Private Wealth Allocations Could Quadruple Through Evergreens

In Brief:

Private wealth investors currently allocate just 3-5% to alternatives compared to 20-50% for institutions, representing a massive untapped opportunity that could reshape the entire asset management industry over the next decade. Peter Aliprantis, Partner and Head of Private Wealth Americas at EQT, argues that evergreen structures and improved investor education will drive this transformation, but warns that firms unprepared for the operational complexities of serving individual investors will struggle. Speaking on the Alt Goes Mainstream podcast from Soho Beach House in Miami before a wealth management audience, Aliprantis brought 25 years of private wealth experience, including 12 years as managing director at TPG Angelo Gordon, to outline how the industry must evolve beyond simply repackaging institutional products. His perspective carries particular weight as EQT, the third-largest private equity firm globally, has developed specialized wealth channel capabilities including evergreen structures that enable accredited investor access rather than limiting participation to qualified purchasers.

Big Picture Drivers:

• Democratization Wave: Evergreen structures eliminate traditional barriers like J-curves and capital call management, enabling accredited investors to access private markets with immediate 100% deployment and lower minimums

• Education Imperative: Wealth channel growth depends on advisors understanding private markets as portfolio ballast and volatility dampeners rather than high-octane growth engines like hedge funds

• Operational Complexity: Serving exponentially larger wealth channel investor bases requires dedicated product development teams, enhanced client servicing, and specialized administrative capabilities

• Model Portfolio Evolution: Customized allocation solutions through model portfolios will become the primary vehicle for mass affluent investors to access diversified private market exposure

Key Topics Covered:

• Evergreen vs Traditional Structures: Immediate capital deployment, liquidity features, and accredited investor access contrasted with institutional draw-down fund limitations and qualified purchaser requirements

• Scale Requirements: Firms need significant origination capabilities to populate evergreen vehicles with 45-60 diversified investments across geographic regions and sectors to serve wealth channels effectively

• Core-Satellite Approach: Private markets evolution mirroring public market trends where evergreen structures become core holdings with specialized draw-down funds serving satellite allocations

• Global Geographic Opportunities: European and Asian markets offering better entry multiples and less competition compared to oversaturated U.S. private equity landscape

Key Insights:

• Allocation Gap: Private wealth investors allocate 3-5% to alternatives versus 20-50% for institutions, suggesting massive growth potential as education improves and access barriers fall through evergreen structures.

• Operational Transformation: Wealth channel success requires firms to build specialized capabilities including bespoke product development, sales support, educational components, and enhanced administrative systems rather than repackaging institutional offerings.

• Performance Expectations: Private markets should serve as non-correlated assets and volatility dampeners in portfolios, requiring investor education to prevent hedge fund-like performance expectations that led to widespread disappointment.

• Model Portfolio Dominance: Customized allocation solutions will become the primary access vehicle for mass affluent investors who cannot meet individual manager minimums or allocate sufficient capital across multiple strategies.

• Scale Barriers: Only firms with substantial global origination capabilities can populate evergreen structures with enough diversified investments, creating high barriers to entry for smaller managers seeking wealth channel distribution.

• Institutional Adoption: Smaller institutions with limited investment teams increasingly prefer evergreen structures to avoid repeatedly underwriting the same management teams across vintage funds, expanding the addressable market beyond individual investors.

Memorable Quotes:

• "The current allocations of private markets to private wealth investors, it's somewhere in the neighborhood of 3 to 5%. And if you look at what it is for institutions, you know, it can go 20%, it can go as high as 50%." - Aliprantis, highlighting the massive allocation gap driving industry growth potential

• "You can't just sell your institutional funds to the wealth channel. They don't that's not going to work. You may raise some money, but that's not where you're going to raise the bulk of your money." - Aliprantis, explaining why firms need specialized wealth channel product development

• "My concern is that investors need to understand why they're investing here and what the benefits are and what they're going to get out of it." - Aliprantis, warning about expectation mismatches as private markets democratize

• "It's not a liquidity vehicle. That's not what it's for. You should be a longer-term investor and you should look to hold it for 3 to 5 years." - Aliprantis, setting realistic expectations for evergreen structure liquidity features

• "Model portfolios will become extremely important going forward. Whether it's a warehouse, whether it's a third-party intermediary that creates model portfolios, they will create customized solutions for their investors." - Aliprantis, predicting the future of wealth channel private market access

The Wrap:

The private wealth channel represents the next frontier for alternative asset managers, with allocation potential to quadruple from current 3-5% levels as evergreen structures eliminate traditional access barriers and investor education improves. However, success requires fundamental operational transformation rather than simply repackaging institutional products, with firms needing specialized capabilities across product development, client servicing, and administrative functions to serve exponentially larger investor bases. Those that adapt effectively to serve both individual and smaller institutional investors through evergreen structures and model portfolios will capture disproportionate growth, while firms clinging to traditional institutional-only approaches risk missing the industry's most significant expansion opportunity.