Advisors Should Build Client Portfolios Like Family Offices

What's New

Individual investors should build portfolios the way family offices do, pairing low-cost passive equities with a large private allocation. Benjamin Sinclair, an Ontario-based investment advisor who writes the Beyond the Exchange newsletter, argues this in a conversation with Ross Butler on Fund Shack. He gave up stock picking. He now looks for an edge only in private markets and in tax strategies such as direct indexing. Advisors should test whether clients' liquidity needs justify the public-heavy mix most still hold.

Why It Matters

Canadian wealth management runs through 5 or 6 large banks. Sinclair argues that concentration has slowed product change. Most advisors still treat alternatives as a small add-on. Sinclair treats public equities as the low-cost half of a barbell. Sponsors such as Blackstone, KKR, Apollo and Brookfield gain most if his model spreads. He charges a flat 100 basis points whatever he buys, so private allocations do not raise his pay.

Zoom In

Asked how he would invest a fresh sum for a long-horizon client, Sinclair describes a roughly even public and private split. The public half goes almost entirely into passive index funds, with some direct indexing for tax losses. Private infrastructure would likely be the largest private holding, given its record of returns with downside protection. Real estate gets a smaller slice after Canada's bad experiences. Private credit depends on income needs. Private equity depends on the client's financial and psychological capacity for risk.

Memorable Quotes

• "It's in the private markets where alpha can be found. The public markets, not so much." The barbell in two sentences.

• "Millionaires tend to see themselves as deserving of the same types of treatment as billionaires." Why the family office model sells.

• "We have punched above our weight in terms of accidents in this space." An admission about Canada's private markets record.

• "The illiquidity of private markets can even be a blessing sometimes because it forces people to think more long term as well." His answer to the liquidity objection.

The Wrap

Sinclair's model holds up while evergreen funds meet redemptions and private managers beat passive equity after fees. It weakens if a run on semi-liquid funds forces gates just as clients need cash. His push for valuation disclosure is a second test. Investors cannot weigh cost against value without cap rates and entry multiples. How evergreen funds handle outflows over the next 2 to 3 years will show whether the barbell suits individuals.