Forty years ago, the world of investment was simpler. Those who had a few savings either put them in a fixed deposit in a bank or bought a small apartment on the coast. The most daring would buy some 'matildes' – as Telefónica shares were called – or Treasury Bills. Investment funds were just created and no one had yet heard of venture capital. Now, in 2024, the sophistication of the financial markets is enormous. The portfolios of wealthy clients no longer only have stocks and bonds, but also include investments in private assets, socimis and even cryptoassets. And through the internet, you can invest in financial derivatives such as dangerous contracts for differences (CFDs) or in 'turbo funds' that multiply the profits (or losses) of certain companies by three or five. In the midst of this maelstrom, advice has become more important than ever. More and more people are deciding to hire a bank or a brokerage firm to help them move their money. Or they are even signing discretionary portfolio management contracts so that the entity directly buys and sells financial assets on their behalf. A good example is what happens with investment funds. After years in which they were simply sold in offices, now 72% are distributed either through managed portfolios or through advisory contracts, according to data from Inverco, the sector association. Víctor Alvargonzález was investment director of the Tressis asset management company and now runs his own advisory firm, Nextep Finance. Over the years he has seen an increase in interest in using this type of service. “Before it was something reserved only for the rich, but now more and more people are seeking financial advice.” Partly because of the greater sophistication of the markets and partly “because banks often ignore part of their clients or charge them excessively high commissions.” Among the latest sophistications of the industry is the generalization of the so-called alternative assets, those that are neither shares nor bonds. These types of investments are not listed on open markets. Their most visible face is venture capital funds, which invest in the capital of companies that are not listed on the stock exchange. There are also funds that invest in private debt. Others do so in infrastructure. In the United States and the United Kingdom, the portfolios of pension funds or university endowments usually allocate more than 20% to investing in these private markets. The great disadvantage is that they are less liquid investments, where the money must be committed for seven or 10 years. In exchange, the return is higher than that of the stock market. In Spain, it is a much less developed market, but one that continues to grow. In the last two years, there is no private bank that has not set up a specific department. One of the firms that created a private markets division is Diaphanum, headed by José Cloquell. Together with his team, they are dedicated to analyzing which topics make the most sense within this field. “We look for highly specialized asset managers, who have funds that have shown that they can do better than the competition, and we select and audit them for our clients,” says the expert. Today, the weight of venture capital in portfolios is less than 5%, but with legislative changes to extend this type of investment —such as lowering the minimum investment to 10,000 euros— and the strong commercial commitment, that proportion is going to grow without stopping. The same is going to happen with bitcoin and other digital assets. From being an ultra-risky bet that only interested young people closely linked to technology, little by little it has been incorporated into the conversation of the large investment firms. Especially since the United States authorized the creation of the first exchange-traded funds that replicate the evolution of cryptocurrencies at the beginning of the year. Javier Caballero is an advisor to the Andbank investment fund Opportunity and a firm defender of the potential of blockchain technology and of bitcoin as a financial asset. “In the United States we are already seeing how some of the large civil servant pension funds are investing in bitcoins,” he explains. Indeed, the Michigan civil servants’ fund began investing in this theme a few months ago. Beyond venture capital funds and cryptocurrencies, investment through conventional funds has also become more complicated. Before, there were conservative funds that bought public debt and stock funds. Now the variety is overwhelming. For example, Diaphanum’s fund supermarket offers more than 25,000 products. There are distribution and accumulation funds; there are references with different currencies; There are sector funds, regional funds, megatrend funds, alternative strategy funds… How can an individual choose from such a wide variety? Josep Soler is the president of EFPA, the European Association of Financial Planners, an organisation with 35,000 members in Spain. Soler explains that “in a world that is evolving so quickly, having some kind of financial advice has become increasingly important”. However, in Spain, the predominant trend is still to leave money in a current account “which gives you almost nothing” or to follow the advice “of your neighbour or your brother-in-law”, complains the manager. The paradox of the investment world is that, despite the great complexity and sophistication, investing has never been so accessible as it is now. Platforms such as Myinvestor, EBN Banco, Scalable Capital or Revolut offer access to thousands of funds, bank deposits, fractional real estate investments or low-cost exchange-traded funds (ETF) within their mobile applications. From Gescooperativo, the manager of rural savings banks, they remind that when investing, a series of factors must be taken into account, such as having a certain diversification of assets, having a plan, knowing the taxation of each product… «In general, there are many people who invest because of trends, or impulses, or because of the recommendation of an 'influencer' and that is how the disappointments end up coming,» they comment from the firm. Investing has never been so accessible and instantaneous and, at the same time, it has never been so complex. Follow all the information on Economy and Business on Facebook and Twitter. Xor in our weekly newsletter