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How Advisors Can Manage Capital Calls With No Extra Effort

According to McKinsey, private equity has grown tenfold since 2000, tripling the pace of public stocks. And it’s only continuing to grow, with allocation expected to reach $1.2 trillion by 2025 according to iCapital and BCG.

So if you’re an advisor working with high-net-worth clients, chances are they’re investing in these funds. Here’s how advisors can better serve and attract high-net-worth clients by helping manage capital calls, with no extra effort.

Inefficiencies in the capital call process

Capital call notices are typically sent to LPs around one week to 10 days in advance of the call due date. Inconveniently, capital calls are most often sent via direct mail, and best-case-scenario are sent via email. For those invested in multiple funds, that’s a lot of mail to keep up with. And a missed or delayed capital call comes with serious consequences.

Source: Unsplash

If investors are unable to transfer the money due to the fund in the time period required, it’s considered a default. While uncommon, there are harsh penalties for defaulting, including high interest penalties, selling the defaulted investor’s stake, and even a deal collapsing with subsequent liabilities.

All in all, for investors with complex portfolios, keeping up with capital calls can become a job in and of itself.

Investor of private equity fund talking on the phone to transfer money due to a capital call.
Source: Unsplash

Making capital calls easier for high-net-worth clients 

Finding an advisor who can help streamline the process is a huge benefit for high-net-worth investors struggling to keep up with multiple private fund investments. Of course, it’s not possible for advisors to sift through their clients’ mail, collecting hundreds of capital calls notices per year for each of their clients.

At AltExchange, we’ve automated the capital call process for advisors by: 

  • Syncing daily with fund administrators and investment portals to collect new capital calls.
  • Providing the ability to send auto-generated notifications and reminders to clients regarding capital calls.
  • Tracking data for all historical (funded) capital calls, as well as ones that are due. 
AdvisorVue’s Capital Call dashboard, showing upcoming client capital calls.

If you’re an advisor interested in managing capital calls with no extra effort, please book a call or schedule a demo.

Not an advisor? We can still help. If you’re an investor looking to take the complexity out of your investment portfolio, let’s talk.

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