Importance of Private Wealth for Asset Managers

As boutique alternative asset managers scale up, the "one man army" approach to capital raising starts to reach its limits. Increasingly, we’re seeing smaller managers bringing in talent focused on channels like consultant relations, family offices, private wealth, etc. Why? Because once a firm reaches a certain size, continuing growth demands that these areas receive dedicated attention. From the high-touch nature of family offices to the in-depth relationship and knowledge required by consultants, these areas can no longer be handled effectively as an extension of general capital raising. Private wealth is another essential area, engaging with advisors and RIAs who need tailored insights and support to convey complex investment products to individuals requiring a different approach—focusing on education, accessibility, and alignment with advisors duties. This highlights a broader trend in the industry: as firms grow, they’re recognizing the need to hire specialists dedicated to each channel. Focused hires in channel such as consultant relations, family offices, or private wealth allow teams to better serve the unique needs of each segment and build stronger, more strategic relationships. For firms aiming to keep expanding, this dedicated focus isn’t just a nice-to-have; it’s essential for capturing new growth opportunities and setting the foundation for long-term success. If you are exploring building out dedicated coverage, let's speak!

A new client of my firm is a multi-million dollar income earner. They had a "Private Wealth" Advisor at [Big bank]. When putting together their initial financial plan, here are 5 opportunities I found in the first 30 minutes that the previous advisor never mentioned. 👇 1. Mega Roth. Their 401k plan allows for after-tax contributions. Since they are WAY above Roth IRA income limits, this lets us get money into Roth (tax-free) to diversify future tax exposure + increase tax-advantaged investing 2. Maximize charitable donations. They were currently making cash donations to charities. This is not tax-efficient in most cases. Instead of donating cash, we will donate appreciated stock. This eliminates capital gains and allows us to claim a charitable deduction. In addition, I may advise using a donor-advised fund to do this and to "bunch" deductions. 3. Insufficient liability coverage. Millions of assets are at risk because they weren't adequately protected with liability insurance coverage. We need increased auto and home insurance at a minimum. An umbrella policy is also necessary to provide extra liability coverage above the other policy limits. 4. Equity compensation calendar. There was no previous plan for stock awards, nor was there any plan for how they could improve the financial and investment plan. 5. Creating "tax awareness". April has been a tax surprise for the last few years. We put together a tax estimate that included salary, bonuses, and equity compensation. Then, we looked at the expected tax withheld for the year. They will owe about $30k in April. But now we can plan for it. This gave them clarity on what they expect at tax time. These are just 5 opportunities out of many. Investing is important, but planning is where the real value is. Once we build the financial plan, the plan will inform the asset allocation and investment plan.

The 26th edition of the Alt Goes Mainstream by The AGM Collective is out! Some of the industry's largest alternative asset managers reported their Q3 results this past week. Apollo Global Management, Inc., Ares Management Corporation, and Blue Owl Capital all shared rather strong results, highlighting some notable current trends in private markets. Some major themes driving private markets forward cross-cut each of their business performance and drivers of growth: 1/ Focus on private wealth: Each of these three firms have made it a strategic priority to focus on private wealth to grow their AUM. The global private wealth channel has been a major driver of growth for these firms’ increase in AUM, with Apollo and Blue Owl seeing strong quarterly results in part due to private wealth channel growth. 2/ Credit takes the credit: Private credit has been popular amongst LPs over the past year. A large portion of AUM growth must be credited to private credit for all three of these firms.  3/ Perpetual / permanent capital is driving growth: Permanent / perpetual capital vehicles have done two major things for these managers: one, they have enabled these firms to not be entirely reliant on shifting fundraising dynamics, which should help these firms’ financial profiles, and two, they have enabled these firms to more easily partner with the wealth channel as these products can have lower minimums and be structured accordingly to fit the needs of private wealth investors. 4/ Acquisitions and strategic partnerships are viewed as levers to drive growth: With FRE a major driver of stock price and shareholder value, these firms recognize that a globally diversified and multi-strategy investment platform will increase the firm’s value. This AGM Alts Weekly covers: 🗂️ AGM Index, an index that tracks the leading publicly traded alternative asset managers. 🗞️ AGM News of the Week, this week covering: 📌 Financial Times' William Louch & Kaye Wiggins on CVC Capital Partners postponing their plans for an IPO amidst current market turbulence. 📌 The Wall Street Journal's Rod James on Blue Owl Capital's Q3 earnings results, largely driven by their credit strategy. 📌 Buyouts / PEI MEDIA GROUP LIMITED's Kirk Falconer on new sports-focused fund Otro Capital spinning out of RedBird Capital Partners. 📝 Reports we are reading 📌 Investcorp's Anthony Maniscalco, Timotheus Osnabrug, Weston Wilkinson, Joshua Lyons on the continued evolution and growth of mid-sized GP stake investing. 💻 Who is hiring: Senior-level positions from companies like iCapital, bunch, Republic, Allocate, Isomer Capital, Northzone. Subscribe 👇 to see what's going on in alts so you and your firm can stay up to date on the latest trends and navigate this rapidly changing landscape as alts go mainstream. https://lnkd.in/egYDzbes

There is one topic that comes up in nearly every discussion with GP’s. Private wealth. This is a term used to categorize non- institutional capital and is brought up specifically in reference to how GP’s in real assets can attract this type of capital into their vehicles. Not all capital sources within private wealth are the same. This means the way a GP sells to them is not the same, nor are the investment goals, structures or products. For example, there are ~14,000 SEC registered ($100million+ of AUM) RIAs that manage a collective $3.7T. But even within RIA’s there is massive dispersion. Firms with over $1B in AUM only represent 6% of RIAs by count but almost 70% of assets. But despite those staggering numbers, most do not work with a wealth advisor. HNW, UHNW, billionaires and family offices often have minimal access to alts today. There are a few reasons: 1. Access - they don’t have access to high quality sponsors 2. Education - there is a lack of education and awarness around the role of private markets investments in a portfolio 3. Tech Infrastructure - the shift from a few investors to many investors requires new tooling for the GP, LP and advisors. As the tech infra and services to support the administration of HNW feeder funds expands, so too will market participation. There is a transformation happening in our industry where $ from individuals (vs institutions) is one of the most highly sought after capital sources… and least understood. In aggregate, the 2,000+ GP’s on Juniper Square manage over 500,000 LP’s that have invested in 30,000+ investments. I don’t known if there is independent data on this, but I’d have to imagine that the collective LP pool of our customers represents the single largest community of non-institutional LP’s that have invested in 1 or more private investment vehicle. Here are some stats: - of those 500K LP’s, ~90,000 have invested with 5 or more GP’s over the last 3 years (min aggregate commitment of 300k and max aggregate commitment of 5mm) - via our digital subscriptions tool, we are tracking ~$1b of capital committed per month since the start of 2024. This accounts only for the $ committed in a fully electronic /digital way. Helping the industry unlock the opportunity is a big challenge and oppprtuntiy. Over the next several months I’ll focus on this topic on various episodes of The Distribution by Juniper Square as well as hosting and co-hosting sessions with others organizations such as NAREIM and NYPEN Real Estate along with our continued effort at Juniper Square to help our clients benefit from the broadening of access to private markets. I believe, when we look back in 10 years, this will be the inflection point as access to private markets will be substantially different and the GP of the future will be structured in new and difffent ways enabling focus on a new (and growing) investor type. The shift will touch every part of the GP’s organization.

PitchBook -- Private equity’s wealth-focused makeover is all about scale “They’ve had to really think through—if we’re going to have success in the private wealth channel, we can’t use the same playbook that worked in the institutional side,” said Phil Huber, head of portfolio solutions for Cliffwater, a manager. “It can be the same strategies and asset classes, but it has to be delivered in a more convenient wrapper.” Almost all of the largest fund managers are hawking so-called wealth-management solutions marketed to investment advisers, So far, the strategy is paying off handsomely in gaining fee-related capital. Through this year’s first quarter, PitchBook data shows that assets in perpetual strategies from the top seven publicly traded alternative asset managers totaled $1.7 trillion, up 21% year-over-year and representing 41% of this cohort’s total AUM. Several senior executives have been telling Wall Street they expect wealth-driven assets to soon reach 50% of their capital. At Partners Group, the pivot to wealth began two decades ago. Today its $48 billion in assets from the wealth channel makes up almost one-third of its total AUM. At KKR, for example, there are about 2,000 institutional clients while the firm’s wealth channel serves tens of thousands of financial advisers. https://lnkd.in/e9T6v-6V