in 2013. Addepar recently hired David Lessing, a former Morgan Stanley MS.N and Merrill Lynch executive, as chief revenue officer to help with that goal.
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Reporting by Lauren Tara LaCapra; Editing by Tom Brown
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