Private Wealth Expert Charts Private Markets Accelerated Evolution

In Brief:

Adam Bobker, Co-Head of Private Wealth Solutions at Fortress Investment Group, joined the Alt Goes Mainstream podcast to discuss the evolution of alternative investments in the wealth management space. With over 22 years of experience at BlackRock before joining Fortress, Bobker offers insight into how private market investments are becoming standard allocations for advisors beyond just ultra-high-net-worth clients. He argues that the once-niche world of alternative investments has fundamentally transformed, with evergreen semi-liquid structures now accounting for 50-60% of alternative investment flows at many distributors.

Big Picture Drivers:

• Client Focus: Building trust, credibility and understanding client problems before proposing solutions

• Educational Evolution: Moving from simply providing access to helping advisors understand how alternatives fit in portfolios

• Strategic Partnerships: Distributors want fewer, deeper relationships with managers who can provide comprehensive solutions

• Product Innovation: Semi-liquid evergreen structures are transforming how investors access private markets

Key Insights:

• Model Portfolios: The industry is shifting from "art" (ad-hoc selection) to "science" (evidence-based portfolio construction)

• Institutional Convergence: Wealth and institutional approaches are merging, with OCIOs being acquired by wealth platforms

• Brand Experience: Brand encompasses every client touchpoint, from marketing materials to timely tax documents

• Asset-Liability Mismatch: The biggest risk in semi-liquid funds is putting illiquid assets in structures promising liquidity

• Distribution Character: Top distribution professionals possess empathy and consultative skills that cannot be trained

• Consultant-Manager Merger: OCIO acquisitions by wealth firms signal convergence of institutional and retail approaches

• Product Structure Considerations: Not every private market strategy works in a semi-liquid format, requiring careful evaluation

By The Numbers:

• 15%: Portion of Fortress's assets that came from wealth channel when Bobker joined

• 50-60%: Percentage of alternative flows at some distributors now coming from semi-liquid structures

• 2-3%: Current average allocation to alternatives for most retail investors

• 10-15%: Typical recommended alternative allocation from distributors

Memorable Quotes:

• "Alts are mainstream right now in private wealth." - Adam Bobker, emphasizing the transformation from alternatives being niche to becoming a standard component of wealth portfolios

• "The days of 60-40 portfolio is just not the right portfolio for today's environment." - Adam Bobker, highlighting the shift toward a 50-30-20 allocation model that includes substantial alternative investments

• "Brand is not just performance or your marketing materials or your education. Brand can be, does your 1099 or your K1 arrive on time?" - Adam Bobker, illustrating how client experience extends to every operational touchpoint

• "Knowledge and skills can be trained, improved, and you can get better at it. But the innovation, where the puck is going, is transforming this industry from more of an art to more of a science." - Adam Bobker, describing the evolution from intuitive portfolio construction to data-driven approaches

The Wrap: 

Private markets are rapidly integrating into mainstream wealth management as traditional 60/40 portfolios evolve toward 50/30/20 structures that include significant alternative allocations. The transformation is being driven by innovations in fund structures, technology improvements, and a shift toward strategic partnerships between managers and distributors. As institutional and wealth approaches converge, Bobker expects continued evolution toward custom portfolio solutions that meet clients' specific needs and goals.