Aiming to open once-exclusive private markets to more investors, large wealth managers are responding with new offerings for everyone from the ultrarich to "regular" clients and retirement savers.
Merrill and Bank of America Private Bank today announced what it's calling its Alts Expanded Access Program for clients hitting the $50 million-or-more threshold. The goal is to give high net worth investors access to private funds, primarily in private equity, that aren't typically among the options offered by most wealth managers. In other words, it's finding even more exclusive opportunities in an already exclusive market.
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All in for alts
The firms' announcements
Whatever the pitfalls, numerous surveys and reports suggest investor demand for alternatives is running high. The investment bank Robert A. Stanger reported in January that $122 billion was raised for alts from everyday "retail" investors in 2024, topping the previous high of $105 billion set in 2022.
Meanwhile Bank of America Private Bank found last year that demand for alternatives is particularly strong among investors between the ages of 21 and 43. Drawing on results from a
That cohort's allocation is already higher than older clients' — 17% of their total portfolios vs. 5% for investors 44 and older. And they want more.
Merrill and Bank of America Private Bank's offering for the ultrarich
Bank of America Private Bank and Merrill is among the many large wealth managers scrambling to meet this demand with an array of new products and offerings. Its Alts Expanded Access Program for investors with $50 million or more "will be supplemental to the core alternative platform that we already have, and ultimately, it'll allow us to bring more offerings to market than we do today," said Mark Sutterlin, head of alternative investments.
Sutterlin said Merrill and the private bank are working with a third-party firm — which he declined to name — to find harder-to-access private investments that may be of interest to ultrahigh net worth clients.
Sometimes these opportunities will come with smaller-than-usual capacity allotments, meaning the percentage of a fund set aside for investors at a particular institution. Also unlike standard investments in private equity, the offerings will allow investors to become limited partners in the funds they're putting money into. As a result, they will have greater responsibility for vetting the various opportunities they're presented with. Sutterlin said that doesn't mean Merill and the private bank are abandoning their fiduciary duties to investors. Ultimately, he said, and that they will still be responsible for making sure anything they recommend is in their clients' best interests.
"But I would say that the ability for investors to do independent diligence, and the expectation that these investors are going to have more experience in private markets and a higher level of expertise in terms of private market investing, is part of what allows us to do a broader based offering for these types of funds," Sutterlin said.
Sutterlin said advisors at Merrill and Bank of America Private Bank are now learning about the Alts Expanded Access Program and they'll begin to introduce clients to funds through it starting this fall. He said there are no plans now to offer it to investors below the $50 million asset threshold.
Goldman and the push to allow alts in retirement plans
Elsewhere, though, a movement is afoot to bring more of the so-called mass affluent into private and alternative markets — and it's
President Donald Trump
The order provoked an outcry. American Retirement Association CEO Brian Graff argued that fiduciaries, not the government, should be the ones deciding if an investment class is appropriate for plan participants.
"Professional retirement plan fiduciaries that are subject to strict fiduciary standards — not the federal government — are in the best position to assess developments in the financial markets and determine what is in the financial best interest of retirement plan participants and beneficiaries," Graff said in a statement in response to Trump's executive order.
Dee Sawyer, head of global distribution at T. Rowe Price, said the target date funds are still being designed for release by the middle of next year so it's hard to say now exactly what strategies they will employ.
"Everybody is unique, but at different points in time, you can have an exposure to different types of solutions, including private markets, and we think that there's opportunities to have that across the spectrum," Sawyer said.
Sawyer said she and her colleagues at T. Rowe Price welcomed Trump's order calling on the DOL to reconsider its fiduciary guidelines for private investments in retirement plans.
"And the reason for that is because it allows more plan sponsors the ability to offer these solutions from a fiduciary perspective, without a concern of litigation risk, which is a real concern of plan sponsors," she said.
Meanwhile,
Greg Wilson, head of retirement for
"Companies are staying private longer," Wilson said. "So when you look at private equity returns over a 10-, 15- and 20-year basis, they've outperformed public equity equivalents. Making these available to the primary source of retirement savings today, which is in the 401(k) plan, we think is absolutely appropriate within a professionally managed portfolio."
Wells sees the value in simplicity even with complex products
Meanwhile,
Wells is working with the wealth technology firm InvestCloud to offer UMA clients access not only to alternative markets but trading strategies involving derivatives and long and short positions that can be used to reduce investing risks. Previously, Maddox said, Wells advisors had to manage clients' allocations to private markets separate from all their other investments.
By bringing it all into one system, advisors should have an easier time with tasks like rebalancing — or buying and selling assets to make sure they maintain a certain proportion to each other in a portfolio. To be included in the UMA, alternative investments and other products also can't charge clients separate sales commissions; everything has to be paid for using a simple fee.
"This just makes it very simple for advisors and clients to understand where it's just one account wrap fee," Maddox said.
"This consolidation of different investment product types into one platform, one program, one advisory relationship, is an industry trend," he added. "I think that will continue. We'll start to see everything kind of collapse into these single-platform sources."
The biggest barrier to getting into alts
To Brian Griggs, the head of portfolio strategy and solutions at the investment management firm Nuveen, the biggest barrier to bringing more regular investors into private markets is a simple lack of understanding. One of Nuveen's lines of business is working with wealth managers at registered investment advisors and other firms and helping them provide opportunities in alternatives and other markets.
To better shed light on the benefits but also possible risks of alts, Nuveen has started what it calls its
"I would say 5% might be too little," Griggs said. "It might not be worth the extra effort of understanding these assets if you're just going to allocate 5%. But then we also work with some family offices and RIAs that have some of their clients with anywhere up to 50% in private markets."
The biggest of those factors is an investor's likely need for cash at any given moment. One of the knocks against private investments is that they are often "illiquid" — or harder to pull money out of than stocks and bonds.
"I think most advisors would say most of their clients don't need 100% of their portfolio in liquid stocks and bonds," Griggs said. "So if you can answer that question with confidence, then all of a sudden it opens up the opportunity to put more of the portfolio in these more diversifying private markets."
