Private wealth and private markets in 2025: at the beginning of a long runway

February 5, 2025 (Preqin News) – Private wealth investors and their advisors want growth, income, capital preservation, and diversification, all characteristics that can be enhanced by including alternative assets in their investment portfolios.

That’s the headline from The Alts Institute Alternative Investing Survey by Brookfield Oaktree Wealth Solutions. The survey found investors with experience of alternatives and those without were keen to increase exposure or find out more.

Of ‘alts users’, 62% plan to increase their allocation over the next two years, 88% are open to investing more in alternatives, and 78% want a greater variety of investments. Among ‘non-users’, 70% said they would invest in alternatives if their advisor recommended it and 72% said they would begin investing if they better understood the available options.

The largest fund managers have led the way, introducing new products to attract high-net-worth investors and, increasingly, the mass affluent. Blackstone now has $260bn of private wealth assets under management (AUM), accounting for 20.5% of its $1.27tn AUM at the end of 2024, and more than 280 professionals in its Private Wealth Solutions business.

More than half (56%) of advisors responding to the Hamilton Lane Private Wealth Survey expect to allocate more of their book to private markets in 2025, with 42% thinking the allocation will stay the same and just 2% expecting a decrease.

With an increasing array of platforms and options, private market managers expect to see more capital flowing into their funds from private wealth.

Preqin News spoke with fund managers and advisors to gather their thoughts, opinions, and predictions for the year ahead.

Demand side

It’s an exciting time. From an industry perspective, we’re looking at a multi-trillion-dollar opportunity that HNWIs and financial advisors alike are eager to seize. Private wealth allocations are very low. Our research indicates users want to invest more and non-users are very interested in learning more. The winners in the space will focus on what the advisor needs and how they can serve as a partner of choice in helping them implement strategies with their clients.

John Sweeney, CEO, Brookfield Oaktree Wealth Solutions (New York, US)

A few GPs were very early and really saw the private wealth opportunity, and others have since caught up. Now I think almost every GP is really focused on this crucial channel. A Bain report says individual investors hold roughly half of global wealth of $275–295tn. It's a massive amount of capital that needs to have the same investment choices and opportunities that the institutions do.

Lawrence Calcano, Chairman and CEO, iCapital (Greenwich, Connecticut, US)

This year, our survey results showed a growing enthusiasm around, and appreciation for, the diversification and performance benefits the private markets can provide. Just a few years ago, we would never have expected to see nearly 60% of advisors planning to allocate 10% or more of clients’ portfolios to this asset class in the coming year. To us, this reinforces the growing understanding of the wealth creation opportunities within the private markets.

Steve Brennan, Head of Private Wealth Solutions, Hamilton Lane (Philadelphia, US)

Brennan was commenting on the launch of Hamilton Lane’s 2025 Global Private Wealth Survey.

As the fundraising environment has become more challenging, private market sponsors have tried to diversify their sources of capital. The industry is now grappling with new fund structures as we start to move from high-net-worth investors, who invest and behave like institutions, to ‘proper’ retail which requires both a lot of education and a safety net. Alternative investments have their place in any long-term investment portfolio, especially pensions, but are still largely the domain of HNW advisory, rather than retail discretionary, portfolios.

Tim West, Partner and Alternative Investments Leader, EY (London, UK)

There’s no one-size-fits-all answer to the allocation question. For some people, starting with an initial allocation of as little as 5% can be helpful in terms of diversification and helping them get comfortable with the space. Others are more eager to invest in alts, especially if their advisor suggests it. Right now, it’s less important to broadly focus on the percentage of portfolios allocated to alts, and more important to focus on helping advisors educate their clients about the value of alts investing and the returns that alts can deliver.

John Sweeney, Brookfield Oaktree Wealth Solutions

John Doe, the dentist in Houston or London, has a small allocation they want to put to work, but they don't want to lock up their money for 10–12 years or more. Yes, a closed-end structure might generate a median return of 16–17% net. But if they get in a semi-liquid structure at 13–14%, it’s 3% less, which is not that much leakage for having the option of liquidity.

Sunaina Sinha Haldea, Global Head of Private Capital Advisory, Raymond James (London, UK)

Advisors need to be selective when picking the right investments for clients. We believe there are a few key aspects that advisors should look out for: a proven ability to navigate multiple market cycles; an equitable, pro rata investment allocation policy; and, equally importantly, a portfolio management engine that can ensure sophisticated liquidity management and a robust valuations process.

Robert Collins, Co-Head of Private Wealth, Partners Group (New York, US)

We’re seeing significant demand for credit, driven by both the newness and accessibility of the asset class, as well as the attractiveness of private credit and higher-yielding public debt in the current market. Private infrastructure is also an asset class that individuals have had limited access to but is now opening up due to product innovation.

Private equity will be the next wave as clients seek higher growth opportunities and we’re seeing a renewed interest in real estate as investors are looking to take advantage of what we perceive to be a very attractive entry point for assets globally.

John Sweeney, Brookfield Oaktree Wealth Solutions

Supply-side

This is our 12th year. And I sometimes say it's taken us 10 years to be an overnight success. We had to first provide access to great managers as well as build out the infrastructure to allow this to happen at scale. Private wealth did not have systematic access to great managers, but access has grown and there are now opportunities for investors to get into the managers that will make a difference in their portfolio and allow them to capture institutional returns.

Lawrence Calcano, iCapital

Product complexity and administration can be potential hurdles but, encouragingly, our recent survey strongly indicates that these challenges can be overcome through education and resources. Our newly launched Alts Institute was created with the understanding that to spur alts investments and help end investors make the most of the opportunities ahead, advisors will need market-leading guidance and support focused on maximizing the potential of alternative investments.

John Sweeney, Brookfield Oaktree Wealth Solutions

The 40 Act funds have been a game changer. They favor strategies with shorter j-curves, so secondaries fall square in the middle of what 40 Act funds are designed to do. The liquidity profile of an average secondaries investment is exactly what the 40 Act is promising its underlying investors, who are getting similar returns to private equity paper but in a semi-liquid structure. It’s a no-brainer.

Sunaina Sinha Haldea, Raymond James

As the industry looks to serve up more appropriate solutions and we see more open-ended and evergreen products, compromises and cracks can appear. More frequent dealing windows can lead to more cash-like or listed instruments being included to provide liquidity, with a consequential drag on performance. The rush to launch private market funds for retail-like investors will inevitably lead to compromises and potentially some disappointments.

Tim West, EY

It's really important that these advisors and their clients are educated on these assets. The burden of education is one the industry should and needs to bear. We spend a lot of time, energy, and money on that and we think it’s as important as ever for the industry to get behind investor education.

Lawrence Calcano, iCapital

The increased volume, not just of data but of how and where it is moving, creates challenges. As GPs find new distribution channels, issues like managing onboarding ramp up. Historically, the cost has kept the entry points high. You can get that down, but the systems you have, the data management, and the workflow are paramount.

Christopher Edwards, Head of Client Enablement, SEI (Philadelphia, US)

There will be a drive for better reporting and more scrutiny on valuations – historically more of an art than a science – and a rush to find technology solutions to rival those that have been built for public markets. It’s time for private markets to grow up, and face the transparency and scrutiny required of their public market cousins, if they want retail-like investors to allocate more than a tiny portion of their wealth.

Tim West, EY

For the most part, portfolio processing of more retail products is not very tricky, it’s similar to what we’ve been doing for a long, long time. You must get the data out through multiple channels in a timely fashion and, let’s face it, it’s historically been quite the manual process to get to the retail groups. So, we had to learn how to automate all of that.

John Carson, Head of Sales – Alternative Fund Services, SEI (Philadelphia, US)

As the private wealth space matures, one of the key challenges that managers face is ensuring that their financial advisor partners have access to the education and tools they need when speaking to clients. One of the key lessons we’ve learned is that advisors and their clients must understand that while this asset class is semi-liquid, there is a reason we call the structures ‘evergreen’. This is because the benefits of both the asset class and the evergreen approach are to be gained over a long-term investment horizon.

Robert Collins, Partners Group

_{The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.}